Description
The report explaining the globalizing wine the BRL hardy
BRL Hardy – Globalizing an Australian Wine Company
Group 10 (Sec- A)
The analyst felt that the culture of the two companies to be diametrically opposite. Hardy’s culture was considered to be “polite and traditional” where as the culture of BRL was considered to be “aggressive and commercial”. The strategies of the two were also different, Hardy was known for its quality wines on the other hand BRL was known for fortified, bulk and value wines. Even though there was such a stark difference in what both the merged companies believed in, they managed to function quite efficiently. The reasons this success could be attributed to the following points• • • • The basic strategies of the two turned out to be complementary in nature to each other BRL had the raw materials, funds and disciplined management at the same time Hardy’s had expertise in marketing, brands and wine-making. Hardy was much more experienced in exporting its wines to UK and the rest of the European countries, which was not the same in BRL When the restructuring of the merged entities was done then the majority of the top management was chosen from the BRL group. They were better equipped to deal with this new situation. If anyone wanted to be noticed or promoted then they had to show it through their work. The new strategy that was decided made them concentrate on the Australian market first and then concentrate they will work on improving their standing in the international market There was a stronger commitment to quality. This aspect was brought in by the Hardy group. Integration of the taskforce of the two groups helped in achieving economies of scale
SUC C E S S O F B R L & H A R DY ME RG E R
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• •
RE LA T I O N S H I P B E T W E E N D A V I E S & C A R SO N
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Davie’s first priority was to clean up the operating problems that were source of the financial problem. After sorting out these issues, he wanted to focus on building on their strengths, starting with their position in the UK market. Christopher Carson wanted to relabel, reposition and re-launch Stamps & Nottage Hill which accounted for 80% of UK market as he felt that the image of these brands had been eroded in UK with time. But he found it extremely difficult to convince Davies about his plans although Davies yielded in the end which resulted in the sales of these brands quadrupling after the re-labelling and
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re-launch. The disputes between the two primarily centred on the marketing strategies especially branding and labelling issues.
D’istinto should be launched as it has a unique image and can be positioned as a lifestyle product. The product is proposed to be associated with Mediterranean lifestyle- passionate, warm, romantic and relaxed and strongly linked to food which would have a universal appeal. Hence, D’istinto can be positioned as a truly global brand which will fulfil their strategy of “concentrating on branded bottled sales for growth”. The idea of attaching a booklet to the bottle describing the wine will enable the company to build its database of wine and food loving consumers who could serve as prospective buyers for the company. It would provide buyers with another product in the lower and mid-price segment.
Miller avoided some of the problems by re-structuring the reporting lines of Carson where Carson would report directly to Miller on the company’s profit performance in UK but through Davies on marketing and branding strategies. D ’ I ST I N T O : SH O U LD I T B E LA UN C H E D
Strength • Unique Image • Lifestyle Product • Strong Link to food • Lower to Mid Price Opportunities • Establish it as a global brand • Fulfil strategy of concentrating on branded bottle for growth • Fill the gap in the price range of A$3 – A$4
Financial factors that need to be considered are contract commitments and excess inventory. Strategic factors that will play a critical role in the success of the product are allocation of management time, corporate funds and human resources. Cannibalisation of BRHL’s fighting brands Stamps and Nottage Hill was also a big possibility considering the price overlap of D’istinto’s extended line with these lines, and therefore an issue to be considered before the launch of D’istinto. The product also had very high forecasted sales numbers which seemed to be overstretched considering the present sales of the other brands.
Weakness • Overlap with brands in mid-range price • Low commitment from non-UK management Threat • Cannibalize Hardy’s own Brands (Stamps & Nottage Hill) • Excess Inventory • Contract Commitments • Risk of Distraction for management
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Therefore on the basis of SWOT, we conclude the product should be launched.
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K E LLY ’ S RE V E N G E V S B A N RO C K ST A T I O N S W O T F O R B A N RO CK S T A T I O N
Strength: • Environmentally responsible product • Profits allocated to conservation groups • “Good earth, fine wine” Opportunities: • Potential of being a global brand • Could target consumers opting for medium range to premium variety (A$4.95 – A$ 7.95) Weakness: • Label design was dull and colorless to stand out on super market shelves • Limited appeal to UK consumers
Threats: • Other brands in the same segment • Cannibalization
S W O T F O R K E L L Y RE V E N G E :
Strength: • Quirky and young image portrayed • Product is totally designed for the UK market Opportunities: • Wine consumption was promoted in the youth through this brand • Helped in increasing customer base for higher end wines (Nottage Hill & Stamps) Weakness: • Australian management considered it down market and gimmicky • UK grocery chains did not consider it to be a quality product Threats: • Cannibalization of BRL Hardy’s own products • Wrong positioning of the product in the mind of the consumers
After comparing and contrasting the SWOT analysis for Kelly’s Revenge and Banrock Station BRLH should focus on Banrock Station as the ideology of the Banrock Station is in line with BRL Hardy. In addition, this wine is already established in the Australian and New Zealand market thereby proving to be a good and market tested product. BR LH ’ S I N T E RN A T I O N A L P RE SE N CE : S UST A I N E D C O M P E T I T I V E A D V A N T A G E ? In order to analyze BRL Hardy’s international presence, issues to consider in exploiting the global presence are as follows: Adopting to local market differences – At BRL Hardy, labelling, pricing and branding are centralized at the parent company whereas the authorities at local markets are responsible for sales, distribution and promotion strategy.
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The company has also designed products to cater to specific geographical regions like Kelly’s Revenge to exploit the opportunities in UK market and Banrock Station to target Australian market. Exploiting economies of global scale According to Miller, three core strengths of the BRL Hardy were World-class production, Global brands and International distribution. Acquisition of Whiclar and Gordon had provided BRLH economies of scale in its sales and distribution activities. Exploiting economies of global scope
Compared with a hoard of local distributors, importers and agents a single local importerdistributor can provide value for the global customer through greater efficiency in the operations and greater reach across countries, faster and smoother coordination across markets and lower transaction costs. Tapping the optimal locations for activities Carson recognized that sourcing from multiple regions was one way to minimize risk and hence the company developed partnership and JV with farmers from different regions. Maximizing knowledge transfer across locations
BRLH ensured the farmers in Sicily that by developing the partnership with the company, they will gain access to the technological know-how of the company and utilize the same to increase their productivity. From the analysis above, we can conclude that BRL Hardy would be able to sustain its position in the international market.
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doc_156493025.pdf
The report explaining the globalizing wine the BRL hardy
BRL Hardy – Globalizing an Australian Wine Company
Group 10 (Sec- A)
The analyst felt that the culture of the two companies to be diametrically opposite. Hardy’s culture was considered to be “polite and traditional” where as the culture of BRL was considered to be “aggressive and commercial”. The strategies of the two were also different, Hardy was known for its quality wines on the other hand BRL was known for fortified, bulk and value wines. Even though there was such a stark difference in what both the merged companies believed in, they managed to function quite efficiently. The reasons this success could be attributed to the following points• • • • The basic strategies of the two turned out to be complementary in nature to each other BRL had the raw materials, funds and disciplined management at the same time Hardy’s had expertise in marketing, brands and wine-making. Hardy was much more experienced in exporting its wines to UK and the rest of the European countries, which was not the same in BRL When the restructuring of the merged entities was done then the majority of the top management was chosen from the BRL group. They were better equipped to deal with this new situation. If anyone wanted to be noticed or promoted then they had to show it through their work. The new strategy that was decided made them concentrate on the Australian market first and then concentrate they will work on improving their standing in the international market There was a stronger commitment to quality. This aspect was brought in by the Hardy group. Integration of the taskforce of the two groups helped in achieving economies of scale
SUC C E S S O F B R L & H A R DY ME RG E R
•
• •
RE LA T I O N S H I P B E T W E E N D A V I E S & C A R SO N
Page
Davie’s first priority was to clean up the operating problems that were source of the financial problem. After sorting out these issues, he wanted to focus on building on their strengths, starting with their position in the UK market. Christopher Carson wanted to relabel, reposition and re-launch Stamps & Nottage Hill which accounted for 80% of UK market as he felt that the image of these brands had been eroded in UK with time. But he found it extremely difficult to convince Davies about his plans although Davies yielded in the end which resulted in the sales of these brands quadrupling after the re-labelling and
2
re-launch. The disputes between the two primarily centred on the marketing strategies especially branding and labelling issues.
D’istinto should be launched as it has a unique image and can be positioned as a lifestyle product. The product is proposed to be associated with Mediterranean lifestyle- passionate, warm, romantic and relaxed and strongly linked to food which would have a universal appeal. Hence, D’istinto can be positioned as a truly global brand which will fulfil their strategy of “concentrating on branded bottled sales for growth”. The idea of attaching a booklet to the bottle describing the wine will enable the company to build its database of wine and food loving consumers who could serve as prospective buyers for the company. It would provide buyers with another product in the lower and mid-price segment.
Miller avoided some of the problems by re-structuring the reporting lines of Carson where Carson would report directly to Miller on the company’s profit performance in UK but through Davies on marketing and branding strategies. D ’ I ST I N T O : SH O U LD I T B E LA UN C H E D
Strength • Unique Image • Lifestyle Product • Strong Link to food • Lower to Mid Price Opportunities • Establish it as a global brand • Fulfil strategy of concentrating on branded bottle for growth • Fill the gap in the price range of A$3 – A$4
Financial factors that need to be considered are contract commitments and excess inventory. Strategic factors that will play a critical role in the success of the product are allocation of management time, corporate funds and human resources. Cannibalisation of BRHL’s fighting brands Stamps and Nottage Hill was also a big possibility considering the price overlap of D’istinto’s extended line with these lines, and therefore an issue to be considered before the launch of D’istinto. The product also had very high forecasted sales numbers which seemed to be overstretched considering the present sales of the other brands.
Weakness • Overlap with brands in mid-range price • Low commitment from non-UK management Threat • Cannibalize Hardy’s own Brands (Stamps & Nottage Hill) • Excess Inventory • Contract Commitments • Risk of Distraction for management
Page
Therefore on the basis of SWOT, we conclude the product should be launched.
3
K E LLY ’ S RE V E N G E V S B A N RO C K ST A T I O N S W O T F O R B A N RO CK S T A T I O N
Strength: • Environmentally responsible product • Profits allocated to conservation groups • “Good earth, fine wine” Opportunities: • Potential of being a global brand • Could target consumers opting for medium range to premium variety (A$4.95 – A$ 7.95) Weakness: • Label design was dull and colorless to stand out on super market shelves • Limited appeal to UK consumers
Threats: • Other brands in the same segment • Cannibalization
S W O T F O R K E L L Y RE V E N G E :
Strength: • Quirky and young image portrayed • Product is totally designed for the UK market Opportunities: • Wine consumption was promoted in the youth through this brand • Helped in increasing customer base for higher end wines (Nottage Hill & Stamps) Weakness: • Australian management considered it down market and gimmicky • UK grocery chains did not consider it to be a quality product Threats: • Cannibalization of BRL Hardy’s own products • Wrong positioning of the product in the mind of the consumers
After comparing and contrasting the SWOT analysis for Kelly’s Revenge and Banrock Station BRLH should focus on Banrock Station as the ideology of the Banrock Station is in line with BRL Hardy. In addition, this wine is already established in the Australian and New Zealand market thereby proving to be a good and market tested product. BR LH ’ S I N T E RN A T I O N A L P RE SE N CE : S UST A I N E D C O M P E T I T I V E A D V A N T A G E ? In order to analyze BRL Hardy’s international presence, issues to consider in exploiting the global presence are as follows: Adopting to local market differences – At BRL Hardy, labelling, pricing and branding are centralized at the parent company whereas the authorities at local markets are responsible for sales, distribution and promotion strategy.
Page
4
The company has also designed products to cater to specific geographical regions like Kelly’s Revenge to exploit the opportunities in UK market and Banrock Station to target Australian market. Exploiting economies of global scale According to Miller, three core strengths of the BRL Hardy were World-class production, Global brands and International distribution. Acquisition of Whiclar and Gordon had provided BRLH economies of scale in its sales and distribution activities. Exploiting economies of global scope
Compared with a hoard of local distributors, importers and agents a single local importerdistributor can provide value for the global customer through greater efficiency in the operations and greater reach across countries, faster and smoother coordination across markets and lower transaction costs. Tapping the optimal locations for activities Carson recognized that sourcing from multiple regions was one way to minimize risk and hence the company developed partnership and JV with farmers from different regions. Maximizing knowledge transfer across locations
BRLH ensured the farmers in Sicily that by developing the partnership with the company, they will gain access to the technological know-how of the company and utilize the same to increase their productivity. From the analysis above, we can conclude that BRL Hardy would be able to sustain its position in the international market.
Page
5
doc_156493025.pdf