Case 6: Tanunda Winery

By: Kayleigh Daniels, Conner Middleditch,

Justin Sturm, Kyle Clark

MKT-2288-C01: Marketing Management

Instructor: Dave English

Date: March 30, 2021

Problem / Opportunity Statement

The problem that Tununda faces would be the big decision of whether or not to export their

wines into another country for sale or to keep selling domestically within Australia. They

must also consider which country they should enter into to have the best success with the

most profit per product. Another consideration is the company's competitors both in Australia

and Worldwide. The Marketing Manager George Steen is seeing export sales growing fast

but at the cost of going through all the red tape involved with exporting to foreign countries,

red tape being taxes, tariffs, and even political and economic issues arising in certain

countries.

Situational Analysis:

Tanunda Winery is looking to expand into the global market. The formally stable market of

Australians Table wines is no longer as predictable which has led to loss for the company.

While the international market for Australian wine has been growing bigger than ever before.

Because of this the company is wanting us to expand into the intonation market and is

wanting our opinion on if we should and to what nations we should go to.

Primary:

We want to make more money and expand our brand into a global force

Secondary:

We want to remain independent and not have to worry about being taken over by a larger

company

Identification of Problems and Opportunities

 Problems: Opportunities:

Quantitative: - Market growth

· We don’t have as much money as
- With more sales, price will
big companies do to expand
decrease
· We can only choose a few

nations to expand into

Qualitative:
· While we are good at making our - We have won lots of awards

high-end table wine some nations making us a well know

like the United Kingdom don’t brand for people that know

really want it. They prefer a wine

different type of wine and since a

lot of the power is held in a few

key chains it makes it much harder

for our smaller company to make it

in there

Feasible Alternatives:

1. Export to Japan

The Japanese market is one of the most important markets to expand into. With the

Japanese government restructuring allowing wines to make from producers a lot

easier. Young Japanese women typically are more interested and invested in wine.
 This market is of great importance to get in for the long term. However, wine is not

hugely consumed compared to beer or sake. Wine is growing quickly in the nation

and with its main alcohol consumers being young, we can aim to try and serve these

women for the rest of their lives. As the first major population of wine drinkers in the

nation, the mothers' wine choices and knowledge can be passed down to their

families. It is important we fight to make an impact in this market. It can help us out

for the long term. This nation is also very close to us, meaning shipping here will be

far cheaper than the alternatives. Not to mention that the Japanese also kept buying

wine even during a recession.

2. Export to Canada

Canada already enjoys our wine. However, it has a smaller market than places such as

the United States or the United Kingdom. Canada's smaller market will allow us much

like New Zealand to really get our international operations set and understood. That

way, if we choose to head to a large nation like its southern neighbor, we will at least

have some great connections that bring our products to North America already. If we

are to expand into Canada, the first province we should start with is Ontario as it's

Canada's biggest province with the biggest city. They would likely be the most open

to our wine compared to British Columbia and Quebec.

3. Only Export to Canadian markets

Each province has its own liquor border we must go though. These liquor borders

don’t let a ton of product into the provinces and closely monitor how well the sales of

these products do. If your product doesn’t sell, you will be removed from the province

so someone else can fill the spot. This nation is going to cost us more to expand in, as

we will require salesmen who take commission to make sure our product sells.
 Investing in Canada is going to cost us a little more regardless, which means we

should only go to Canada and invest in 3 provinces. Those provinces being British

Columbia, Ontario, and Quebec. These provinces are chosen because they are the 3

biggest populations province wise in Canada. However, one possible issue could be

that British Columbia does have a large local wine scene in the province. Locals may

want to drink something local as opposed to something from out of the nation. In

Quebec, there are strong cultural ties between Quebec and France. They might choose

French wines over ours. If either Quebec or British Columbia prove to be to much of

a risk then we can choose Alberta as the 3rd province. It’s the 4th biggest province

with 2 major cities and a population that will be open to our wine. There are just a lot

less people in Alberta than there is in B.C. or Quebec.

4. Export to New Zealand

While the paper doesn’t talk a lot about New Zealand, I think it is a very important

market to expand into for proximity reasons. While one of the smallest, (with only 4

million people) New Zealand drinks more alcohol per capita than both Japan and

Canada. If the company is serious about wanting to expand into the global market,

what a better nation to start with than our neighbors. We're close enough that we don’t

require a ton of people to work there. If we do need to send people there on business

trips, it's going to be a lot cheaper than heading to any other nation on this list. This

also allows us to set up our international marketing branch. As of right now, it's more

of a hobby. If we can expand into New Zealand, we will be able to get our exports set

up and ready. This will make transitions easier for us to expand into a nation that is

much further away and more different than ours.

5. Export to the US

The United States is one of the largest economies in the world. For Australian wine, it

is our second biggest market. Expanding into this large nation makes a lot of sense.

By becoming successful within the US, we can use that brand reputation to head to

other nations with a lot of ease. For example, once we have done well in the States it

is easier for us to head up to Canada.

6. Only Export to the US

The biggest issue with the United States is we are not really dealing with them as a

whole. Instead, they are forced to deal with state per state bases. Each state has

different taxes and a different government system. It does not make sense to expand

into other nations. Instead we just expand into the United States itself. The best 3

areas to start with would be New York, Illinois and the district of Columbia. New

York is one of the biggest cities in the states that also enjoys Australian wine. Which

is why you would also expand to Illinois as you would get the city of Chicago. What’s

nice about these 2 states is there is some distance between them so there is a chance

our wine can be brought over to neighboring states giving us room to expand into if

we need to. The last area D.C gives us the city of Washington. Now this is a bit more

of a gamble as were just investing in a single city. But this city is that capital of the

United States, meaning you're going to be in a market where people from all over the

United States come to as well as people from all over the world. If our marketing is

done right, we can use this as a way to expand wine across both the United States and

the world itself.

 7. Export to the United Kingdom

As of right only nations have clients that have reached out to us seeking to buy our

wine and that is the United Kingdom. Meaning they are very much invested in us. So,

by choosing to expand into this nation we already die-hard fans that will help us to

expand our brands reach. By choosing to start in the United Kingdom we are going to

face some logistical issues but by having such a strong client base there that already

wants us it can help expand into the nation itself. While also giving us easier access

into other markets such as Canada, the EU, Ireland, and the US.

Recommendation and Implementation

We recommend that we move to the United States and Canada. The United States is the

second largest global purchaser of Australian wine. With huge cities like New York, Chicago

and Washington, we would be able to perform well in the nation. Since we are shipping to

North America anyways, we feel it also makes sense to try and expand into Canada as well.

In Canada we would aim to move into the province of Alberta as they do not have as much

government involvement so getting our product in stores will be alot easier. We also would

aim to bring our product into the province of Ontario. The reason for this is that Ontario is the

largest province in Canada with the largest city in Canada; Toronto. Unlike Quebec, the

people living in Ontario are culturally diverse. We will have lots of different people and

markets to sell too. The A.W.E.C also has an office they maintain in Toronto allowing

networking to be done very easily in the province of Ontario. We would also recommend an

increase in costs for the distribution fixed costs because the fixed costs they have for it now

would not suffice for a big international export of this quantity.

Expected Outcomes

We believe that by expanding their international exports to Canada and the United States

accompanied by specific product selection, brand ambassadors, and product promotion,

Tanunda Winery can increase their profits significantly and at a relatively low cost. We

believe that Canada and the United States would be ideal to export to because of the ease of

doing business there combined with the low tariffs, Tanunda would ship the products to two

close countries to cut the costs of shipment and distribute along the eastern coast of both

Canada and the United states in order to create a more efficient distribution chain for both

countries.

SWOT

Strengths:

- Strong growth in Australia

- Rapidly gaining acceptance in the marketplace.

- 12 awards for its red wines at a major wine show.

- Captured numerous awards every year at national and regional wine shows for both

red and white.

- Established a solid reputation in Australia as a consistent producer of high-quality

premium table wines.

- Strong marketing skills.

- Labels are considered exceptional in terms of communicating the quality of wines and

standing out among competitors.

- Distribution system resulted in prominent display of the wines in many retail outlets

throughout Australia.

- Advertising campaigns are viewed as innovative and contribute to the recognition of

the brand.
 - Rapid growth for the company between 1995 and 1999, sales increased from

33,200,000 to 49,400,000

Weaknesses:

- Only achieved marginal success in international market

- Described as a passive exporter.

- No explicit export strategy had been established.

- The worldwide wine market was dominated by Europe.

- The EU accounts for 31% of the total area of the world vineyards

- Italy exported approximately 2 1/2 times as much wine as Australia on a yearly basis.

Opportunities:

- Evaluate the feasibility of launching a major export drive.

- Significant growth opportunities existed in export markets.

- In early 2000, there was a good opportunity to get into foreign markets in a big way.

- Very positive environment in several export markets has been forecasted.

- Olympic games in Sydney

Threats:

- exporting into the international market- concern for making a profit.

- Competition is fierce worldwide and France, Italy, Spain are experts at producing

large volumes of value priced, well recognized wines.

- These places have greater recognition than Australia in the key international markets.

- EU has the advantage

- The United States has a closer cultural relationship with the nation of japan giving

them an advantage in the Japanese’s market which they are fighting us in right now.

- Large corporations: Many large companies for wine have come out of Australia as

there have been lots of mergers. Giving these companies a huge control of the
 Australian market. Which in turn leads to them having a large say of Australian wines

on a global scale. Meaning while we are competing with other nations we are also

competing with our nation and with larger companies

Numbers

Fixed cost:$320,000 Fixed cost: $320,000

Canada selling price: 289.12 Usa selling price: $238.41

Canada per case: 160.99 Usa Cost per case: $148.66

Break even point: 2,498 Break even point: 3,565