Crafting Winning

Strategies in a
Mature Market:
The US Wine
Industry
Group 1 of Section 2:

Abhilash Dutta (FT172001)

Alok Pathak (FT172009)
Ankur Rao (FT172016)
Bhanuu Prashast (FT172024)
Harshit Sodhani (FT172031)
Abhishek Rana (FT172002)

A Brief History of Wine

Section 2 Group 1

Threat of New Entrants

Low barriers to entry
Easy entrance of new
wineries to the market
Bargaining Power of Suppliers
Wine
producers
have
increased
having their own vineyards, with
abundance in types of grapes to
choose from
Inexpensive options for specialized
machinery available
LOW
Easy availability of land

Threat of Substitute
Only 10% drank wine regularly
46% preferred beer/spirits
35%
drank
alcoholic
beverages other than wine

Attractiveness of the Industry:

Porters Five Forces Model

HIGH

HIGH

HIGH

Section 2 Group 1

Industry Rivalry
Number of US wineries increased
by 400%
Little
growth
in
demand,
oversupply of grapes
Downward pressure on prices and
margins
Large players spent 40% of their
expenditures on marketing and
HIGH
distribution

Bargaining Power of Buyers

More and more number of
wineries
entering
the
market(low priced grapes)
Production
outstripped
consumption by 15-20%
Enormous
retail
and
distribution consolidation

Entrants Strategy
Strategy to be used
New price
segment
New varieties for
a wide range of
drinkers
Ease of drinking
Eliminate
wine
What factors
should be
eliminated that
the industry has
taken for granted

Wine
Industry
jargon which is
difficult
to
comprehend

Create

Provide new
factors that the
industry has
never offered

Blue
Ocean
Strategy

General
perception
of
wine
among
masses
Raise

Factors that
should be raised
well above the
industry
standard

Reduce

Factors that

should be
reduced well
below the
industry
standard

Competit
ive
Advanta
ge

Unnecessary
focus on age,
vineyard,
grapes etc.

Section 2 Group 1

Similar product
at lower cost:
COST
ADVANTAGE

Price Premium:
DIFFERENTIATI
ON
ADVANTAGE

Factors of competition

Existing Players Strategy

Differentiatio
n

Economies of
Scale

Established player should try to expand the market

Medium sized winery: Sale the wine as super
premium
Increase consumer base by targeting non-wine
drinkers as well
Leasing for new technology
Indirect competition: Distribution channels
Section 2 Group 1

Competitions & Investments

Section 2 Group 1

Competition since Inception

Wine industry has been this competitive since
its inception
Thats one of the reason why its one of the
highly competitive industries
There is a requirement of high investment for
land and machinery
This ensures quality, which in turn is a crucial
element that customers look for in a good
wine
Section 2 Group 1

Section 2 Group 1