ANALYSIS ON

COONAWARRA WINES

Assignment 1

Date- 31/03/2015

Submitted by – Rakesh Jha

PGDM- Semester 4

CLASS – MARKETING 1

Submitted To - Prof. Jayanta Sengupta

Integrated Marketing Communications

IMC STRATEGY

IMC refers to the process of integrating and coordinating various

communication elements known as Promotional Mix. The promotional mix

consists of sales, advertising, sale promotion, personal selling, and public

relations. This in fact particularly the case for Coonawarra Wine, where strong

marketing communications is required to achieve strong brand identity is of the

utmost importance. Coonwarra maintains its strong reputation as a leading wine

region through its strong presence in the Australian domestic market.

To achieve this, an intense information gathering process was adopted that first

involved a preliminary secondary information-gathering phase during which the

various elements/aspects involved in the IMC process were identified and their

relevance linked to the wine regions real-life situation.

There are basically two model:-

1. The Integration Model (planning group level)

Internal- planned messages, strategic plan, mission statement, policies

where it has to be asked how the internal will be carried and further to

the next process.

Intra-regional- product and service messages where the action takes

places.

Communications- unplanned messages where basically, messages are

not arranged or driven in cordially manner but to make confirmation

and proceed to level 1 process. It’s a cycle process.

2. The Integration Model (regional level)

External- asking for communications through media, promotions.

Regional- interactions specially deals with door-to-door, retail outlets

etc.

Communications- requires word of mouth factor, being it’s the

external factor, so that the taste of wine can be classified only through

word of mouth.

PEAK PLANNING GROUP

The planning group’s task is threefold: 1. It must diagnose the region’s

strengths and weakness. 2. It must develop a vision that is shared by all, and 3.

The Planning Group must develop a long-term plan of integrated marketing

action. The beginning of Coonawarra Wine, was probably based on common

interest at a production level rather than marketing level; it’s only recently that

marketing has become a science so to speak. Coonawarra wines, probably

regarded as a bit of hocus-pocus by some of the producers and some were a

little nervous about marketing level where everyone felt comfortable. Now

people are starting at a marketing level and working conundrum for a small

producer who knows a lot about making wine but not as much about selling it.

REGIONAL STRATEGIC PLAN

According to the wine industry officer, the marketing plan has two major goals-

to increase visitation and visitor yield and to increase sales. The bulk of the

associations investment and expenditure is in the area of hospitality and public

relations with activities such running the wine events and hosting of key wine

press and industry representatives. The region makes little use of paid

advertising. Such advertising that is commissioned centres largely around the

various formal scheduled events.

CUSTOMER/STAKEHOLDER FOCUS

Stakeholders would therefore include everyone from the person who prunes the

vineyard right through to the vineyard or winery owner. The concept can be

further widened to include members of the local community, the Penola and

District Business and Tourism Association (PADBATA), the local council and

so on. Being a small community, many informal links naturally develop when

people regularly “cross paths”.

The challenge arises for the regional tourism organisation, like any other

regional tourism organisation, in being able to cater for the different stakeholder

within the group. The target market is different to that of the regional tourism

organisational target market and as such the messages and the images are not

always as compatible as we would like them to be.

Bruce Redman said, the wine region is geographically not a neat fit with their

tourism region as perhaps it is in some other areas such as the Barossa. Within

their tourism region there are at least five other regions such as keen as there

were to see their particular region and their regional brand recognised,

differentiated, supportive and promoted. As such they are constantly working at

having not only the theme of food and wine supported within their region, but

also their regional brand (Coonawarra) recognised and supported by both in

their regional tourism organisation and the South Australian Tourism

Commission. This work needs to be ongoing and at the end of the day they have

to strategic in setting up the priorities, fostering relationships, supporting and

initiative activities that meets the vision and the goals of the organisation.

MISSION AND VISION

Recognized as the best red wine district in the world

To promote Coonawarra as the premium red wine district in the world,

locally, nationally or internationally, through united accessible forum

that is constant and consistent.

The potential for conflict in terms of strategic direction would seem

quite high.

Members have got different commercial objectives, some may have

had to make a small compromise in the way things are done.

STRATEGIC CONSISTENCY OF REGIONAL BRANDS

The regional level, the concept of Internal Marketing is heavily applied which

is directed towards the wineries and their stuff plus all the major ‘actor’

stakeholders within the region, such as the tourists association, travel agencies,

the hospitality and the retail industries. According to the wine industry officer,

most brand messages related to Coonawarra originate from CVA, although

other organisations also produced promotional material. The wine industry

officer was consequently asked the question as to what the CVA is doing to

foster communication amongst those engaged in image-building activities. For

communications with other tourism operators and our surrounding Visitor

Information Centres we produce and distribute a quarterly news bulletin. The

bulletin is one-page sheet with information about coming events, achievements

or any new collars-doors, new restaurants-thing that have a tourism related

news value. The website also promote fairly heavily within the region and also

in their external promotional collateral and marketing activities. The use of the

website increase dramatically and now regard it as one of the key

communication channels. It is very effective and efficient communication tools

and relatively easy for a small office to manage. On a more level, the website is

printed on a Cooonawarra bottle bags which are produced by the Association

and distributed through cellar doors as well as the inclusion of the web address

on items such as signage at the Mt Gambier Airport and Coonawarra Cup

merchandise etc.. Having a bi-monthly cellar doors staff get-togethers which

have an educational component increases the invitation to local hoteliers,

restaurateurs, and tourism operator to come along to build relationships with the

vignerons and their staff and to learn a bit more about wine. In understanding a

number of wine tourism research initiatives we have been able to provide not

only our members but also our tourism partners and the general community with

an invaluable insight into visitation and drivers.

SWOT ANALYSIS

Strengths-

Quality extends across a broad spectrum of wine varieties,

styles and price points, which is a very good thing

Weakness-

The domestic market for wine is very substantial, but it is still

dominated by low-price basic wines — another weakness.

Water is also an issue here as it is in many wine regions.

Threats-

There are a number of very serious economic threats that cloud

the short term outlook. 

Production costs are rising rapidly– labor, grapes and other

inputs are increasingly expensive.

Land prices for new vineyard projects seem to be growing

exponentially.

Revenues are not increasing at the same rate, with the result that

margins are being squeezed.

It is not clear how long the current combination of rising costs

and falling revenues (or soft revenue growth) can be sustained.

Opportunities-

New wines and new markets. By new wines mean a movement

to expand Brand both into the higher reaches of the wine wall

and into other varietals.

Not cheap bulk wines

Not overpriced prestige labels like those of wines from other

countries

The new market with the greatest potential for Australia wines

may be Australia itself.

Bottom Line Analysis

The long run opportunities are important, but it seems that the short term threats

are on everyone’s mind right now, in particular, the inflation-exchange rate

squeeze. If inflation continues at high rates, some producers will be squeezed

out of the market. Perhaps they can sell to other countries or on the domestic

market, but the prospects are not good if everyone tries to shift focus at once.

What is keeping the exchange rate stuck at an over-valued level? Politics and

fear, I suppose. There’s a presidential election in the fall and everything here

has taken on a political significance, so it is no wonder that holding the line on

the exchange rate (and denying that an inflation problem exists) would be

political, too.

OPPORTUNITIES AND CHALLENGES

One of the challenges facing an organisations with limited resources is how to

effectively fund its various strategic efforts. The development of the Limestone

Coast Zone has presented Coonawarra with both strategic opportunities and

challenges. The wine industry officer was asked to comment on the Limestone

Coast Wine industry council and how this organisation figures in the plans of

CoonawarraVigerons Associations. Its an area that equate to about 10% of the

population of the wine industry, so it’s a very large in production terms.

Another challenges relates to the development and nurturing of a strong ‘region-

oriented’ culture. For the integrated marketing efforts to be truly effective, all

those working within the region should come to the realisation that the welfare

of the region as a whole is just as important as the promotion of their individual

interests. With the strong regional culture, the region’s wineries and other

stakeholders have the advantage of communicating with the wine consumer and

the visitor with one voice.

The wine industry officer summed up the opportunities and challenges facing

the Coonawarra wine region this way:-

Product development and strategic marketing are the keys to our

regions future success.

Various guests speakers and workshops helped in developing

appropriate tourism products and services for visitors

The cellar door study has provided with invaluable information as to

who is visiting and why. It cannot be ignore this information and both

individual business as well as collectively need to use this information

strategically to develop and promote the point of difference.

Wine tourism is a tough market, there are not only new wines label

being launched everyday but also new cellar doors opening, new wine

regions evolving and ever increasing array of holiday and short break

options and increasing competition for the disposal dollar.

COMPARISON WITH SULA WINES.

In 1993, Stanford-trained engineer Rajeev Samant left his job at Oracle in

Silicon Valley to follow his entrepreneurial spirit “to do something on my

own.” He wasn’t quite sure what he’d be doing when he came home to India.

One day his father showed him their 30-acre family farm in the hill station of

Nashik, 180 kilometres from Mumbai which he had wanted to sell. Samant

started growing mangoes on the site but soon realised that traditional agriculture

in the region was not profitable. He noticed that a lot of table grapes were being

grown in the area but no one was making wine.

In 1996 and 1997, with the help of Californian winemaker Kerry Damskey,

Samant grew five acres of grape varieties never planted in India before:

Sauvignon Blanc and Chenin Blanc, under the brand ‘Sula Vineyards.’ They

used New World techniques because India didn’t have a tradition of wine-

making. In 1998, money was raised to build thewinery.

Pioneering Work

In 1999, the modest Sula Vineyards with its iconic sunburst had its first crush,

and in 2000, sold its first bottle of wine.

Wine Spectator, a leading wine magazine, did a five-page feature on Sula in

November 2002, a proud first for an Indian winery, says Samant.

His Californian philosophy of allowing one and all to visit the winery was

unheard of in India where a handful of wine growers kept the secret of wine

making close to their chests.

“After Sula’s success and having seen the process of making wine for

themselves, farmers thought this can’t be that difficult and decided they could

also make wines,” Samant recalls. “Soon many in the neighbouring farms -

people who have never tasted wine before - jumped on the bandwagon and

started their own wineries. That regretfully resulted in wines that were not of

very good quality.”

Undeterred, Samant continued to experiment with new varietals. Ten years on,

Sula Vineyards has expanded to 1800 acres and produces three million litres,

which constitutes some 75 per cent of India’s wine.

In the process, Sula has placed itself firmly as India’s leading premium brand by

concentrating on quality. “The wines are exported all over the world and feature

on the wine lists of some of the world’s finest restaurants,” says Samant.

“Today Sula Wines is India’s number one in terms of consumer perception and

sale.”

Challenges

It took more than two years to obtain the necessary licence to make wine. “We

were the first company to apply for a licence in our state in 15 years,” he says.

“We decided to change tack with the powers that be: don’t think of this

initiative as alcohol production, think of it as a benefit to grape growers,

increasing rural employment. And that struck a chord with the government.”

Banks were not willing to lend as there was no track record. So Samant

borrowed from friends and family. “My father’s bank eventually made me a

loan, solely on the basis of his 35-year custom with them,” he says.

Another challenge was marketing. Not only were Indian wines not heard of,

they were more expensive than some French wines sold in India.

Growing the Market

The biggest challenge is to grow the market. In India, annual wine consumption

is 10 millilitres per capita compared to China’s 400ml. “I’d like to see

consumption in India grow from 10ml to 100ml per capita,” Samant says. “To

achieve this, we go out to rural areas and do tastings and education on wine.”

Alcohol consumption is a state issue, not a federal issue. Karnataka, another

wine producing region, imposes huge state duties on Maharashtra’s wine, and

vice versa.

“We need to get these people to talk to bring down the duties and have free

trade zones for wine within India,” Samant says.

The other challenge would be getting the rest of the world to find Sula Wines

acceptable.

Broad-Based Clientele

When Sula started operations, they sold their wines in the four main cities of

India. Their customers were the wealthy Indians, tourists and expats, recalls

Samant.

Today the clientele is more broad based and the consumption has moved out to

the upper middle class in Tier-2 cities, such as the state capitals, and tourism

areas in Maharashtra and even the rural areas.

Sula Vineyard trees - INSEAD Knowledge

“Currently we have one per cent of the population drinking wine. What I would

like to see is five per cent over the next ten years; that would be huge in

absolute terms. Imagine the amount of grapes we have to plant -- triple shifts

and increased acreage,” says Samant. “We do not focus on exports because we

don’t need to; there is a huge market here we can tap.”

Sula became profitable from the second year. Because of the fast-growing

market, it has been reinvesting its profits every year. Revenue was $12 million

in 2008 with profits of one million dollars.

Riding out the economic downturn

India is one of the fastest-growing wine markets in the world, with growth of

more than 25 per cent a year over the last four years. “That was probably not

sustainable and so with the economic meltdown last September, there has been

a fall in wine consumption,” says Samant. “Hotel stock levels have fallen by 50

per cent and inventory levels are at a record low.”

But things are beginning to look up and Sula Vineyards hope to achieve double-

digit growth this month after 12 bad months.

“In the meantime, Sula has been gaining market share even as the wine market

in India has been declining. It currently has 35 per cent of the market - which is

a lot for wine,” Samant says. “That’s definitely going to help us a lot when the

market picks up.”

SWOT ANALYSIS

Strength-

Fastest growing market in wine industry (30% p.a growth rate)

Good climate for grape growing

Women/youth see health and sophistication in wine

Weakness-

Drinking age (42% of population) is 25yrs of age

Poor awareness of wine and infrastructure

Wine has an elite taste

Opportunities-

Large domestic markets with increasing disposable incomes

Increased tourism

Population changing lifestyle accepting new trends

Export potential to the rest of the world

Threats-

Religion replicates it as a sin

Whiskey is preferred alcoholic beverages

Advertising is banned for alcohol

Brand Building

Sula had positioned itself as an indigenous wine made to international standards

with international techniques and know how. A number of consumables are

procured overseas and also adopted to the sub-tropical Indian conditions.

Sula celebrated the harvest season of 2005, by opening a 1st wine tasting room

in India in its Nashik winery atop hill giving 180degree views. The winery and

vineyards are open to public for educational tours also there “beyond”, a 23

room resort.

Marketing Mix for Sula Wines

The marketing mix of Sula wines which includes the 4P’s of Sula wines. Sula

wines are one of the most widely distributed and most loved wines of Indian

origin.

Product and Pricing of Sula Wines – Sula Wines has 5 basic types of wines.

Each of them has been mentioned here along with the pricing which i could

find. Pricing of Sula wines is general pricing and appears more of penetration

rather than premium pricing. Here are the products and pricing of SULA wines

Red Wines

sula cabernet shiraz 395

madera red 250

White Wines

sula sauvignon blanc*540

sulachenin blanc*395

madera white 205

viognier**

dia white

riesling

samara white

Rose Wines

sula blush zinfandel-450

madera rosé-205

Sparkling Wines

sula brut* 550

seco

Dessert Wines

late harvest chenin blanc

PLACE

Five Star Hotels

Wine shops

High end Restaurants

PROMOTIONS

Use of the mass media to promote alcoholic beverages is not permitted, but in-

shop advertising or on-premise promotions are allowed in all states except

Delhi.

Organizing Sula fest

Organizing a launch of a new brand

Complementary glass of wine in restaurants and bars

Sula Harvest

Internet marketing