EssaysForStudent.com - Free Essays, Term Papers & Book Notes
Search

Raventós I Blanc at a Crossroads - Wine Company

Page 1 of 10

International Marketing Strategies

Raventós i Blanc at a Crossroads

Group A1

30.11.2017

Claire Beaudron, Ziqi Liu, Sindri Hannesson, Patrick Muturi, Dino Slijpen


  1. Situation of Cava Sector and Market

Cava refers to the type of “sparkling wine produced using the Champagne Method or the traditional method in specific winemaking regions of Spain” (Cano, Franch, Gimbert, 2009, p.4). Its primary market rests in Europe and is predominantly centered in Spain. In 2008, 220 million-plus bottles were sold in the cava sector, of which domestic sales in Spain contributed 89 million bottles, taking up nearly 40% of total sales. Approximately 66% of the remaining 137 million bottles, which constituted the export sales, went to Germany (51.4 million), the UK (30.5 million), Belgium and Luxemburg (9.9 million). Three major markets – Spain, Germany and the UK – consumed 74% of all bottles sold in 2008 (Cano, Franch, Gimbert, 2009, Exhibit 9).

The cava sector in Spain is dominated by Freixenet and Codorniu, who represent more than 75% of the total bottles sold in 2008 (Cano, Franch, Gimbert, 2009, p.6). Numerous wine-making companies are present nationally and internationally, directing their focus on different areas of product competitiveness, such as premium quality, low price and developed distribution channels. As a result, the cava sector in Spain encounters considerably fierce market competition.

In general, the international cava market is competitive with a tremendous potential for growth. Western European markets are usually fairly mature and face abundant consumption with highly demanding customers. Regardless of the lack of wine culture in emerging Northern and Eastern European markets, there is a great deal of potential. More distant markets, such as the U.S., Japan and China, are also expanding thanks to their increasing awareness of fashionable products along with a higher purchasing power (Cano, Franch, Gimbert, 2009, p.15).

  1. Raventós i Blanc's Competitive Position

Raventós i Blanc, a major player in the Spanish wine industry since the mid-1990’s, produces both wine and cava. The latter represents the core focus of the business, where most of the expertise lies. With both products, the company positions itself in a select niche market, where the target customers value quality and are not necessarily price driven.

The brand of Raventós i Blanc has historically been built on strong values such as the tradition and heritage of a family business, the high quality, uniqueness and character of the various wines, as well as the vineyards and overall property. The fact that Raventós i Blanc solely uses its own grapes in the production process can be a strength as much as a weakness. The quality of products is high, but the production capacity is limited, as are the resources allocated to innovation, technology and advertising campaigns. The results are a lack of economies of scale along with a low brand recognition in the market.         

In Spain, Raventós i Blanc uses a well-established distribution network. Around fifty distributors place the majority of the company’s products in high and medium-high-end restaurants and specialist shops. The company does not have the capacity to both produce volumes for the mass market and simultaneously keep the superior quality. Furthermore, their brand recognition is too low to compete with luxury products like champagne.

In mature international markets, cava is generally perceived as being a low-quality product. Consequently, it faces competition from local low-quality products and from luxury products like champagne.

In general, Raventós i Blanc operates in markets where customers are generally not educated when it comes to quality and price. This poses some restrictions on business opportunities, as quality and expertise are the major strengths of this company. Please refer to Annex 1 for a detailed analysis of the factors affecting their position, both nationally and internationally. In order to improve their competition stance, several strategic alternatives are possible.

  1. Raventós i Blanc's Strategic Alternatives

Raventós i Blanc faces decisions in the areas of Production, Branding & Market Positioning, and Exports & Markets:

  1. Production: The decisions to make in regards to production are whether to keep producing wine or solely focus on cava, and whether or not to increase production by using grapes that are not grown on the own estate.
  2. Branding & Market Positioning: Raventós i Blanc has three options. First, stick to the high-quality niche market they are currently in. Second, go to the mass market. Third, compete with well-known luxury products, like champagne.
  3. Exports & Markets: Raventós i Blanc has to decide if it want to focus on the Spanish market or increase its international presence. For the latter, it is also important to decide whether to focus on mature markets or emerging ones.

The company operates in a niche market, and producing high-quality products is part of their DNA. The market of sparkling wines is highly fragmented and end-consumers generally lack expertise when it comes to quality and price. That being said, it seems highly unadvisable to move into the mass market, as this would entail a change in the company’s core values (such as changing the tradition of producing solely from grapes grown on the company-owned vineyard).

Competing with well-known luxury products, such as champagne, seems to be unfeasible in the current situation. Champagne has a distinct reputation all over the world, and most customers lack the knowledge to see cava as a potential substitute. This leaves us with three reasonable and suitable options for Raventós i Blanc:

Download as (for upgraded members)  txt (15.1 Kb)   pdf (314.7 Kb)   docx (86 Kb)  
Continue for 9 more pages »