The Diversification Challenge

Presented by Team #5
ABOUT THE COMPANY:

• The Cattier Family traces back itself to 1625, where they used to grow and sell grapes in the Champagne region,
specifically around the village of Chigny-Les-Roses.

• In 1918, Jean Cattier decided to brand and market the Champagne that his family had been producing and that essentially
marked the beginning of the prestigious Champagne company “Champagne Cattier.”
• The Cattier product line contains 14 distinct products which are classified into 5 major product lines
• The first Cattier product line is known as “Tradition” - introductory line accessible to all consumers.
• The second product line know as “Premier Cru”- targeted to more mature wine consumers and particularly most liked in
the French Market.
• “Clos du Moulin” is the third line which is particularly produced from grapes (strictly pinot noir and chardonnay).
• The fourth product line is called “Insolites” -tailored to the younger-generation market in nightclubs and bars.
• The Fifth line is considered to be a more luxury champagne brand and is called the “Armand de Brignac”.
• The most successful markets for Cattier’s champagne are Japan, the United Kingdom, Australia, Portugal, and Germany.
For the Armand de Brignac brand, the biggest market is the United States, followed by the United Kingdom, the Middle
East and France.

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1.What are the challenges faced by Cattier? How are they connected or
interlinked?
• In the home market they faced fierce competition from cheaper local sparkling wines (Crémant de Bourgogne) and also
from European sparkling wines (sekt from Germany, prosecco from Italy, and cava from Spain).

• The economy was suffering for several years and unemployment remained high. This had an impact on the consumption
of champagne.

• The November 2016 US presidential election was largely based on a platform of protectionism and “putting America
first.” It was unclear what this might mean for exports of champagne to the United States(US being the largest consumer
of wine by volume).

• The UK referendum in March 2019 had huge impact on the economy. The value of the UK pound went down rapidly
against the Euro, making French exports to the United Kingdom more expensive

• It was unclear what effect these would have on future demand for champagne.

• The desire to engage in alliances in the home country and abroad, was often successful but were very short-lived.

• The competition had become more turbulent, while competitive threats were intensifying.

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2. Should Cattier use diversification to manage the challenges?
• The Cattier company dealt with only one type of product.
• When that product is faced by challenges, the company's main source of income is affected.
• If the company had diversified its operations, the challenges faced would not have hit them as hard.
• Diversification is a move that would help alleviate these challenges.
• By producing other products, the company would have another source of income hence reducing reliance on champagne.
• The company could look into another market that is not flooded where it would be easy to sell the new products.

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3.What are your recommendations for cattier management?
• Since cattier has diverse line of products, it has multiple target markets

• In order to sustain in the long run cattier needs to diversify from the existing business.

• For luxury brand like Armand de brignac one of the potential market is US and UK , to overcome the challenge
diversification of the product line is essential.

• Probably they could tie up with the company which is from UK market ( in US market already they partnered with jay z)
and could sell champagne under their label in order to reduce trade tariff.

• Another possible way of diversification is they could establish themselves in a new market and create a brand
awareness for the champagne.

• The cost of these two methods is expensive , since their financials are strong they could take risk to expand their market

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3.What are your recommendations for cattier management?
• As cattier faces heavy competitions from their competitors, they can extent their product line by producing by- products
of raw materials like premium dry fruits. As they are masters in producing grapes in their vineyard.

• 80% of their customers are said to be hotels and restaurants, they could introduce their new lineups to their majority
customers as complementary product. At its initial stage they can target celebrities by giving exotic dry fruits as a
welfare. In this way we can determine its reach and market consistency of this new product expansion.

• Enotourism Offer :

1. Cattier has 400 years of legacy- It can captivate on it by offering tourism.

2. Tourism include the history of their company- Their Cellars(which are best and innovative in France)
3. This will not only give revenue in the form of tourism but also pave way for additional sales in Champagne.

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Thank You
Presented by Team #5
Aishwarya Swaminatha Babu (2013005)
Kamil Mohamed A(2013049)
Madhumitha B (2013065)
Ram Karthigeyan K R (2013091)
Vignesh Kumar (2013113)
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