Andrew Peller

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Andrew Peller Marketing Project Phase One. Company Analysis

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<ul><li>1.[ANDREW PELLER LIMITEDSITUATION ANALYSIS &amp; MARKET OPPORTUNITY PROPOSAL] 1Andrew Peller Limited Situation Analysis &amp; Market Opportunity Proposal Rachel Smethurst, Rodion Salakhutdinov, Anselm, Hardeep, HuzafaThis document is a prepared analysis and research study based on the Canadian Wine Market in 2012. The document concludes with a prospective market opportunity based on secondary research collected. Included is an evaluation of Andrew Peller Limited, the Canadian wine market size and condition, competitors, market factors, and a marketing proposal.[Company Address]</li></ul><p>2. 2ANDREW PELLER LIMITED PROPOSALSITUATION ANALYSIS &amp; MARKET OPPORTUNITYTable of Contents Company, Strategic Business Units, &amp; Brand Analysis ..................................................3 Company Overview ..................................................................................................................................................3 Strategic Business Units.........................................................................................................................................3 Consumer Wine Making Kits &amp; Importing ....................................................................................................... 3 Specialty Retailers ....................................................................................................................................................... 3 Wine production ........................................................................................................................................................... 3 Brand &amp; Product Analysis .....................................................................................................................................5Canadian Wine Market ...............................................................................................6 Statistics .......................................................................................................................................................................6 Key Players &amp; Dynamics ........................................................................................................................................6Competitive Analysis ..................................................................................................7 Direct .............................................................................................................................................................................7 Casella Wine PTY LTP and Fosters Group ....................................................................................................... 7 Constellation Brands .................................................................................................................................................. 7 Indirect..........................................................................................................................................................................8Customer Analysis ......................................................................................................9 General Characteristics &amp; Statistics ..................................................................................................................9 Decision Factors &amp; Consumer Segments.........................................................................................................9Market and Consumer Factors .................................................................................. 11 Government Regulation &amp; Tax ......................................................................................................................... 11 Growth and consumption trends .................................................................................................................... 11 Foreign Subsidies and Imports ........................................................................................................................ 12 VQA .............................................................................................................................................................................. 12 Lifestyle Integration ............................................................................................................................................. 12SWOT Analysis .......................................................................................................... 13 Market Opportunity Analysis .................................................................................... 14 Appendix .................................................................................................................. 15 Works Cited .............................................................................................................. 21March 6th, 2013 3. ANDREW PELLER LIMITEDSITUATION ANALYSIS &amp; MARKET OPPORTUNITY 3 PROPOSALCompany, Strategic Business Units, &amp; Brand Analysis Company Overview Andrew Peller Limited (APL) is a Canadian company thatproduces and markets wine and wine related products. A leading participant in the Canadian wine market, APL looks to serve the needs of all wine consumers by offering premium brands together with popular and value priced varietals, as well as manufacturing consumer wine making kits. They are the 2nd largest producer and marketer in the Canadian wine market and have leading brands in all price segments. (2012 Annual Report, 4)Innovation, capital investment, and active evaluation of market opportunities have all been key factors to the success of this company. The core business focuses on the production and marketing of premium wines and winemaking kits.Strategic Business Units Andrew Peller has expanded operations fromwine production to include manufacturing of consumer wine kits, importing, and retail operations. (Annual Information Report, 6) Consumer Wine Making Kits &amp; Importing The wholly owned subsidiaries, Global Vintners and The Small Winemakers Collection, respectively oversee consumer winemaking kits and importingin Ontario. Both strategic units focus on providing quality products to their consumers at the best value. The Small Winemakers Collection imports and markets international premium wines. (2012 Annual Report, 7) Specialty Retailers Andrew Peller Limited forwardly integrated into retail distribution with the establishment of Vineyard Estates, Aisle 43, and Winecountry Vintners. These 102 retail establishments market and sell trademarked brands under the Andrew Peller umbrella and strengthen the companys distribution channel. (2012 Annual Report, 7) Wine production APL produces and markets over 20 brands of wine over 5 value segments. In fiscal 2012, the company experienced a 4.3% increase in sales and as at March 31, 2012, had 13.6%March 6th, 2013 4. 4ANDREW PELLER LIMITED PROPOSALSITUATION ANALYSIS &amp; MARKET OPPORTUNITYshare in the English Canadian market. Of 2012 sales, approximately 50% were Ontario sales.(Figure 1) The company is only one of two major wine producers to increase market share over the last 5 years. (2012 Annual Report, 9) APL has displayed strong sales figures, market growth, and financial stability over the past years. Andrew Peller brands have received many prestigious awards and have ranked in the top selling products in the LCBO.(Figure 2)(Annual Information Report, 9) Figure 3SuppliersCore CompetenciesMarketing and Innovation Location DistributionThe nature of the industry requires a consistent supply of quality raw materials and a strong relationship with suppliers. Input materials include purchased grapes, grapes produced in APL vineyards, bulk wine, and juice; the input mix varies based on the wine produced. To ensure quality and consistency of the supply of Canadian grapes, APL has entered into over 75 contracts with grape suppliers in British Colombia and Ontario. The company also owns various wineries and vineyards in premium geographic areas within the two provinces. (Figure 4) Locational competencies provide a competitive advantage as wines are produced with local grapes and sold in their respective provinces.(Annual Information Report, 10) Marketing and innovation are driving forces behind APL brand awareness. The company utilizes traditional media, social media, and looks for unique and innovative marketing methods and distribution channels. Effective marketing for the launch of the Crush brand in 2012, through the use of promotional posters and banners, resulted in the strongest sales experienced for a new brand in Vineyard Estates. (Annual Information Report, 9)To facilitate consumer research and brand awareness, the company TripAdvisor allows consumers to rate their experience at various Andrew Peller wineries. The companys social media presence is weak but growing. Some wineries, such as Trius and Peller Estates, have Youtube channels to advertise their products and increaseMarch 6th, 2013 5. ANDREW PELLER LIMITEDSITUATION ANALYSIS &amp; MARKET OPPORTUNITY 5 PROPOSALconsumer awareness. The TV brand spot for XOXO has been uploaded to the site for consumer viewing. Major brands have a Facebook and Twitter presence, although subscriber and video views are relatively low which suggest that social media is not optimally utilized. (Figure 5 &amp; 6) (2012 Annual Report, 5) The company values innovation in product offering, process, and design. Examples include, the new Skinny Grape product targeted towards calorie conscious women, and the introduction of lightweight glass in an effort to reduce costs and be more environmentally friendly. All bottled portfolio products will be packaged this glass by 2013 and this unprecedentedinitiative was well received by the LCBO. (Annual Information Report, 9)Brand&amp; Product Analysis APLs product base is divided into segments based on a combination of both price and quality. They are as follows: VQA ValuePopularly PricedEntry-LevelPremiumUltra - PremiumLess than $8$8-$12$10-$15$15-$20Over $20(Annual Information Report, 7) Value brands include blended, sparkling, and fortified wines. Both value and popularly priced varietal frequently are ICB wines, indicating that they are a blend of domestic and international wines. The VQA designation is given to wines of 100% Canadian content and these wines can be further divided into segments by price. A complete list of brands available within each segment is available in the appendix. (Figure 7)(Annual Information Report, 9)All brands are positioned to offer the best value product at each price point. Brands from all value segmentsare amongst the companys top selling products. Frequent evaluation of market opportunities, consumer trends, and positing of brands to meet consumer needs, has developed APLs ability to market to multiple segments. Most of the brands available for retail sale are carried in the LCBO and many of the brands including Peller Estate French Cross/Proprietors Reserve, Wayne Gretzky Estates, and Crush have been top rated sellers within the distributor. (Annual Information Report, 8)March 6th, 2013 6. 6ANDREW PELLER LIMITED PROPOSALSITUATION ANALYSIS &amp; MARKET OPPORTUNITYCanadian Wine Market Statistics The Canadian alcoholic beverage industry is divided into wine, beer, and spirits. Wine encompasses champagne, fortified, sparkling, and still wines. The following is a table of 2012 sales and volume figures and the forecasted values for 2013 and 2016. YearGrowth Percentage ofMarket SizeVolume ConsumptionMarket Size ($)($)(Liters)20123.3%$6,495.7 Million431.7 Million20133.3%$6,709.8 Million445.1 Million20163.2%$7,358.1 Million490.2 Million(Marketline, 14 15) Information in the preceding table is provided by Marketline Industry Profile report on the Canadian wine industry. In 2011, still wine comprised 81.5% of market sales followed by fortified wine (10.3%), champagne (6.9%) and sparkling wine (1.2%) (Marketline, 10)(Figure 8)Key Players &amp; Dynamics Key competitors in the market include Andrew Peller Limited, Fosters Group, Casella Wines, and Constellation Brands.(Marketline, 12)The market is experiencing both horizontal and vertical integration. Imports currently represent 85% of sales and are a major threat to domestic companies.(Lees) Both suppliers and distributors have significant power due to the importance of high quality raw material and the lack of distribution alternatives. Primary distribution channels are limited to provincial and private retailers, on-trade accounts, wineries, and exporting. 88.3% of sales occur through specialist retailers or on-trade accounts. (Marketline, 13)Dominant companies are expanding their portfolio to include low cost, mass production brands in order to compensate for intense competition and consolidation of companies. Tax levies on international products and a maturing market will impact future production selections. (2012 Annual Report, 5)March 6th, 2013 7. ANDREW PELLER LIMITEDSITUATION ANALYSIS &amp; MARKET OPPORTUNITY 7 PROPOSALCompetitive Analysis Direct competitors are major wine manufacturer and independent wineries. Indirect competitors include other alcohol products, beer, spirits, and liquor. Due to the high degree of substitutes and highly segmented consumer preferences, indirect competitors are views as a high threat.Direct Major competitive wine manufacturers include the following: Andrew Peller Limited (Canadian) Constellation Brands (American) Fosters Group (Australian) Casella Wine PTY LTP (Australian)(Marketline, 12)The competitive landscape is characterized by a consolidation of companies and vertical integration. Concentrated manufacturer power increases competition within the market. Trends include pricing pressure and expansion of portfolios to include lower priced, mass marketed varietals. (Marketline, 21) Brand awareness, purchasing power, stable supplier relations, and strong marketing are all key attributes to competitive viability. Casella Wine PTY LTP and Fosters Group Both Casella Wine and Fosters Group are Australian wine companies that sell large volumes of products in the Canadian market. Fosters Group operates in several alcohol categories and focuses on exporting premium wines to the Canadian market. (Marketline, 26) Of the three brands Casella Wine produces, only Yellow Tail is available in the Canadian market with an average price around $10-$15. (Casella Wines) Both companies are considered competitors but are disadvantage in that they cannot compete in the VQA market segment. Constellation Brands Constellation Brands is an American conglomerate which acquisitioned the Canadian wine company, Vincor Canada. The company can be divided into two divisions: Constellation Wines and Crown Imports. Constellation wines handles all production andMarch 6th, 2013 8. 8ANDREW PELLER LIMITED PROPOSALSITUATION ANALYSIS &amp; MARKET OPPORTUNITYmarketing of wine brands. This company is the major competitor to Andrew Peller as they lead the market with a 26.3% share and are the only d...</p>

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