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Section V: The Business of Wine Chapter 17: The Marketing and Distribution of Wine.

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Presentation on theme: "Section V: The Business of Wine Chapter 17: The Marketing and Distribution of Wine."— Presentation transcript:

1 Section V: The Business of Wine Chapter 17: The Marketing and Distribution of Wine

2 History of the Wine Business  Wine has been made in America going back to the nineteenth century.  During this time, Europe produced superb wines due to advances in chemistry and microbiology.  France established its wine classification system.  Wine industry expanded; transportation methods improved  Phylloxera struck in the mid-1800s.  Prohibition was another serious setback in 1919.  Prohibition was eliminated in 1933.

3 State Laws on Selling and Transporting Wine  Control states The state is the sole distributor of alcohol  Open states Free enterprise; private companies operate at each level Three-tiered system of distribution: producer to distributor to retailer/restaurant On or off-premise licenses  Partial control states

4 Wholesale Sales Strategies  Sales reps regularly visit their accounts to keep customers abreast of what is developing.  Offer buyers a chance to taste current offerings  Offer periodic discounts for certain wines A post off is a discount applied to a specific wine for a specific period of time.  Provide additional opportunities for wine tasting such as Trade tastings.

5 Profitability in the Wine Industry  There are several basic formulas that show whether a pricing decision will be effective. Freight on Board price Laid-in-Cost Wholesale Price and Margin on Sell

6 Strategic Marketing  Cost Leadership: The firm will deliver the same benefits as competitors but at a lower price  Differentiation advantage: A firm delivers benefits that exceed those of competing products  Focus Strategy: this is the most intense strategy, and addresses a specific segment of the market.

7 Strategic Marketing in the Wine Industry  Small boutique wineries depend on producing wines that are superior in quality to wines produced by competing wineries in the same, or a close, region.  Such wines are unique in the level of their quality, their limited numbers and their regional identity.  They have a distinct inherent differentiating advantage.  Wines of this level of quality often have a demand that exceeds their supply, and therefore are expensive.

8 Branding and the Wine Industry  The majority of wines sold in the United States are brands that are able to deliver the same benefits as those of competing products but at a lower price.  Brands employ the first marketing strategy known as cost leadership.  Brand wines are often defined by the price at which they are sold.  The wine industry has become dependent upon branding.

9 Branding and the Wine Industry (cont.)  Brands now control the US wine market.  Branding helps differentiate a product from the competition by clearly defining its differentiating characteristic.  Marketing team must convey a consistent message through all aspects of communication and promotion.  In order to be successful today, all marketers must incorporate the Internet into brand promotion and sales efforts.

10 Alternative Methods of Selling Wine  Wine should not be shipped by ship, truck or plane during the summer or the depths of winter cold.  Prior to the arrival of the newest vintage, many retailers seek to move the remains of the previous vintage to make room for the new wines  There may actually be special discounts to the consumer.

11 Buying Futures  Buying futures means that the wine is purchased before it is actually released to the market.  Ensure collectors have access to the wines  Wine is purchased and paid for before the buyer can possess it.  Helps the winery: Buyer pays up front, thus supporting the winery Ensures the wine gets sold

12 Buying From Auctions and Private Cellars  The primary way for restaurants to acquire older wines is to purchase them at public auction.  Bidding is highly competitive.  Auctions offer access to rare caches of wine.


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