The Wine Industry of Australia - Essay Example

Executive Summary The wine industry of Australia has been one of the most successful among the existing wine manufacturing companies in the world. The Andrew Peace Wines is a company dedicated to excellence and pure customer satisfaction through a continuous process of benchmarking and improvement. The company is largely family-owned and family-managed which makes it a lot easier for these stockholders to control and administer. The products were not limited to a number of varieties; instead it is an array of various wine flavors such as the Chardonnay, Might Murray White, Rose, Shiraz and others. The process of making the wines are truly technologically enhanced which consequently adds value to the products. Also, aside from the availability of resources such as an expansive land and bountiful grapes harvest, the company thrived on the efficient leadership of the primary owners who are also the foremost managers of the wine enterprise, Andrew and Cathryn Peace themselves. This couple has been able to bring on success to the company because of their enthusiasm in keeping updated with the current trends in the global market and the recent changes in the portfolio of their strongest competitors. Resourcefully, the couple thought that a local market will be insufficient if they desire to go big time so they endeavored into the intricate world of exporting. Opportunely, this decision to expand externally proves to be a productive choice. Moreover, the management of the company constantly recognizes the needs of its employees and personnel and the increasing demand for employment. As trends in the global wine making industry continuously change, Andrew Peace Wines also adjust to the transformations through decisive action plans which particularly focus on the marketing, branding and promotion of the products. They are consistently entwined into the greater realization of a globally popular wine producing company. Company Overview and the Mission Statement Andrew Peace Wines remains a proud family business even after a quarter or a century on from planting its first block. The company became one of the biggest family owned wine-manufacturing enterprises in Australia. It all began with a weekend escape which providentially turned into a family enthusiasm. Through much hard work, optimism and perseverance of the three generations of Peace, the ‘country retreat’ vineyard generated its very first vintage in 1995 and a profitable winery was launched. from the apwines.com Andrew Peace Wines currently endeavors in the production of high-quality wines with lower prices in order to meet the demands of its targeted audiences. Table of Contents Executive Summary…………………………………………………………….. 1 Company Overview and the Mission Statement……………………………….. 2 I. Introduction………………………………………………………………...... 4 II. Product Description…………………………………………………………. 5 III. Environmental Scan……………………………………………………….. 6 IV. Competitor Analysis……………………………………………………….. 7 V. Market Segmentation, Targeting and Positioning………………………….. 9 VI. Developing Market Tactics………………………………………………… 10 VII. Market Forecasting……………………………………………………….. 12 VIII. Action Plans………………………………………………………………. 13 Reference List Works Cited…………………………………………………………………….. 14 Bibliography……………………………………………………………………..15 I. Introduction Undoubtedly, Australia is the most vibrant wine-producing state in the world. In more or less than six years, the land under vine enlarged from 80,000 hectares to around 150,000. In a comparable period, exports, likewise, have doubled and it now it outranks the nation of France as UK’s No. 1 best seller. Having a uniquely Mediterranean climate, the primary predicament, drought, is prevailed over by the use of irrigation, specifically from the impressive Murray River. This magnificent conduit connects the chief vineyard estates of New South Wales, Victoria and South Australia, liable for approximately 40 per cent of the yearly harvest (Platman, 2005, para 1-2). In several regards, Australia embodies the industrial features of winemaking on an imposing scale. It’s highly automated, the vineyards are expansive, the wineries and refineries and the expenses are maintained under rigid control. Two decades ago, two-thirds of the grapes generated were multi-purpose, a quantity for winemaking, portions for dried fruit, and the remaining are put up for sale for the table. With the beginning of the millennium, the emphasis is recently on the finest wine grapes of Shiraz, Chardonnay and Cabernet Sauvignon (ibid, para 3). At the avant-garde technology, with state-of-the-art wineries, as well as exceedingly skilled and trained winemakers, the wines are in principle exceptionally proficient. Any difficulties can be dealt with the use application of acidification, the adding up of tannins, or even sugar to smoothen out the weaknesses. Assortment and combination are the solutions to producing a globally competitive commercial wine. The grapes do not necessarily have to come from a particular location, but may be extracted over immense stretches of land. Undeniably, wines from South-East Australia can be created from a mixing together of grapes from three various Australian states over one thousand miles at a distance. This process permits the winemaker to produce a wine which is completely dependable and reliable, so that each bottle achieves a definite minimum level of quality. Furthermore, the level of uniformity attained allows the producer to establish a brand based on a wine that is effortless to drink and a label that trip off the tongue (ibid, para 4-8). Contained in this context, Andrew Peace, a commonplace Aussie, liberal, sincere and sociable and, by some means, his wines mirror his personality. His winery is located in Swan Hill, Northern Victoria, where he has possession of approximately 2,000 acres of land, with a number of 450 acres under vine. This is an enormous area of irrigated land, spanning the Murray River. After his father acquired the vineyards in 1980, Andrew eventually was trained as a winemaker with the colossal wine companies of Lindemans and Mildara Blass. In 1995, the family took the choice to expand their own winery, and such has been the drastic growth that, with respect to export amount, Andrew Peace Wines are currently ranked as fourteenth (ibid, para 15). More importantly, it remains a family-managed business enterprise under the supervision of a high-powered and focused owner. II. Product Description Once the grapes are produced and transported into the winery, Andrew is merely a mechanical expert. For instance, “red grapes are heated before fermentation, to achieve better color and fruit extraction and, where appropriate, natural tannins and acids are added to ameliorate the balance and structure. To improve complexity, some parcels are aged with oak, by suspending oak plants in the vats. This is a far superior method than oak chips, and attains the same surface area coverage as a barrique, but at one-third cost” (Platman, 2005, para 35). While several of the bigger producers source their wines from various locations to acquire an array of characteristics in their blend, the hush-hush of Andrew’s Chardonnay is to harvest the grapes at three special stages of sugar maturity. The lower levels make available citrus, whilst the higher, more tropical fruit. A proportion of the blend goes through malolactic fermentation for buttery tastes, and portions receive oak treatment. The conclusive outcome is a multidimensional wine advertising, amazingly, at less than pounds 4 a bottle (grocer, 2007). Andrew Peace concentrates in entry level products, and a complete variety is accessible at Asda. “The Mighty Murray White (pounds 3.61) has lemon fruit with a touch of gooseberry, and the Chardonnay (pounds 3.98) is a classic mixture of citrus and tropical fruits softened with a little butter. The Rose (pounds 3.77) is produced by fermenting the juice on its skins, achieving a simple mix of cherry, raspberry and strawberry fruit. For juicy, vibrant black fruit, the Mighty Murray Red (pounds 3.57) over-achieves and, finally, the Reserve Shiraz (pounds 5.98) revealed flavors of soft, ripe damsons” (Platman, 2005, para 38). III. Environmental Scan Australian winery Andrew Peace is placing its Masterpeace wines into FuturPak cartons prepared almost completely from renewable materials, as environmental concerns persist to prevail over drinks packaging. According to UK importer Bottle Green, “The 1-litre box is made from a fully-recyclable Tetra Prisma carton and will retail for the same 5.99 pounds sterling price as the range’s 750 ml glass bottles” (Grocer, 2007, para 1-2). The FuturPak will be obtainable for Chardonnay and Shiraz, through the Coop and Nisa-Today’s from last year, prior to being exported nationwide. Drinks industries are being encouraged to curtail on packaging waste by the administration quango, Wrap. Australia’s Mudgee Valley and French producer Boisset’s French Rabbit were the pioneers of a wine in Tetra Pak into the UK three years ago (ibid). On the 31st of October 2000, the head of leading wine producer Southcorp proposed for national principles to safeguard the environment and the industry’s prospect. Southcorp Limited managing director and chief executive officer Graham Kraehe argued that the deep-seated challenge the industry confronts in achieving its improvement objectives over the subsequent 25 years was environmental management. Mr. Kraehe informed the First National Wine Industry Environment Conference it was high time for the Australian wine industry to abide to a set of code on sustainable environment management practices. Moreover, Mr. Kaehe assumed that, “What is becoming increasingly apparent is the need for an industry-wide approach that addresses not just the economic growth of the wine industry but its environmental sustainability. We developed standards for wine; we developed standards for labeling and a number of other things; it’s now time to develop standards for environmental sustainability” (aap, 2000, para 1-5). According to Bryonie Grieveson, marketing manager at BRL Hardy Europe, no fewer than seven Australian brands among the top 10 wine labels has on no account been more accepted by UK consumers. Moreover, according to him, in a progressively more cutthroat marketplace it is imperative for brands to have a frame of reference for differences and to have supplementary value; more than just a vineyard (grocer, 2000, para 1-5). Also, he argued that the proposed environmental sustainability of the wine industry is more likely to become successful if the shareholders will have a long-term partnership with the costumers, consumers and conservationists. This is due to the reality that consumers are becoming exceptionally conscious of environmental concerns and if they can see that they can make a difference, even though insignificant, it would still be an added worth to their purchase choice. The advocacy and sponsorship also provide importance to the retailer and gains benefit for a valuable cause. Therefore, while wine brands battle for rights of expression, voice and consumer expenditures, promotions become a gradually more important component of the marketing mix with a number of the larger brands venturing heavily above the line (ibid, para 11-12). Hence, Andrew Peace Masterpeace wine (pounds 5.99), which are previously only available in glass bottles, these wines can currently be purchased in Tetra Pak cartons, which use fewer resources in manufacturing and transfer. “Bottle Green launched two of its Australian Masterpeace wines from the Andrew Peace Winery into one-litre Tetra Prisma cartons last year to tap into the trend for environmentally friendly and convenient packaging. It was trialed in the Co-op and rolled out to Asda, Somerfield, Nisa-Todays, Budgens and Spar. A new rose is set to join Shiraz and Chardonnay and the packaging has been tweaked to give emphasis on the recycling credentials” (grocer, 2008, para 1). IV. Competitor Analysis The Australian wine manufacturing industry procures grapes and other primary ingredients which are processed into wine, port and wine-based alcoholic beverages. These products are sealed in glass bottles or barrels then put on the market for wine merchants as well as retail outlets such as high-quality liquor stores, hotels and restaurants. Several wineries also put up for sale their product straightforward to the public through cellar door sales. This group is composed of divisions primarily endeavoring in production or blending of wine, fermented cider or wine vinegar, or alcoholic beverages (M2 Presswire, 2007, para 3). Between 1990 and 1994 Australian exports improved from 37 to 114 liters. Along with 1994 export revenues increasing by 6% volume decrease 13% and strain on supply, Australia is entering a new period in wine exporting. The temporary objective is no longer bulk transportation to Sweden and New Zealand, but to safeguard existing shelf space, in the UK specifically, against other competitors while new sowing come into manufacturing in the subsequent years, when Australia will be ready to stimulate export expansion. Cautiously opt for the markets where there is space for increase in prices during periods of transition and warily select the markets where prices can be held. In various markets, such as UK, the moment it has lost shelf space it will consequently result in twice cost increment as much to purchase back, and Australia will require it in a few years when the time comes that its fresh harvests become popular. Moreover, with greater than 80% of revenue and volume selling to Australia’s top five markets, there are other foremost prospect markets to emerge, such as Germany, the Netherlands, the Far East and the USA, to distinguish only some (ibid, para 6-8). However, analyzing the wine industry in Australia, particularly Andrew Peace, with respect to California and Chile as mighty competitors, the Australian wine industry would definitely demonstrate inherent strengths and weaknesses. Australia has a substantial degree of political and economic security. Australia still has lesser cost land accessibility, comparative to California and sections of Europe. Just like the case of Andrew Peace, the expansive land that he inherited from his entrepreneur-minded father has a level of output that remains of an amount where the fruit can be extracted singularly from the estate. This splendid situation permits greater quality control, specifically as increasing conditions are ultimate, and the use of irrigation tolerates the production of flawlessly healthy and mature grapes. Moreover, Australian wine industry has highly improved technology and infrastructure, and has some well-built research organizations to sustain technological developments. Many would even agree that Australian wine industry has a established leadership attributes in several aspects of the word; thus, the crowd of Australian expatriate winemakers and technicians currently handling responsibilities in most wine-producing nations of the world. Andrew Peace Wines is one of the proofs that business success in Australia not only lies on the availability of land and resources but also to the type of leadership being conveyed (Nicholson, 1996, p. 71). Therefore, even though confronted by a highly-competitive nature of the wine industry, Andrew Peace Wines were still able to maintain their firm ground, which is the reputation of one of the finest wine-producing companies in the world. Furthermore, Australia has a diverse selection of wines that can gratify all the demands in a rather exceptionally unique way; for instance, Andrew Peace Wines’ the Shiraz grape that generates inimitable style to Australia. Andrew Peace followed the concept of regional bleeding to produce more high-quality wines; he did not limit his marketing strategy to regional designations to attract overseas buyers. With the export competitiveness of the wine industry, it has developed entries into all price classifications of the international wine market and became acknowledged as one of the influential in world class wine production. However, aside from the strong points of Australian wine industry, there are also shortcomings or limitations. One of the most pressing restrictions of Australia is water, which then eventually became a biased issue, to validate the economic workability of grapes over other kinds of crops. Australia has a comparatively high-labor cost which gives pressure to the wine industry, and which causes a lot of problem for Andrew Peace. Nevertheless, this scarcity in labor force is compensated by the development of the industry as a mechanized and rapidly growing wine industry in the world (ibid, p. 71). V. Market Segmentation, Targeting and Positioning In the late nineteenth century, the wine industry was afflicted with intermittent crises of overproduction, which resulted in the decrease of wine prices worldwide. Nevertheless, the ensuing international increase in demand for wine implied that prices recuperated relatively promptly, specifically when a bountiful grape harvest was pursued by a period of relatively low produce. The crucial factor affecting the price of the lower quality wines manufactured for mass production was the unstable quantity of the yearly grape harvest, while, on the contrary, the price of higher quality wines was resolved largely through the quality of the vintage. In reality, its vulnerability to price fluctuations brought about by yearly variations in the weather, wine is particularly dissimilar from other alcoholic beverages, such as beer and spirits. Several of the modifications that have occurred in the wine industry during the late twentieth century have been put up to decrease the extent of this unpredictability in order to assure the effective accumulation of revenues and profit by wine manufacturers (Unwin, 1996, p. 310). On the part of Andrew Peace, he has no winemaking background when his father Jim made a decision to invest in a vineyard in the 1980. At that time, seventeen-year-old Andrew went off to college to acquire the knowledge of the business and he finally returned in 1995 to manage the business venture, instigating a winery in Swan Hill, north-west Victoria. Andrew Peace wines are now accessible in 16 different countries, with a considerable proportion of his grapes also finding their way into quite a few of the more popular Aussie labels. However, the insufficiency in the background in wine gained benefit in some manner, proclaimed Andrew, during a summer vacation in Britain. He also said that “It means we have no restrictions on what we do and just create a good value for money package and give our consumers what they want” (McCoy, 2003, para 4). The outlook is typical of the immense tramps Australian wine has established in the last two decades, eventually at last deposing the French as the UK’s top seller. Nevertheless, although Andrew recognized his wines may not be the most excellent in the world, he is resolute that the consumer will always be on top. He responds to every mail sent to him personally and preparedly admits that the flavors of the wines are influenced to go well with the customer (para 5). Andrew upholds that Shiraz is the ‘quintessential’ Australian diversity but his collection incorporates all the popular selections, which are, “Cabernet, Chardonnay, Riesling, Semillon, Sangiovese, Malbec, and Viognier and retails from pounds 4.49 to pounds 5.99” (ibid, para 7). It may distress some of the old stagers who would fancy a little more veneration from their wine. Yet, the outspoken Andrew Peace approach is just about a snapshot in minuscule of the reason explaining the success of the wine industry in Australia. VI. Developing Market Tactics “Dorothy Gaiter and John Brecher are wine writers for the Wall Street Journal. Gaiter and Breecher tested 50 Dorothy Gaiter and John Brecher are wine writers for the "Wall Street Journal". Gaiter and Brecher tested 50 Australian chardonnays priced under $US20 per bottle in the US. Just seven of the wines received ratings of "good" or better. The writers claim that most relatively inexpensive Australian chardonnays are overly sweet and heavy and lack balancing acid and individuality. Andrew Peace Wines 2003 chardonnay, which sells for just $US6.49, received a "good" rating. An "okay" rating was given to two chardonnays by Yellow Tail, the most popular Australian label in the US” (Godwin, 2005, para 1). Producing wine is more than a family matter for Andrew Peace Wines. It’s a labor of love that acknowledges several of the competitors or rivals. Cathryn Peace, export manager, reported that production at the winery had improved six-fold in the past decade. According to her, in there initial years, they capitalize on 3,000 tonnes of grapes. Five years ago, it was 18,000 tonnes. She even admitted that her contribution at the winery has also altered to cope with the demand. She recounted that she used to accomplish multiple jobs, which include laboratory work and sample collection. Today, they have a team of wine makers and a grape contact employee in order for Andrew and her to concentrate on managing the personnel and the staff, export activities and the winery itself (Austrade, 2004, para 1-5). Moreover, Andrew Peace travels a lot nowadays to meet with his international partners in the global wine making industry. Moreover, according to Cathryn Peace, their wine making enterprise has never been a tedious venture because it has always been a family concern for them. They acqire hoards of grapes from their neighboring farms and they frequently converse about the progress of the vines and the varieties of plant that they will explore in the future. Also, the winery brought employment advantages because it has created many domestic jobs ranging from laboratory functions to transport, sales and customer service. Cathryn also mentioned some of their marketing strategies in order to expand which include the integration of UK and other potential markets in their export activities. She believes that the wine business has been efficient and flourishing because a family-managed business enterprise, they perform and accomplish a lot of tasks themselves hence they can offer customers competitive prices. The family Peace has everything produced, transported and delivered punctually which become another key to maintaining export customers contented with their product services (ibid, para 8-11). Cathryn also expressed her gratitude to Austrade which provided them with offices and opportunities to participate in trade exhibits such as Australia Week in Los Angeles previously this year and France’s Vinexpo. Moreover, Austrade’s Export Market Development Grants (EMDG) is also a valuable assistance for being able to make financial arrangements that makes a genuine competitive advantage. Nowadays, the aim of the family-managed Andrew Peace Wines is to expand on their exports. They have started aiming for the thriving places of Dubai and Czech Republic. For her last words in the interview, Cathryn summed up the success story of their wine enterprise, which is, “it’s just a matter of keeping up with the demands (ibid, para 15). Also, as another marketing strategy, the Andrew Peace Winery has launched a new website, , to keep the loyal customers updates with the goings-on in the successful family-owned and family-managed wine business enterprise. Andrew Peace regularly writes a monthly blog of news and perspectives and will position tasting suggestion notes for each of his wines online together with a competition to be the victor of wine for a single year. Andrew Peace Wines made the most out of the technological availability of the Internet to edge further on their competition with other colossal wine manufacturing companies. The value chain of the company, even though is a family-managed business, is not restricted to the conventional way of doing things in the business sector. Fortunately, the company has kept on its feet when it comes to the adjustment necessary in an ever-dynamic business and commerce world. VII. Market Forecasting Australians have always found drinking irresistible, but tastes have diverged. They are no longer contented with a mere glass or bottle of beer after a stressing day at work. Moreover, the young and stylish are frequently going up to bars and bottle retailer stores with more not reusable or passive income and a longing to be ‘in’ or to updated to the latest trends. Ready-to-Drink (RTD) mixed alcoholic beverages and first-class beers have mushroomed on the market, and wine is no longer conventionally assigned to the dining table. Nevertheless, the gross surge of RTD products is starting to dawdle while the cocktail culture carries on in its growth, as declared by the Estate Wines senior brand manager Travis Fuller. Likewise, he stated that “We are also seeing the perception of wine changing – where once wine was consumed during dinner only, it is now beginning to monopolize alcoholic beverage consumption. Beer consumption trends have also shifted in the full strength category with emphasis on quality rather than quantity, with imported and premium beers, such as Holsten Premium Bier, becoming the regular choice of consumers” (Ferret, 2004, para 4-5). Rodger Morton, of the Morton Corporate & Branding Consultants and general manager Jennifer O’ Callaghan has the same opinion on the pattern to an increasing quantity of RTDs such as “Bacardi and Coke, Bacardi Breezers, Whiskey and Coke, Bundy and Coke, Vodka and Orange, Irish Whiskey and Lemon, Lime and Bitters, FX vodka including raspberry and passion fruit, and Nobody Blue-Bourbon and Cola” (ibid, para 6). Equally asserts that wine persists to grow and develop, particularly in the export markets, whereas the demand for beer is in a stable decline. Similarly, George Dajczer of Andrew Peace Wines also recognizes the burgeoning of the RTD market. He said “It has exploded into consumers hands. The expansion of Australian wines into the world market is also noteworthy, as demonstrated by Yellow Tail wine” (ibid, para 10-13). In light of this current trend in consumer trends with regard to the consumption of wine, the growth of RTD was predicted by Andrew Peace Wines as a sudden change in the consumers’ preference for sweeter palates. Moreover, the company endeavored in forecasting the growth of a wine market that will address the different needs of genders. According to Fuller, “Many of the drinks are now being targeted at women or unisex offerings which can be enjoyed by both, particularly RTD such as Barcardi and Coke the male target, while the Bacardi Breezers the female target” (ibid, para 15). Hence, it can therefore be assumed that the increase in the awareness of the consumers regarding the wine industry spawned the emergence of the RTD market and its continued development. Again, Dajczer of Andrew Peace Wines argued that consumers are nowadays demanding the finest quality of wine for a lower purchase price. Also, the consumers are becoming more market savvy which consequently equip them of the knowledge regarding competitor variations and the exceptional quality of wine on the local market, yet again the promotion of international markets also with Australian wines on top 100 lists throughout the globe (ibid, para 17-18). VIII. Action Plans Since the trend nowadays in wine consumption is towards the RTD market, the Andrew Peace Wines will undergo modifications in their product orientation in order to accommodate this global wine consumption changes. The target consumers will not only be the adults but also the younger ones who are earning their own incomes. However, this sudden shift to the flavoring of the wine will be temporary since these young and dynamic people will only be preoccupied with the sweeter taste of RTD and will then eventually work their way to the long-established and time-honored labels as they grow old and mature. The promotional activities then and the marketing strategy will diverge into two, namely for the aged population and for the newly-arising young wine consumers. According to Dajczer, wine consumers are more predisposed to purchase quality rather than price. Several wines are even being marketed by price merely as if that is the optimal reference point of quality (ibid, para 23). Therefore, the marketing branding and promotion are the recent focus of the Andrew Peace Wines since these have become far more sophisticated and concentrated on in the contemporary period. In terms of the procedures and mechanisms to fill or bottle, Andrew Peace Wines will comprehensively adopt the use of Tetra Pak for environmental considerations and also aluminum cans for packaging. This innovation in packaging wines has been integrated as an essential part of a brand strategy (ibid). Furthermore, the company will more likely change the branding with stronger and more vibrant colors, brighter packaging and unique bottle contours. Works Cited "Grape Growing in Australia- Industry Market Research Report. (2007). M2 Presswire . A Year Down the Line.. (Acid Test). (2008). Grocer . Bottled with Love. (2004). Austrade . www. results.myphf.co.uk/framedresults.asp?/keyword=australian+made+products Drinking at a Premium. (2004). Ferret . www. results.myphf.co.uk/framedresults.asp?/keyword=australian+made+products Grocer. (2007). OZ Winery Opts for Greener Packaging. Grocer . McCoy, L. (2004). Raise a Glass: Open Mind for a Best Sell Wine. Birmingham Evening Mail . Nicholson, R. (1996). A New World Vine Revolution. Wine Industry Journal , 11 (1). Platman. (2005). Dining Style: Andrew Peace- An Australian Wine Success. The Birmingham Post . Raise a Glass: Open Mind for a Best Sell Wine. (2004). Bimingham Evening Mail . SA: Call for Wine Industry Environment Guidelines. 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