Wine Industry Porter Analysis

This sample paper on Brl Hardy Wines offers a framework of relevant facts based on the recent research in the field. Read the introductory part, body and conclusion of the paper below.


Porter analysis, a highly competitive industry under consolidation with very high market potential and growth.

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Bargaining power of customers = High 5/5

  • No switching cost
  •  Numerous players, numerous wine
  • At final customer level

§ Change in consumer habits and needs:

  • “Industry was becoming increasingly fashion-driven” Australian wine was becoming a “hot trend”
  • At distribution channel:  § Increasing power of wine wholesalers and retailers (less fragmented, rationalization and consolidation).

     Looking for set of key partners to source large quantity of wines and worldwide. in many countries, such as Sweden and most of Canada, state-run monopolies controlled retail distribution channels.

  • These monopolies could buy direct from the wine producers and had strong bargaining power over distributor/wholesalers and the wine producers themselves. In Britain, the large supermarkets such as Tesco dominated retail sales, and large firms such as Wine Importer and Corney & Barrow dominated the import/wholesaler business.

  • The supermarkets had the ability to buy directly from producers and increasingly preferred to deal with a smaller set of producers with broad product lines.

Bargaining power of suppliers = 4/5

  • One of the “core critical resources”: access to good grap fruit is key. Suppliers are sometimes switching quickly from one
  • Vintage could jeopardize for various reasons.

Thread of substitutes = Medium 3/5

In Australia: change in the consumer habits:

  • moving from beer consumers to wine consumers;
  • increase in domestic consumption.

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  • Alcopops “Ice sirmoff” like drinks arriving.

Thread of new entrants = 2/5

  • Complex industry, complex value chain. Very difficult to enter.
  • Under concentration / consolidation. Ex. In Australia 1996  § 10 largest companies = 84% of the grape crush  § 4 controlled over 75% of domestic branded sales.

BUT: major

Internal rivalry among current competitors = High 5/5

  • Very high competition. Alcohol perception and Wine comsumption decline in countries such as France, Italy, Chile and Argentina gave more space for exportation

Changes in regulation = 3/5

  •  More restrictive laws about alcool and driving.
  • Potential change in sulfite regulation
  • Great Australian Wine Company

French AOC, Italian DOC 7. Economical trends = 0/5

Good economical trends  o Exchange rate in favor of Australia for export. page 1 / 3 Intgrativecasestudy 1. 1 Wine Industry – Porter Analysis o Very good market conditions:  § Local and International – major growth. § “Rapidly growing demand from new consumers in non-traditional markets”  o “Australian wines began to find large market abroad”  § 27% of production in 1995  § Projections: 450MA$ 3. 5% in Value (95) – 2. 5BA$ 16% (2025). § Doubling of total Australian production by 2025. o 4 key export markets for Australia (expected to reach 60% of export sales by 25 years in ?   § UK (2/3 of Sales export), US, Germany, Japan. Wines from Australia and New Zealand sold at higher average prices in Britain than wines from France, Italy, and Spain.
• 8. Social pressure: 0/5

Low to Check: I thing at this time, ads about the fact that to drink one or two glasses of wine a day is good for health.

  • Technology breakthroughs = 4/5 key to have the new operations
  • Large-scale wine suppliers from New World countries (US, SAm, SAf, Australia) were exploiting modern viticulture and more scientific winemaking practices to produce more consistent high-quality wines”.

Additional forces: Complements 0/5

  •  No comment. pre merger, question 1 Before BRL and Hardy’s merger they were considered rivals with different point of views in their strategic process to the wine industry that led them each to have a different organization overall. Hardy was known for its polite and traditional approach with award winning quality wine and BRL’s approach was focused on an aggressive and commercial culture that followed its fortified, bulk, and value wines.
  • Hardy started out strong, a family owned business that gained recognition and respect as beginning the largest winemaker in Australia. In 1882 Hardy won his first international gold medal at Boudreaux. Hardy’s goal was to manage a team with marketing expertise, brands and winemaking know-how. They were focusing on global external brand awareness. On the other hand, BRL was on a commercial exporting level considered “the oil refinery of the wine industry”. BRL was following Hardy’s path of being the second “largest crush in Australia”.
  • In 1916 BRL was the first cooperative winery, with 130 Italian grape growers. BRL’s success came in 1980’s when it started to sell its bulk wines aboard mainly in Scandinavia. BRL had access to fruits, funds, and disciplined management. Because of BRL and Hardy’s power status in the wine market, their goals they had in mind and financial problems among the companies. They thought it would be a good idea to merge and hopefully give them the ability to upgrade their business and encounter new opportunities.
  • The pre conditions of both companies are one of the reasons that allowed BRL Hardy to thrive in their post merger success. Item  Hardy  BRL page 2 / 3 Intgrativecasestudy

Wine Industry

Porter Analysis Known for Australia’s largest winemaker Second “largest crush in Australia”  Fortified, bulk, value wines  “The oil refinery of the wine industry”  Agressive and commercial   Cooperative  (1916: 1st cooperative winery, 130 italian grape growers) Award-wining quality wines  Won international gold medal at Bordeaux  Polite and traditional   Family ownership  “Thomas Hardy & Sons”  (1853)

  1. Culture/Values Core competencies “Marketing expertise, brands, and Huge-volume grape crush  winemaking know-how”  Bulk packaging operations  “access to fruit, funds, and disciplined management”
  2. Long history of exporting much Limited international experience in higher value added wines  Scandinavia
  3. Track record at export/global  External brand awareness
  4. 1989: acquisition of Whiclar and Gordon, a respected UK based wine importer – distributor + agency rights for France / Chili / South African wines.
  5. Looking for wineries in Europe Struggling and looking for ways to to reach critical mass + credibility expand and upgrade its business  to give access to Europe.
  6. Looking for multiple sources of supply to reduce risk of vintage  (Optimistic acquisition in France and Italy 92).
  7. Looking for loan + financial partners. Export Experience Goals page 3 / 3 Powered by TCPDF (www. tcpdf. org)

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Wine Industry Porter Analysis
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