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Great Southern & Margret River Distilling Companies

Course
Institution affiliation
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Executive summary
Great Southern & Margret River Distilling Companies is an award-winning distillery
company in Australia that focuses on production of premium whiskies and gins. To further grow
the company intends to enter a foreign market, particularly India. India is a wide market that
houses other markets within it and as such provides a good starting point for the company.
India is a very attractive market for the company due to various factors such as a very high
demand for whisky, a growing preference for white liquor, an interest in the western culture
and a change in the drinking culture in the country, where younger adults and women are also
indulging in drinking. Great Southern & Margaret River Distilling Companies is an already
established brand and therefore is likely to appeal to consumers with disposable incomes who
are attracted to foreign liquor brands as opposed to local brands.
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Contents
Executive summary..........................................................................................................................2
Introduction.....................................................................................................................................4
Entry mode of Great Southern & Margaret River Distilling Company............................................5
Exporting......................................................................................................................................5
Why export and not Strategic partnership or joint ventures......................................................6
Strength of Great Southern & Margaret Distilleries........................................................................7
Weakness of Great Southern & Margaret Distilleries.....................................................................8
Operational strategy and corporation objective for Great Southern & Margaret Distilleries........8
Corporate objective.....................................................................................................................8
Operational strategies..................................................................................................................9
Organizational design for Great Southern & Margaret Distilleries.................................................9
Financial requirements for Great Southern & Margaret Distilleries.............................................10
Staffing policy for Great Southern & Margaret Distilleries...........................................................11
Conclusion......................................................................................................................................11
References.....................................................................................................................................12
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Great Southern & Margret River Distilling Companies

Introduction
Great Southern & Margret River Distilling Companies is a renowned small medium
enterprise based in Australia that produces quality spirits, particularly whiskey and gin. The
company was founded in 2004 by Cameron Syme and currently operates three distilleries, of
which two are under the Great Southern Distillery umbrella and are located in Porongngurp and
Albany. The other distillery is under the Margaret River Distilling Co umbrella (Great Southern &
Margaret River Distilling Companies, 2020). Given the success that the company has
experienced over the years as will be later evidenced, the Great Southern & Margret River
Distilling company intends to expand to India. India is a great potential for the company due to
the preference for whiskey in the country as well as tap to the increasing upper middle-class,
young professionals and entrepreneurs and other elite consumers with disposable income, an
interest in the western culture and who prefer drinking imported liquor exposed to them during
their travel.
Entry mode of Great Southern & Margaret River Distilling Company

Exporting
The Great Southern & Margaret River Distilleries intend to enter the India market via
exports. Exporting is the sale of products and services, which are sourced from home countries,
to foreign countries. It is mostly preferred by small medium enterprises due to the avoided
costs of establishing operations in a new country and high flexibility (Laufs & Schwens, 2014).
As such, this entry mode fits with the Great Southern & Margaret Distilleries which is a small
medium enterprise that is less than two decades old and that has managed to set up three
distilleries in its home country Australia, with the most recent being set up not more than five
years ago. Given the mode of entry, the Great Southern & Margaret River Distilling Company
intends to enter the India market as a foreign imported liquor. Imported liquor forms a very
small percentage of alcohol consumption in India. It is usually consumed by the rich and upper
middles class in metropolitan cities and is popular among young professionals and
entrepreneurs who desire to migrate from local brands to international brands. International
exposure to imported liquor during travel has also led to its increasing popularity (Mathur,
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2014). This is in line with the Great Southern & Margaret Distilleries brand which focuses on
producing very quality spirits that cater to a very specific and relatively small market segment.
The company therefore does not intend to own the majority of the market share in India, but
rather cater to upper middle class and elites.
Chung, Lu Wang and Huang (2012), explain that in order for SMEs to achieve success
with exportation, they need to focus on effective and efficient distribution and marketing of
their products and services. Therefore, to achieve success, Great Southern & Margaret River
Distilleries could enter a contractual agreement with a local distributor to ensure that the
products reach the target audience. In India, there are very few restrictions on the marketing
and distribution of alcoholic beverages which are also sold in supermarkets. Given that Great
Southern & Margaret River Distilleries focus on premium spirits and target a specific
demographic of consumers, the distribution channels should align with the lifestyle of the
target customers, who spend their leisure time in malls, high-end restaurants and resorts
(Dickey, 2012).
A major disadvantage of this entry mode, is the high custom duty, 150% on the cost,
insurance and freight, imposed on importation of alcoholic beverage. The final cost to the
consumer is around 9 to 11 times free on board in Mumbai (Australian Trade and Investment
Commission, 2018). Even then, despite the high custom duty, India contributes up to 7% of
total alcohol beverage imports into the South East Asia region. The imported spirits market in
India is growing 25 percent yearly and it is estimated that Indian spirit imports will soar to five
million cases (a case contains 12 bottles) by 2015 (Mathur, 2014).
Why export and not Strategic partnership or joint ventures
A strategic partnership would also be a viable entry mode for Great Southern &
Margaret Distilleries. It involves a contractual agreement between two or more enterprises, in
which the involved cooperate in agreed ways with a common end goal. It is preferred since it
allows the involved companies to share the risks and resources required to enter international
markets (Bodin & Kekesi, 2017). This entry mode has been used by several international
companies entering India, by partnering with local players. An example is InBev, a major beer
company, which entered a joint venture with RJ Corp, based in Delhi for assistance with the
strong distribution network of the local company. Other big liquor companies like SABMiller
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and Carlsberg have also entered the Indian market and are geared to collaborate with Indian
companies (Mathur, 2014). While this would be a very effective entry mode for Great Southern
& Margaret Distilleries, there are various factors that would compromise the quality of the
brand. Great Southern & Margaret River Distilleries produce premium whiskeys and gins from
grain products particularly barley. However, in India the main raw material used for spirits is
molasses, which produces relatively inferior quality of spirits. Few distilleries are adopting use
of grains for their spirits. Alternatively, the company, like several other spirit companies in
India can import malt for further distillation in India, as is the case with Indian made foreign
liquor. However, this will also compromise the quality of the end product. Either of the
alternatives would compromise the quality of the brand of Great Southern & Margaret
Distilleries, which focuses on the best quality of products from the picking of raw materials.
Additionally, most of these companies enter these joint ventures with the aim of penetrating
the majority of the market share of the Indian market by selling relatively cheaper liquor, which
is not in line with the brand of the company.
Strength of Great Southern & Margaret Distilleries.
Great Southern & Margaret Distilleries is an already established brand as one of the
producers of the best quality of whisky and gin in the world. The company has won a multitude
of awards over the years. In 2017 and 2020 it was named the best international craft whisky in
the world by the American Distillers Institute. In 2018 it was named the best whisky in the
Southern hemisphere by the Jim Murray Whisky Bible and in 2019, the UK Whisky Magazine
Icons of Whisky named it the best Australian Distiller of the year (Great Southern & Margaret
River Distilling Companies, 2020). These awards are a testament to the quality of spirits
produced by the distiller. India is the biggest consumer of whisky in the world, which is the core
product of the distiller. There has been a growing popularity and high demand for expensive
liquor and the market for expensive liquor is set to continue to grow. This is driven by the rising
affluence of India’s middle class, which is set to grow up to 10% per year. Indians are drinking
more and spending on premium alcohol. The trend will likely continue as urban dual-income
families in the nation of 1.3 billion follow peers in the U.S. and Singapore when it comes to
eating and drinking out. Jain, Roy and Ranchord (2015), explain that upper middle-class Indians
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love to spend money on luxury items, with their consumption patterns being heavily influenced
by the western culture. Alcohol is one of the luxury items that they spend on. Additionally, India
is a part of the BRICS that is Brazil, Russia, India, China and South Africa, which are countries
with rapidly growing economies and therefore there is estimated to be an increase in the
number of people with disposable incomes in the coming years. Eng and Bogaert (2010),
explain that other than wealthy elites such as maharajas and royalties, there has also been an
increasing percentage of upper-class population, all who consume luxury products. While the
findings suggest little support for homogenous luxury preference, Indian consumers share
cultural characteristics of lavish consumption of luxury and display of wealth in social functions.
Luxury reflects conspicuous consumption and status, and signals wealth for individuals, and
conveys social identity and status in Indian society. While whisky is the most consumed liquor,
there is also an increasing preference for white spirits over brown especially among young
consumers and women (Mathur, 2014). While vodka is the most preferred, Great Southern &
Margaret Distilleries have the opportunity to introduce their gin in the Indian market and target
this demographic.
Weakness of Great Southern & Margaret Distilleries
The company specializes in premium whisky which is relatively costly. The distiller has
four brands of spirits. Three of these brands; Limeburners, Tiger Snake and Dugite are whiskies
with price ranging between $82 to 1,200 U.S dollars. The fourth brand, Giniversity is a gin brand
with price ranges between $54 to $99 U.S dollars. These are relatively expensive drinks
compared to most foreign imported liquors sold in the country such as Chivas Regal and Johnny
Walker which have relatively affordable brands of up to $35 U.S dollars. While there has been a
rapid increase in the middle-class population in the country, concerns on whether these
middle-class population fits the description of middle class in other countries have been raised.
Economists describe the middle-class people as those living on between $2 to $10 per person
per day as valued at 1993 purchasing power priority. The lower middle class are those living
between $2 to $4 per person per day and the upper middle class are those living on between $6
to $10 per person per day. However, less than 2% of Indians live on $10 per day. This means
that in the case of an economic shock they are likely to fall back to poverty (Biswas, 2017).
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To solve this weakness, the distillery should consider developing a new brand of
premium drinks at cheaper prices say $40 to $90 U.S dollars. This allows the distillery to
compete with other premium brands like Chivas Regal and Johnny Walker sold in the country.
This strategy has been employed in other industries such as the hospitality industry where
luxury hotel brands like the Hilton Hotels have introduced more affordable brands in order to
compete with business models such as Airbnb (Guttentag & Smith, 2017).
Operational strategy and corporation objective for Great Southern & Margaret Distilleries
Corporate objective
The main objective of Great Southern & Margaret Distilleries is to increase its market
share in India by becoming the best-selling premium foreign imported whisky in India.
Operational strategies
Development of Competitive Priorities
Great Southern & Margaret Distilleries are not only competing against other foreign
imported liquors but are also competing to win upper middle-class consumers of Indian made
foreign liquor. Developing competitive priorities is therefore very important. Creating products
that suit the Indian market in regards to quality and price is one step. The distillery also has to
invest in proper marketing in order to reach the target audience. As such, developing
competitive priorities is important. Another way that the distillery intends to achieve
competitive advantage is through proper marketing. Intensive marketing is crucial in exporting.
Tan and Sousa (2015), explain that competitive advantages such as lower costs than
competitors and differentiation advantages when combined with marketing capabilities of an
exporting firm, translate to positive export performance. Amini, Darani and Amini (2012),
explain that proper marketing strategies play a key role in building the intended brand image
which promotes the market performance through increased purchases, customer loyalty and
satisfaction. Great Southern & Margaret Distilleries are not only selling liquor to its Indian
market but also, selling a luxurious brand. As such marketing is key.
Product and Service Development
Great Southern & Margaret Distilleries therefore intend to meet the customers’ needs
by introducing premium alcohol with relatively affordable prices, which are not available in
Australia and its other markets. It also intends to introduce a range of whiskies to cater for the
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demand in India. Similarly, the company will introduce affordable gin brands to cater to the
increased preference for white liquor among the youth and women.
Organizational design for Great Southern & Margaret Distilleries
Great Southern & Margaret Distilleries will adopt the global customer design for the
organization in India. This design is used when an organization intends to serve different
customers or customer groups, each with specific needs which call for special expertise or
attention. This organizational design allows the organization to be centred the company around
the customer. The power in the buyer-seller interaction has been shifting to the buyer. The
global competition and industry overcapacity have given buyers more choice. Information
transparency has reduced the sellers’ knowledge advantages. The competitive advantage has
shifted to one of pleasing increasingly global knowledgeable and powerful customers. It is
achieved by creating organizational units for global customers or customer segments and the
leadership mindset to support them. Customers in different countries have different cultural
norms and process expectations and failing to design to these different sets up an untenable
risk. With global expansion, clients expect suppliers to provide consistent and coordinated
services.
While India is the largest market for whisky in the world, it differs in terms of culture
and demographics compared to Australia and other western markets. A lot of the whisky sold in
the market is Indian-made foreign liquor, while imported liquor has a very small market share in
the market. As earlier mentioned, Great Southern & Margaret Distilleries intends to focus on
the upper middle class and other elites in the country. As such, it is important that the quality
of the products sold in this market meets the expectations of this demographic while still
ensuring that the products are within an affordable price range.
Financial requirements for Great Southern & Margaret Distilleries
While one of the main reasons that exporting is preferred by SMEs is the low resource
commitment, the Great Southern & Margaret Distilleries like any other SME is set to incur costs
in the process of internalization. The distillery will incur sunk costs such as costs for gathering
information on the new market, introduction of new products in the market, possible changes
in packaging and most importantly costs incurred in establishing marketing channels.
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To cater for these expenses, Great Southern & Margaret Distilleries can consider several
financing methods. One such source is equity financing for example the owner’s personal
savings or retained profits from the business. This form of financing is mostly used by SMEs that
are still in the start-up phase and therefore have lack trading history or have a high risk of
failure. The distillery can also acquire financial capital from external sources such as banks and
financial institutions and security markets. SMEs that have grown over a certain period and
have established a consistent tack record and have the ability to provide collateral have more
financial options (Abdulsaleh & Worthington, 2013). Great Southern & Margaret Distilleries has
over the years shown tremendous growth as earlier indicated through the multiple awards,
newly established distilleries and additional brands which improve the creditworthiness of the
firm. As such, the distillery has several financing options.
Staffing policy for Great Southern & Margaret Distilleries
Great Southern & Margaret Distilleries intends to enter India market via exportation and
therefore requires very little personnel to handle the new market. A lot of the efforts in the
new market will be directed towards marketing. The company will therefore adopt a
polycentric staffing approach. This policy involves hiring and promoting employees who are
citizens of the host country (Brewster, Boselie & Purpura, 2017). It is compatible for the
distillery due to the low costs of recruiting as well as training. It also alleviates cultural myopia
and as such there are lesser difficulties with adjustments and communication since all
employees are from the same region (Isidor, Schwens & Kabst, 2011). Marketing experts
located in India best understand the market, the appropriate distribution channels to be used
and marketing tactics to be used that best appeal to the target market and as such, the
polycentric staffing policy is the best fit for the company.

Conclusion
Great Southern & Margaret River Distilleries is a promising small medium enterprise and has
the potential to further grow with internationalization. India has several factors that make it a
favorable market for the company for example, the high demand for whiskey, a growing
preference for white liquor among young consumers, a growing population of middle class and
upper middle class with disposable income and a change in culture of drinking. Given that the
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distillery is still growing, exports is a good mode of entry given that the company is still growing.
Despite the high custom duty and other importing costs, there has been an increasing demand
for foreign imported liquor among the demographic with disposable income, which the
distillery targets.
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References
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