Being Strategic: French Winery Considers Indian Market

Lifestyle Changes Through Affluence

Between 2007 and 2010, India’s growth averaged 8 percent annually. This
economic success was due, in large part, to India opening its economy to foreign
competition, making changes in manufacturing and instituting measures to
encourage international trade. The signs of economic growth in India were clear:
new houses were being constructed in city suburbs, many more cars were using
the already crowded roads, and a new, affluent middle class had emerged. With
the growth of the middle class came a demand for luxury goods. One of these
was wine.

Rapid Growth in Demand

At the beginning of the 21st century, the wine market in India was almost
non-existent. By 2011, the market was expanding rapidly, with annual growth
running at over 30 percent. A new habit of wine drinking had been encouraged
by duty exemptions the Indian government made to boost wine consumption.
By 2011, there were three major companies in the Indian wine market; they
met about 90 percent of demand. However, the remaining 10 percent of the
rapidly growing market was large enough to accommodate more competitors.
Because the quality of Indian wine was still relatively low, some companies had
started importing foreign wines and rebottling them in plants in India for
domestic consumption.

A Small Winery Sees an Opportunity

Chateau Camargue was a small winery located in the Avignon region of France.
Dominated by the more popular wineries in the region, the company had
struggled in recent years, despite the glowing reviews its cellar( where wine is
stored ) had received. The owner of Chateau Camargue, Pierre Camargue,
attended an international wine show at the end of 2010 and was
intrigued( fascinated ) by the possibilities of exporting to India. The European
wine market was saturated, his company’s expenses were rising drastically, and
he needed a way to boost cash flow and expand market share rapidly. Exporting
to India seemed to be the ideal opportunity.

Learning Outcomes

This case study relates to the following learning outcomes from the module
Implementation of Market Entry Strategies in the course International Market
Entry Strategies:
• Determine the best approach to implement a market entry strategy, analyzing
the value of potential forms of each strategy.
• Implement a direct exporting strategy, whether exporting directly to foreign
consumers/businesses, or using intermediaries such as agents.
• Implement an indirect exporting strategy by finding and choosing an
appropriate domestic intermediary, such as a trading house or confirming house.
• Establish and manage foreign direct investments (FDIs) in the target market.

Case Study Questions

1. What are the main market entry barriers that Chateau Camargue faces in
entering the Indian wine market?

2. In your opinion, what would be the best market entry strategy for Chateau
Camargue to overcome its financial difficulties? Explain your reasoning.

3. Should Chateau Camargue consider a long-term foreign direct investment

strategy in India? Explain your reasoning.

Key Points

 The main reason for this can be attributed to the fact( Indian Wine market
is small ) that Indians preference for hard liquor and beer boasts nearly
98% of market share whereas wine with low ABV only has 2% market
share.
 religious and public opinion moving towards the prohibition.
 In the 1980s and 1990s, a revival in the Indian wine industry took place as
international influences and the growing middle class started increasing
demand for the beverage.