BRL Hardy:

Globalizing an Australian wine

company

Section F Group 1

Aakanksha Kirti
Ashish Katiyar
Dibyalaxmi D
Nikhil Gupta
Priya Chandak
Pusyakant Tiwari 17/338

1. Should Mr. Millar approve Carsons proposal to launch Distinto? Defend your response
with strong evidence and arguments.
Carsons main idea was to build a brand with a unique image built around the Mediterranean
lifestyle which included passion, warmth, romance and relaxation. He had decided to market it in
such a way so as to link it strongly to food. This would give BRLH an opportunity to put forth a
very different view of wine to an average wine consumer and thus gain exposure to a new
market.
According to us, Millar should approve Carsons proposal. Below are the arguments for and
against our recommendation and also an explanation as to why the above mentioned decision
should be taken:
Arguments for approval:
Risk Mitigation: Grape harvest was known to be vulnerable to weather, disease and other
factors which affected the quality and quantity of wine. Sourcing from multiple regions and
involving only a few key suppliers would help BRLH to hedge against the uncertainties
Market potential/ Portfolio expansion: UK market is basically driven by brand power than
cost. Local retailers own brand dominated the market with over 50% of the market share.
Grocery chains generally shifted their focus on key suppliers who can supply them wide
range of quality wines. So, a large product portfolio would lead to better visibility in the
grocery stores.
Customer segments: Unique brand offerings would help capture a new consumer group. An
opportunity is there to build their brand image in Europe in size, impact and reputation.
Strengthened operations: Projected Australian red wine shortage could be dealt with
alternative Italian red wine
Other benefits: It held potential to not only serve the whole European market but also be
exported to other countries such as Latin America and US

Arguments against approval:

Cannibalization: Though Distinto would be filling the lower price points ($3.49-$4.49), its
higher range ($4.99 - $5.99) could possibly cannibalize Hardys core offerings - Stamps and
Nottage Hill
Focus :Carson is already loaded with commitments. Distinto might distract Carson which
may lead him to lose focus
Mapocho failure: Failure of Mapocho launch had turned the management at headquarters a
little risk averse. In addition there was a doubt the strength of the European sales
organization to carry another brand in addition to (struggling) Mapocho
Residual risk: Residual risk is the risk remaining after the risk treatment- after
implementation all the controls needed. We can clearly see that failure of Distinto ran the
risk of excess inventory and contract commitments, a case in point of such a risk.
Resource crunch: Distinto could overload human resources who were already far pushed
because of the rapid expansion in the previous five years. This is because it be huge effort in
terms of brand building and developing product portfolio awareness among customers and
would directly compete with the existing Hardy-range of products under the same parent

company.
In spite of the above mentioned reasons against approvals, we feel that most of them can be
overcome. Failure of Mapocho could be treated as a learning experience and thus would help the
team avoid all the mistakes it had done previously. The arguments of Carsons dilution of focus
and over-stretched human resource could be dealt with if the brand Mapocho is pulled out of the
market. (Mapocho risked 400,000 euros, and a golden opportunity to capture its over expected
demand- 150,000 against 80,000 originally planned)
Since it has not been performing, a better ROI would be in launching a fresh new brand,
targeting a new market and carefully avoiding the mistakes made before. Distintos branding
and marketing initiatives were thought out to be unique. Its boldly distinctive labels and other
packaging designs would make it stand out. Its marketing strategy of linking it strongly to food
puts it in a very different customer-offering bucket. Thus, this sort of strong branding initiative
may mean that it doesnt cannibalizes Hardys Stamps and Nottage Hill. Therefore, the decision
to choose Distintos is a go.

2. What recommendations would you make to the organization concerning the conflicting
proposals for Kelleys Revenge and Banrock Station? Clearly identify a possible HQ
decision and supporting evidence as well as a Subsidiary perspective before making your
choice.

As the HQ is unhappy with the performance of the Mapocho project and is raising doubts about
the launch of Dinstinto, as well as misgivings about Kellys Revenge when Banrock Station is
backed by proven success records, we believe that the organization should launch Banrock
Station and not Kellys revenge.

Reasoning
1. Clash of cultures: Senior management would be appeased that though Distinto has
been launched despite their misgivings, the subsidiary company is conceding on at least
one issue. This would balance the negotiations and may help restore harmony in a
relationship marred by discord. The underlying motivations for the clash of ideas, is in
the culturally dissociate legacies of the merged organizations. Concerns are raised if the
bulk wine oriented BRL colleagues really understood international marketing. A feeling
of us versus them is there.
This creates a palpable tension in the organization. We can see that Stephen davis has
been appointed as an intermediary in shared reporting relationship to Millar, which is
because of the inherent tension. (Exhibit 5). He is discontented with the state of things,
and expresses his frustration by labelling management control as a tight leash.
2. Strategic fit: Banrock Station with its brand image as an environmentally responsible
product(Good Earth Fine Wine) with part of its profits allocated to conservation

groups, will be a more strategic fit as far as the organizations new strategy to become
one of the worlds first truly global wine companies known for its quality is concerned.
3. Target customer: Women represent a sizeable portion of the U.K. market, and the
brand of Banrock station would appeal to them more than Kellys revenge which is
mainly targeted at the youth.
4. Trusted Global brand: The idea of Kellys Revenge is unconventional and more risky,
being unproven. Further, Banrock stations success in Australia and New Zealand
(there objective was to try 20% things and getting 80% right rather than doing two big
things- means that much thought had been given to conceptualize it) where it became
the largest selling imported brand makes it look like a much more attractive choice.
5. Organizational politics: Though, the U.K. team argued that the design, environmental
positioning was not that appealing for their customer but there are serious doubts about
Paul Browne playing politics to block Banrock Station. The management even got the
feeling that he had manipulated the customer reviews of Banrock Station in U.K. He
was acting as a barrier rather than a facilitator of communication due to his own vested
interests in promoting Kellys Revenge,
6. Brand personality: Davies and the Reynella based staff had more experience in
marketing Australian wine and they felt that Kellys Revenge was kitsch, downmarket
and gimmicky. The labelling of Ned Kelly- the outlawed bushranger, gives a fun brand
personality that the young wine-enthusiasts might associate with that is rebelliousness.
But, that doesnt gel well with the top- managements concept of the parent brand. They
comment that by decentralizing too much responsibility, they lose control of brand issues.
They wanted to take more control as the brad owners.
7. Weak support: Even Millar who is an unbiased audience in this case, did not like the
idea behind Kellys Revenge. Yet, he gave it a shot by getting reviews from ASDA, a
U.K. grocery chain where the response was again not that great.
8. Resource crunch: The constraint on resources if both Distinto and Kellys Revenge are
launched by the U.K. subsidiary would be too huge. For Banrock station, only the
distribution would have to be managed. Aggregation here, seems more logical than
adaptation.
We can see that the sales per employee of BRL Europe has jumped from 348 in 1990 to
1007 in 10 years span, which supports the labor concerns. (Exhibit 4)