european wine case wine manufactures buyers – off-trade, on-trade suppliers – grape growers,...
TRANSCRIPT
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European Wine Case
• Wine manufactures• Buyers – off-trade, on-trade• Suppliers – grape growers, bottles
• How to use and analyze market data• Datamonitor, Euromonitor
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Industry Analysis
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Rivalry Among Competitors
Rivalry is greatest when:• Competitors are numersous or are roughly
the same size• Industry growth is slow• Exit barriers are high• Rivals are highly committed to business and
have leadership aspirations• Firms cannot read each others signals
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Power of Buyers
Power increases if:• Few buyers and larger purchase volumes• Industry products are standardized• Buyers face few switching costs• Buyers can threaten to integrate backward
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Power of Suppliers
Power increases if:• Is more concentrated than the industry it sells
to (Microsoft)• Supplier group does not depend heavily on
the industry for its profits• Switching costs are high (Bloomberg
terminals)• Suppliers offer differentiated products (Drugs)• Suppliers can threaten to forward integrate
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Threat of New Entrants
Barriers to entry1. Supply-side economies of scale (Intel)2. Demand-side economies of scale (ebay)3. Customer Switching costs (SAP software)4. Capital requirements5. Incumbency advantages regardless of size6. Unequal access to distribution channels7. Restrictive government policies
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Threat of Substitutes
• It offers an attractive price-performance trade-off
• Cost of switching is low
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Broader Industry Map
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Rivalry
• Highly fragmented (top three hold less than 10% share)
• Forward integration (winemakers>retail): rare• Backward integration (winemakers>grower):
common• New players restricted by regulation• Vulnerable to substitutes
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Buyer Power
• Supermarkets/Hypermarkets (41.8%)• Retail concentration varies by country (FR/UK
concentrated Carrefour/Tesco, others competitive)
• Switching costs moderate• Produces can differentiate products• Consumers demand variety• Backward integration unlikely
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Supplier Power
• Vertically integrated business, but:• Large growers also source grapes, usually for
lower priced products• Independent growers can find alterative
markets (sugar) and forward integrate• Quality is important
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Market Entry
• New company, diversifying, exporting• Government regulation of alcoholic beverages• Import taxes (moderate, except NO, SE)• Advertising and drinking age regulations• Margins low on non-premium products
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Substitutes
• Alcoholic beverages: spirits/beer• Low switching costs• Per unit costs higher/lower (spirits/beer)• Need for refrigeration• Channels: some must have (restaurant) others
don’t• Use: occasions (i.e. champagne)
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How can the European Market be Segmented?
• Geographic• Demographic• Psychographic• Behavioral
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PsychographicInterestsActivitiesOpinionsHabitsLifestyleHobbies
Behavioral How people use the
product What roles people have in
the buying process How people respond to the
product
CountryRegionGeographical BordersLanguageHistorical geo-political
Age and life cycleLife StageIncomeGenerationSocial classGender
DemographicGeographic
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France off-trade vs. on-trade
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Pricing
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Projections
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Emerging Market Trends
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China Case Study
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China Case Study
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