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Case study Pepper River writing

1. Read the article below about Pepper Creek, an Australian winery.

Klein wins gold

Wine grower Johnny Klein celebrated last night. For the third time in a forty-year career, his Pepper River Chardonnay has won a gold medal at the South Australia wine festival. Im over the moon, was Johnnys reaction. It just shows that traditional methods will always produce a better wine than the tasteless, low quality wine that todays multinational conglomerates are selling. Pepper River is well-known in the region for its traditional but expensive production methods. The winery was founded in the 1930s by Johnnys father, Jacob, who brought French know-how and methods with him when he emigrated to Australia from Alsace. Johnny took over Pepper River in the mid sixties and as the Australian publics taste for wine developed, the family business grew. In recent years, however, unfavourable climatic conditions and fierce competition from the industrys majors have made life difficult for Johnny Klein; only the exceptional marketing skills of his daughter Sara have kept the winery in business. Just a few days away from his sixtieth birthday, Johnny is looking forward to handing over the family business to Sara in the near future. Sara has done a terrific job in building up a loyal customer base over sixty percent of our production is sold to customers who have been with us for more than five years, he says. I am confident we can continue to satisfy discriminating customers who know the real value of traditional quality. 2. Sara sent the following email to her father: Dad, we need to talk when I get back from Melbourne. I finally managed to meet Mr. Parker, but he doesnt want our wine. The usual reasons were too expensive, we dont do softpacks and we dont do blends. Whats more, theyre not interested in distributing Pepper unless we increase our volumes by around 40%. Look, Dad, you really have to take this seriously. I know you make the best wine in the state, but we just cant compete with the majors - not on price, not on volume, not on transport & packaging costs when you insist on bottles not softpacks. And as long as you refuse to blend, were going to lose out every time we have a bad summer. Australia now exports more than half of its wine production with much better values per litre than at home were losing market share in S. Australia, were having to cut margins and were getting nowhere on the export market. I had another call from Chris Willow at WWM / their offer to join the group is still open. I know it means change, but its the only way. WWM shipped 16 million litres last year mostly to the US. We can be part of their success if you cant beat them, join them!

3. Information on the wine export market. According to the latest figures, the main world wine exporters are: Italy (27%), France (23%), Spain (14%), Australia (6%), Others (30%).

4. The table below gives information about Australian wine exports in 2011.

Australian wine exports in 2011 United Kingdom USA New Zealand

Volume in ML (million litres) 216 120 26.7

% Change (as compared with 2010) 17.9 53.3 14.7

Value/Litre $4.19 $6.17 $3.49


You are a management consultant and you were invited to provide solutions. Use the information above to analyse the current situation of the company in terms of Strengths, Weaknesses, Opportunities and Threats. Based on your findings, write a report addressed to Johnny Klein including the strategy you propose the management should adopt. Write between 250-300 words.