EXEMPLO DE PRÉ-PROJETO
|Final Paper for the Degree (Lato Sensu) Graduate MBA Course in International Trade – T18 |
|Internationalization of the Brazilian wine |
|A Study on the insertion of Brazilian wines in the German market |
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|Juliana Clemente Troula |
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|Coordination: |
|Prof. Dr. Celso Cláudio de Hildebrand e Grisi |
|Prof. Dr. Fábio Lotti Oliva |
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|Advisor: |
|Prof. Dr. Fábio Lotti Oliva |
|São Paulo – 04 / 2009 |
Acknowledgements:
To Professor Maria Sylvia Macchione Saes, senior lecturer of the University of São Paulo, for her selfless support and guidance in the initial selection of the theoretical basis and line of research for this paper.
To Chef Peter Rock, in Nuremberg - Germany, for giving up his time to answer a questionnaire and provide highly relevant information, both general, in regard to the global market, and specific in regard to the German winegrowing industry.
Resumo
Esse estudo analisa o potencial de mercado na Alemanha e aborda, superficialmente, uma estratégia de posicionamento de marketing internacional para alguns vinhos brasileiros. Além disso, busca-se explorar: a evolução ao longo dos anos, a identificação de fraquezas e a proposição de melhorias para a indústria vitivinícola do Brasil que, bem como outros sistemas agroindustriais nacionais, enfrenta dificuldades de coordenação produtiva, manutenção de qualidade e posicionamento mercadológico para atingir um nível satisfatório de competitividade, no contexto internacional.
Com o uso de entrevistas, participação em exposições, visitas a estabelecimentos, pesquisas em sites e leitura de livros ou artigos publicados sobre o assunto, foi realizado um projeto que apresenta três grandes vertentes. Uma delas seria a análise da competitividade do produto brasileiro, tanto no âmbito industrial, como mercadológico. Em um segundo momento, delineou-se o potencial de consumo para o produto, no mercado alemão atrelado a uma nova estratégia de posicionamento de marketing.
Finalmente, como busca de benchmark para a indústria vitivinícola nacional, foi feito um estudo de caso sobre o histórico da evolução da indústria vitivinícola alemã e os incrementos no seu nível de qualidade conquistados ao longo dos anos.
Como resultado da pesquisa, podemos identificar um nicho de mercado internacional para alguns vinhos específicos brasileiros bem como, delinear superficialmente uma estratégia de posicionamento de marketing. Além disso, através desse estudo, também podemos observar as melhores práticas de coordenação industrial na Alemanha que podem ser absorvidas, não somente pela indústria vitivinícola, mas, também, por outros sistemas produtivos agroalimentares brasileiros.
Como conclusão desse estudo, percebemos que se tem muito a explorar no que diz respeito à organização produtiva da indústria vitivinícola nacional para incrementar a produtividade e manter a qualidade de seus produtos. Com a sustentação do nível de qualidade e competitividade de custos, encontrar-se-ão diversos nichos de mercados internacionais para os vinhos brasileiros como, por exemplo, o espumante e o orgânico.
Abstract:
This study analyzes the market potential in Germany and it approaches superficially an international marketing positioning strategy for some Brazilian wines. Even more than that, the project explores: the evolution along the years, the identification of weaknesses and the proposition of improvements for Brazil’s winegrowing industry that faces, as well as other national agro-industrial systems, difficulties in productive coordination, quality maintenance and marketing positioning to achieve a satisfactory competitiveness level in the international context.
Using interviews, exhibit participations, establishment visits, websites researches and reading books or articles published about the subject, this project was developed and it presents three great branches. One of them would be the analysis of the Brazilian product competitiveness, in the industrial sphere as well as in the marketing area. In a second moment, the potential product consumption was delineated in the German market linked to a new marketing positioning strategy.
Finally, as a benchmark search for the domestic winegrowing industry, a case study was developed about the history of the German winegrowing industry evolution and the increments in its quality level that were achieved along the years.
As a result of the research, we can identify an international market niche for some specific Brazilian wines as well as, we can outline, superficially, a marketing positioning strategy. In addition, through this study, we can also observe the best practices of industrial coordination in Germany that can be absorbed, not only for the winegrowing industry, but, also, for other Brazilian agri-food production systems.
In conclusion of that study, we noticed that there is a lot to be explored in relation to the national winegrowing industry production organization to increase the productivity and maintain the quality of their products. Provided the quality level and the cost competitiveness is maintained, there will be several international market niches available for the Brazilian wines like, for example, the sparkling and the organic wines.
Resumo:
Este estudio analiza el potencial de mercado en la Alemania y se acerca, superficialmente, de una estrategia de posicionamiento de marketing internacional para algunos vinos brasileños. Aún más que ese, el proyecto explora: la evolución a lo largo de los años, la identificación de las debilidades y la proposición de mejorías para la industria de vinificación del Brasil que enfrenta, así como a otros sistemas agro-industriales nacionales, dificultades en la coordinación productiva, mantenimiento de la calidad y posicionamiento en el mercado para alcanzar un nivel satisfactorio de competitividad, en el contexto internacional.
Con o uso entrevistas, participación en exposiciones, visitas a establecimientos, pesquisas en sitios en la internet y la lectura de libros o artículos publicados sobre el tema, fue desarrollado un proyecto que presenta tres grandes vertientes. Una de ellas sería el análisis de la competitividad del producto brasileño, en el grado industrial así como en marketing. En un segundo momento, fue delineado el potencial de consumo del producto en el mercado alemán enjaezado a una nueva estrategia de posicionamiento de marketing.
Finalmente, como busca de benchmark para la industria de vinificación nacional, fue hecho un estudio de caso sobre la historia de la evolución de la industria de vinificación alemana y los incrementos en su nivel de calidad que fueron alcanzados a lo largo de los años.
Como resultado de la pesquisa, podemos identificar un segmento de mercado internacional para algunos vinos específicos brasileños así como, podemos delinear superficialmente una estrategia de posicionamiento de marketing. Además, con este estudio, podemos también observar las mejores prácticas de la coordinación industrial en la Alemania que se puede absorber, no sólo por la industria de la vinificación, pero, también, por otros sistemas productivos agro-alimentares brasileños.
En conclusión de ese estudio, notamos que se hay mucho a explorar relacionado a la organización productiva de la industria de la vinificación nacional para incrementar la productividad y mantener la calidad de sus productos. Con el sostenimiento del nivel de calidad y de la competitividad de los costes, habrá disponible varios segmentos de mercado internacionales para los vinos brasileños como, por ejemplo, el espumante y el orgánico.
Table of Contents:
1. INTRODUCTION
1. Problem Situation / Challenge: Difficulties encountered by the Brazilian winegrowing industry and identification of market opportunities within the international context.....................................................................9
2. Objectives: Analysis of the main causes of these difficulties, proposal for improvement and study of a competitive strategy for some Brazilian wines in Germany................................................................. 15
3. Justification: Improvements both in the positioning within the international market and in the organization of the Brazilian agribusiness system are crucial, so that the country can finally become the “world’s granary”……………………………………………………………..17
4. Case study: Analysis of the winegrowing industry in Germany as a benchmark, study of the potential consumption of the German market for exports of some Brazilian wines and definition of a marketing positioning strategy................................................ 21
2. REVIEW OF THE THEORY: COORDINATION OF PRODUCTION AND MARKETING.
1. Features and trends within the global agri-food industry requiring better organization of production...............................................................26
2. Evolution of the Brazilian agri-food industry and an analysis of its potential............................................28
3. Analysis of the production organization of the Brazilian winegrowing industry, identifying the main causes of its difficulties..........................................................30
4. Review of the main marketing concepts adopted to boost the competitive strategy of some Brazilian wines on the international market.......................................31
3. METHODOLOGY
1. Determining the type of research and its constraints………………………………………………….........46
2. Specific objectives of the research...........................47
3. Types and sources of information.............................49
4. Defining the issues of the study...............................50
4. ANALYSIS OF THE RESULTS
1. Proposal for enhancing the production organization of the Brazilian winegrowing industry...........................52
2. Study of the potential consumption of the German market for several Brazilian wines............................55
3. Defining a marketing strategy for Salton sparkling and organic wines……………………….................................63
5. FINAL REMARKS…………..…………………………………………..69
6. BIBLIOGRAPHY…………………………………………………………71
1 INTRODUCTION
1 Problem Situation / Challenge: Difficulties encountered by the Brazilian winegrowing industry and identification of market opportunities within the international context.
The Brazilian winegrowing industry, like many other agribusiness systems, is facing difficulties in organizing its production, maintaining quality and in its positioning on the international market.
This production system in particular is a very appropriate example for explaining why strict coordination is fundamental for transforming regional producers into highly productive, internationally renowned suppliers.
Unlike most consumer goods that frequently use only new marketing techniques to add value to their brands, wine, in most cases, has to simultaneously show higher levels of quality in how it is processed in order to achieve this same objective.
Brazilian wine is unable to attain a high-profile international position, in spite of Brazil’s huge agribusiness potential. Other South American countries such as Chile and Argentina, with smaller areas of arable land to be exploited and much less economic clout than Brazil have for many years successfully attained high-profile positions on the international market, with competitive prices.
The culture of wine production was introduced in Brazil by the Portuguese and Italians who chose the south of the country to settle. Initially they were independent producers with no standard of quality, coordination or technological innovations.
Thus we can say that Brazilian winemaking is much more similar to that of Europe, that is, it is based on small producer families, than the large-scale production system prevalent in the United States and Australia. (ZYLBERSTAJN, 2002).
By using several sources of information, Sato (2004, p.1) detects that:
[...] Around 95% of Brazilian wines are produced in Rio Grande do Sul, with 5% in Santa Catarina and Paraná, taken together. In Rio Grande do Sul, red wine predominates, with 77.4%, rosé wine with 15.3 % and white wine with 7.3% [...].
Table 1 – Sales of wines and derivatives produced in RS, from 2003 to 2008 - the domestic and external markets - in liters.
|Products |Jan to Dec |Jan to Dec |Jan to Dec |
| |2003 |2004 |2005 |
|Customers |Average |High |The lowest |
|Non-customers |Low |High |Low |
Source: Aaker – Strategic Market Management - 1998.
The loyalty matrix suggests that those with an irregular attention to the brand, including those who occasionally pay attention to competitors’ brands, must be a priority for the organization.
Using the matrix implies estimating the size of the six cells, identifying the customers in each group and drawing up programs that will influence their brand preference and loyalty level.
In the wine market the question of loyalty to a brand carries a lot of weight in the consumer’s decision to purchase (KIM; MAUBORGNE, 2005). Nevertheless, the decision process to buy a product also involves other motivational factors explained in the next paragraph.
Maslow (1943) starts from two ideas when formulating his theory of human motivation: the environment influences human behavior (cultural factors) and human beings carry certain innate motivations and emotions (genetic factors).
The author believed in human kindness, thus his research led him to search for “self-achievement” themes and the study of human potential.
When researching “emotional domination and security” within the Blackfoot Indian tribe in 1938, he noticed that people have certain inner needs not specified by Freud which were against the capitalist notion of the economic man stimulated by material desires. He recognized the innate need of people to experience sense and have a purpose in their lives.
In developing the theory of human motivation, Maslow tried to understand the factors comprising happiness and a sense of achievement. Upon analyzing normal personalities he identified common characteristics such as self-esteem, self-awareness, skills of receiving and expressing love and the ability to question the rules of society itself as prerequisites for a healthy psyche.
In this context, Maslow’s Theory (KOTLER, 2000) hierarchizes human needs in such a way that the motivation of individuals would strive to satisfy those needs that range from primary (physiological) needs, to the most complex or psychological needs (self-achievement). The five types of need are shown in the table below.
Table 5 – Human needs according to Maslow.
|Physiological |Hunger, thirst, sleep, sex, etc |
|Security |Stability, protection against physical or emotional harm, etc |
|Social |Friendship, intimacy, acceptance, feeling loved, loving, etc. |
|Self-esteem |Being admired by the others, feeling important, self-love, personal achievement, etc. |
|Self-achievement |Personal development and/or professional advancement, personal satisfaction, etc |
Source: Kotler – Marketing Management - 2000.
For Maslow, individuals would only transit from one stage to another if they have satisfied all the needs of the previous stages, that is, when the most basic needs have been satisfied, new needs (at a higher level) appear, and the old needs no longer serve as motivators of behavior. This is the characteristic of the hierarchy of relative importance of human needs, where at the top there is the desire for self-achievement, “especially the tendency to become what he potentially is: become everything that a person can become.”
Chart 2 – Hierarchy of needs.
Achievement
Esteem
Participation
Security
Basic
Source: Marketing Management - Philip Kotler (2000).
This fact cannot be proven in all societies, but the hierarchy serves as a guideline for the decisions of marketing professionals when adapting a product to be offered to the consumer.
Later, the ERG – Existence, Relatedness and Growth Theory of Clayton Alderfer (1969) was to make Maslow’s hierarchy more compatible with the reality of a larger number of societies, showing that more than one need may be taking place simultaneously.
During the decision process for buying a product, the consumer is faced with several stages of reflection. The AIDA model created by Jerome McCarthy in 1960 explains the stages that are prerequisites for a purchase decision. Attention, Interest, Desire and Action form a linear hierarchy that consumers experience when making a purchase.
So in order to buy a product the consumer must necessarily meet the following criteria:
Table 6 – Stages, according to the AIDA model, in the purchasing process.
|Attention |Knowing that a product or service exists. |
|Interest |Paying attention to the characteristics, specifications and benefits of the product. |
|Desire |Having the desire to enjoy the benefits the product offers. |
|Action |Purchasing the product |
Source: Aaker - Strategic Market Management - 1998.
The chart below highlights the purchase decision process itself:
Chart 3 – Purchase decision process.
Source: Kotler - Marketing Management - 2000.
So in an example about motivational segments and priorities of airline customers, Aaker (1998) segments the motivations as follows:
Table 7 - Customer motivation: airline passengers.
|Segment |Motivation |
|Business |Reliable service, convenient times, user-friendly airports, frequent flyer programs and comfortable service. |
|Tourists |Convenient prices, times and dates. |
Source: Aaker - Strategic Market Management - 1998.
It is important to be aware of the set of motivations that comprise the consumer’s choice; although motivations are not the main element when defining a strategy or differentiating a business, they represent minimally a dimension that one must attain in order to perform adequately, on pain of losing the battle. According to Aaker:
[...] if taste is the basic motivation for those who buy special frozen dinners, a viable company must at least be capable of offering an acceptable taste[...] (AAKER, 1998, p. 59).
As Chart 4 suggests, motivational analysis of the consumer begins with the task of identifying the motivations of a given segment.
Chart 4 – Analysis of Customer Motivations.
Source: Aaker - Strategic Market Management - 1998.
Going back to the example of the airlines, Naresh K Malhotra (1999) in his book “Marketing Research” shows how the analysis of customer motivations is effectively put into effect. Malhotra tell us:
[...] that Asian airline companies had for a long time been facing uncertainty and strong competition from their US counterparts. Within this context they woke up to the need to group together and increase their clientele. Secondary data (information already available in the market) showed that the factors determining passengers’ choice of an airline company included prices, punctuality, destinations, offers available, in-flight meals, service, etc... The Asian companies were offering these services at least on equal conditions. In fact, an additional study showed that in-flight service and food were even better than those of the competitors. Against this background, why were the Asian companies feeling the heat from the competition? [...] (MALHOTRA, 1999, p. 474).
Afterwards, a qualitative study was carried out using focus groups. This revealed that the frequent flyer program was a critical factor for a large segment in general, and for the new business segment in particular. Multiple regression analysis of the data gathered in a survey of international passengers enabled the following conclusions to be reached:
[...] The likelihood of flying and other measures of choice served as a dependent variable, while the set of factors involving service, including the frequent flyer programs, was the independent variables. The results showed that the frequent flyer program did in fact have a significant impact on the choice of the airline company. Based on this evidence, three Asian companies launched a joint program for their frequent flyers, called Asia Plus, for users of all their airlines. The program was the first among the Asian airline companies to offer free travel in exchange for regular flying. A marketing campaign was launched and millions of dollars spent on advertising to promote Asia Plus. The frequent flyers went from, let’s say, turbulence to good weather, and the Asian airlines saw their passenger turnover grow [...] (MALHOTRA, 1999, p. 474).
This type of analysis, in the case of customer relationship management in services besides airlines companies, can be exampled by chart 5:
Chart 5 - Service.
[pic]
Key to the chart
|Facilidade de acesso |Ease of access |
|Programa de Passageiros Frequentes |Frequent Flyers Program |
|Agilidade no atendimento |Quick customer service |
|Cordialidade e atenção |Cordiality and attention |
|Manter |Maintain |
|Manter ou melhorar |Maintain or improve |
|Melhora menos prioritária |Lower priority improvement |
|Prioridade maxima |Top priority |
|Imapcto |Impact |
Source: Malhotra – Marketing Research - 2009.
In regard to pricing, Parsons and Dalrymple (1995) hold that the definition of the price of a product can serve different purposes. In some cases, the price affords the product exclusiveness; while in other cases a low price enables it to gain market share from competitors.
Globalization is a trend in the business environment, and the borderline between what is domestic and what is international is an increasingly tenuous one.
The disappearance of customs barriers has led to greater affinity between countries. Technological development and globalization have in turn produced important modifications in the international arena.
According to Mead (1998), major companies conduct their international business through subsidiaries and joint ventures, while small companies also feel the pressure from foreign competition and decide to internationalize, too. In the advanced stages of development, organizations opt for franchising or licensed manufacture.
The different stages of development involve different concepts of international marketing.
Keegan (2005) during the internationalization process establishes four stages within a company’s internationalization process:
• Domestic Organizations: companies focused on the domestic market, with only sporadic export activity.
• International organizations: Companies that transfer their values and practices to their branches in other countries.
• Polycentric Organizations: Companies that adapt their values and practices in their branches located in other countries.
• Global organizations: Companies that successfully develop a global strategy for their product based on similarities between the markets.
According to Craig and Douglas (2000), global marketing is more complex than domestic market-focused marketing alone, as the activities involve different management systems, such as licenses, strategic alliances and joint ventures. For Troyjo (2005), for example, organizations must put in place departments for handling these specific problems and, at the same time, identify opportunities within the international context.
Kim and Mauborgne (2005) analyzed the case of Casella Wines and put together the framework needed to create alternative room in the market to get round the competition.
Chart 6: Elements for creating a new value curve - The four actions framework.
[pic]
Source: The blue ocean strategy - Kim and Mauborgne (2005).
Casella Wines created the “Yellow Tail” wine whose strategic profile beat the competition and created the “blue ocean”. Instead of offering wine as wine, Casella created a social wine accessible to everyone. In other words, accessible to consumers of beers, cocktails, etc...
In a two-year period, this social and fun wine turned out to be one of the fastest-growing brands in the market in the United States and Australia. This wine outperformed sales of French and Italian wines.
An interesting feature of the Yellow Tail wine is that there was no promotional campaign, mass media or advertising campaign to divulge it. Initially too, this wine did not steal the market from traditional wines, rather it simply won over new consumers who had previously never drunk wine.
US consumers usually consider wine complicated because its taste is difficult to appreciate. Beer and cocktails are sweeter and easier to drink. Yellow Tail is smooth and less complicated than traditional wines. In other words, the alcohol structure is less complicated.
The Yellow Tail packaging is uncomplicated and innovative, with vibrant oranges and yellows on a black background. Traditional wines have labels with lots of details that are difficult to understand.
Figure 2: Wine labeling.
|[pic] |[pic] |[pic] |
|UNITED STATES |FRANCE |ITALY |
Source: Wine lovers questionary - 2009.
1- Winemaker’s name
2- Region where the grapes were cultivated.
3- Year in which the grapes were picked.
4- Type of grape.
5- Type of processing.
6- Bottling region.
7- Additional information.
Figure 3: Yellow Tail labeling
[pic]
Source: - 2009.
Still with regard to Yellow Tail we can say that labeling terminology and the traditional marketing of wines were eliminated.
Pari passu, a drink was created that has a light taste and can be enjoyed socially. Furthermore, the point-of-sale relationship was enhanced and the complexity of the wine reduced.
Chart 7: Summary of the Yellow Tail strategy.
[pic]
Source: The blue ocean strategy - Kim and Mauborgne (2005).
3 METHODOLOGY
3 Determining the type of research and its constraints.
We can say that this study is an exploratory one, as it has sought to identify a niche in international market and has merely scratched the surface of an innovative marketing strategy for some Brazilian wines.
In addition, based on the case study, this paper also sought to increase the level of competitiveness of Brazilian wine within the production environment.
Therefore the purpose of the case study of the German industry was to provide the development time line of those regional winemakers with initially low yields progressing to a globally recognized, highly coordinated and efficient production system.
In spite of having touched upon production concepts, this study was limited to examining matters of an administrative nature, such as: organization of production and marketing positioning. Therefore this study did not go into depth in its analysis of specific matters involving the science of enology.
One can say that this study began with a theory: Brazilian wine is fully capable of competing with wines from the New World (USA, South Africa, Chile and Australia) on the German market, as Brazil possesses a huge unexploited agribusiness potential. Besides, Brazil also enjoys greater possibilities of achieving economies of scale when compared to Chile and South Africa, while its production costs, such as labor, are much cheaper when compared to those of the USA and Australia.
Although not an explanatory study, this project also sought to understand the ex-post-facto CAUSES of the problems within the Brazilian winegrowing industry, by analyzing historical data on the internet and reading books and articles on the topic.
Furthermore, the study also tries to DESCRIBE the German wine market and the history of its development. In order to confirm documentary data information, a field research was carried out in Nuremberg – Germany, but which is not statistically representative.
The case study of the German winegrowing industry not only serves as an organizational model for Brazilian winemaking, but also as a means of understanding how possible local competitors would behave. It should be pointed out, nevertheless, that according to the Blue Ocean strategy, both the Salton Moscatel and Organic Wines would endeavor to explore new niches in the German market rather than competing head-to-head with the Sekt.
Given that studies were carried out using bibliographies of articles, books and periodicals, errors of analysis may have occurred. Nevertheless, a documentary survey was done primarily on sites, several interviews and a simple field study to prove the theory.
The reason for choosing an exploratory research is due to the effort to satisfy a theory and the originality of identifying a new market niche.
3.2 Specific objectives of the research.
Summarizing, we can say that this study is structured in the following manner:
Chart 8: Research scheme
[pic]
Key to the chart
|Pesquisa exploratória |Exploratory research |
|Bibliografia |Bibliography |
|Marketing Internacional |International Marketing |
|Perfil de consumo, demografia, competitdores, etc |Consumption profile, demography, competitors, etc |
|Organização da produção |Production organization |
|Validação documental |Documentary validation |
|Estudo de caso |Case study |
|Fontes secundárias |Secondary sources |
|Estratégia competitiva |Competitive strategy |
|Mercado alemão, grande importador |German market, major importer |
|Entrevistas |Interviews |
|Indústria alemã |German industry |
|Pesquisa de campo |Field research |
|Fontes primárias |Primary sources |
Source: Juliana Clemente Troula - 2009.
A bibliographic research was carried out of articles, books and periodicals in order to analyze a strategy for raising the competitive stand of the Brazilian wine, within both the marketing and the production environments. The books chosen to attain these objectives belong, in the main, to the following fields: organization of production, marketing and competitive strategy.
In order to validate the ideas presented in the bibliography researched regarding the organization of production, a documentary research was carried out on the sites of public or private research institutions, associations, companies and news agencies. In addition, several interviews were carried out, both in wine stores and exhibitions.
In order to render feasible a new marketing strategy prepared through bibliographical research, data was gathered both in the field, by visiting supermarkets, and through interviews in wine stores and exhibitions. In addition, all information collected was validated by reviewing the information provided by sites and articles on the subject.
3.3 Types and sources of information.
Summarizing, as mentioned previously, by using interviews, visits to establishments, participation at exhibitions, research on sites and reading of books or articles published on the subject this project came to fruition under the guidance of three major approaches. One of them was an analysis of the competitiveness of Brazilian wine within both the production and the marketing environment. The second was the measurement of the potential consumption of the product on the German market and the strategy for its marketing positioning. Lastly, in the search for a benchmark for the domestic winegrowing sector, a case study was made of the history of the German winegrowing industry and the enhancements in the level of quality attained over the years.
As a source of secondary data, we used bibliographical and documentary research. Among the classical authors consulted we have Kotler, Aaker and Porter. In the case of documentary research, we can mention AC Nielsen, the USDA, CONAB, UVIBRA, Austrade etc.
To obtain primary data we did a survey with enologists in wine stores and at exhibitions. However, the number of interviewees is not statistically representative, and it was decided not to mention the names of the companies or professionals present especially at the Expovinis fair.
As already mentioned, in the case of indirect documentary research we can say that both documentary and bibliographical sources were used. At the same time, in the case of direct documentation we can say that a simple field study was carried out in Nuremberg.
The interviews conducted both in wine stores and at exhibitions are classified as structured and involve intensive direct observation.
Lastly, in regard to the case study we can say that information was collected about the strategies employed for achieving established goals, while also outlining a political and managerial profile of the country and its producers. In addition, the economic and production scenarios were analyzed at different stages, so as to understand how the country made decisions in the face of numerous adversities.
3.4 Defining the issues of the study
The data was collected using a qualitative questionnaire applied to Chef Peter Rock in Nuremberg - Germany. In addition, interviews were held at the Expovinis Brasil fair, with research on websites and published articles.
In line with the 4 P’s, the questionnaire applied to Chef Peter Rock comprised the following questions:
PRODUCT:
• What changes were made to the German production system in order to increase exports?
• How do the winemakers control the quality of the grapes and the wines?
• What is the duration of the supply contract between the winemakers and the farmers?
• Are German producers interested in producing organic wines?
PROMOTION:
• What is the primary international marketing strategy for German wine?
PLACE:
• In what type of establishment is wine mostly consumed?
PRICE:
• What is the average price of German wine and imported wine?
Both the exporters and the enologists interviewed at Expovinis 2009 will not be identified. Nevertheless, we provide below a list of the questions submitted to them:
PRODUCT
• Which wines of the winemakers at the Expovinis are intended for export and which quality wines are only consumed locally in Brazil? Why?
• Why don’t Brazilian winemakers produce wine in long-life packaging as Chile does?
• Which winemaking features of Chilean wine lead it to be the largest South American exporter and recognized worldwide for its quality?
PLACE
• To which market is Chilean wine most exported?
PROMOTION
• What is the international marketing strategy adopted by the Chilean wine for conquering the European market?
PRICE
• What is the average price of Chilean wine on the European market?
4 ANALYSIS OF THE RESULTS
4 Proposal for enhancing the production organization of the Brazilian winegrowing industry.
In accordance with the questionnaire on the four P’s and in regard to the changes in the German production system so as to increase exports, Peter Rock said that the key landmark was the decision of the cooperatives to increase the planted area and invest in technical improvements for cultivating grapes.
Over time, German farmers decided to make intensive use of fertilizers and to considerably expand the planted area, so as to provide the largest possible quantity of grapes, so that the government would test for quality and decide whether the fruit was appropriate for producing high-quality wine. In other words, the greater the quantity of fruit provided, the greater the possibility of finding the proper grapes.
Furthermore, and still with regard to the product, where wine for export is involved they choose small areas of the plantations to invest intensively in the Riesling grape, which requires a high level of quality and additive control.
The primary international marketing strategy of the German wine is to publicize the quality of the Riesling grapes used to produce the majority of the products for export.
In order to control the competitive stand of the German wine against the French, for instance, the country makes use of the government office in Wiesbaden, which is responsible for controlling imports and exports using a quota system.
With regard to the quality of the grapes and wines, we can say that both the government and the winemakers are responsible for controlling them. In the case of grapes, the quantity of natural sugar they contain is measured. In the case of wine, the quantity of additives and pumping is controlled.
There is no contract between farmers and producers that determines the quantity and quality to be produced every year, because the climate in Germany is harsh and unstable, which adversely affects productivity forecasts for the harvests.
Lastly, in regard to the production of organic wine, we can say that in Germany this type of activity is at the crawling stage, although Germans appreciate foodstuffs free of additives or chemical products.
The fact that production of organic wine is still at the crawling stage is due to the unfavorable natural conditions in Germany. Therefore based on the theory of comparative advantages, we can conclude that Brazil could be a supplier of this product.
As observed in the establishment where the interview took place, we can see that the prices of wine in Germany, both imported and domestic, can range from 1 Euro to 20 Euros. However, as already mentioned, the average is around 1.78 Euros.
According to what has already been said, in regard to the venue chosen, the supermarkets are the establishments where the product is mostly purchased, while the preferred wine among Germans is sparkling white wine. Based on this fact we can identify an opportunity for Brazilian Salton Moscatel, should it be able to penetrate this market at a competitive price if possible.
It is worth pointing out that in the case of the Yellow Tail wine and the blue ocean strategy, Salton Moscatel would not be intended to compete head-on with Sekt, but rather to open a new market in Germany by winning over traditional consumers of beer, as its simple alcohol structure and sweet taste would be very familiar to this type of consumer.
Based on the information gathered in interviews at the Expovinis stands, we were able to reach the conclusions in the paragraphs below.
An extensive list of wines was indicated as intended for export. However, one can see that several wines of excellent quality such as Salton Moscatel are only intended for local consumption.
One theory behind this fact would be that Brazilian wine is incapable of being sufficiently competitive in terms of costs, in order to beat the competition in Europe. However, if Chile, South Africa and Argentina are able to compete on price, what’s to stop Brazil?
Unlike Chilean wines, Brazilian wine has never been produced in long-life packaging, as this is not part of the consumer culture in Brazil.
On account of both relief and climate, Chilean winemakers found the ideal environment for producing their wines. In addition, for many years local producers endeavored to obtain several certificates of recognition from European consumers in order to penetrate and become the largest exporter in Latin America to that market.
As a result of the above-mentioned investments in certification, Chile now has the European market as its primary destination for exports, and is the South American country with the largest share of that market.
Lastly, Chilean wine reaches the German market at an average price of approximately 2 Euros. Similarly, Californian, Australian and South African wines are also able to compete at this same pricing level.
Without going into matters of winemaking, if Chile, Argentina and South Africa are capable of penetrating the European market at the price of 2 Euros, why couldn’t Brazil?
Based on the foregoing we can conclude that Brazil has to organize its production system in order to become as industrially competitive as the USA, Australia, Chile and South Africa.
2. Study of the potential consumption of the German market for several Brazilian wines.
As already mentioned, the German market is the world’s largest importing market and per capita consumer. It is approximately 20 liters per person, a figure which according to AC Nielsen will only tend to increase in years to come.
According to Aaker’s theory (1998) and in regard to wine brand loyalty, we can see that the Germans are less loyal than consumers in other countries, as they are usually very price-sensitive.
According to the AIDA model, one can attract the attention of the German consumer using packaging with an uncomplicated but exotic and vibrant message. As far as interest is concerned, the idea is to attract consumers of additive-free products to organic wine, and traditional beer consumers to a sweetish wine with a simple alcoholic structure with which they are already familiar, such as Salton Moscatel. The desire and the purchase action would come in response to the offer of differentiated products to specific groups of consumers in Germany.
Table 8: Per capita wine consumption per country.
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Source: United States Department of Treasury Alcohol and Tobacco Tax and Trade Bureau - 2005.
As already mentioned, Germans are very price-sensitive and the majority of them, almost 60%, purchase their wines in supermarkets.
According to Kotler’s theory (2000), the competitive strategy for Brazilian wine to gain a foothold in the German market would be that of the specialist, while according to Keegan (2005), the Brazilian winegrowing industry would thereafter be capable of evolving from a domestic to an international status.
According to Parsons and Dabymple (1995), notwithstanding the exclusivity that pricing may afford to a product, Brazilian wine must enter the German market at a price as competitive as the Chilean and Argentine wine.
Fortunately, in regard to management by category within establishments in Germany, on-site observation shows that in most cases there is no preference for displaying German wines in the best places on the shelves.
With the exception of the Real supermarket, both imported and German wines are displayed together. The only concern is to ensure that the more expensive wines take pride of place. Wines in long-life packaging, in turn, are placed on the floor.
According to Aaker (2007), the product category associated with a new business is of enormous strategic importance. For example, Schweppes, perhaps in an attempt to avoid competing with Coca Cola and Pepsi, positioned its product as a mixed drink on the US market. However in Europe, the product is placed on the shelves alongside the soft drinks.
Below one can see several photographs of the establishments:
Figure 4: Photo of the Real supermarket in Nuremberg - Germany.
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Source: Juliana Clemente Troula - 2009.
Figure 5: Photo of the Aldi supermarket in Nuremberg - Germany.
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Source: Juliana Clemente Troula - 2009.
Figure 6: Photo of the Plus supermarket in Nuremberg - Germany.
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Source: Juliana Clemente Troula - 2009.
Figure 7: Photo of the Norma supermarket in Nuremberg - Germany.
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Source: Juliana Clemente Troula - 2009.
Table 9: Price survey in the supermarkets of Nuremberg.
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Source: Juliana Clemente Troula - 2009.
4 Defining a marketing strategy for the Salton Moscatel sparkling and organic wines.
The essence of the marketing strategy is the pursuit of a point of difference in relation to the competition, by choosing the market, product, price, image and distribution with a view to excluding or preventing copycats. One can say that strategic marketing endeavors to constantly operate in tune with the purpose of the project and the organization’s overall target.
The essential components of strategic marketing are: segmentation, positioning and selecting the target market (targeting).
Jerome McCarty (1960) once developed the concept of the four P’s, which is in line with the idea of the marketing mix. The 4 P’s are: product, price, promotion and place.
Analyses are also carried out of the sector and of the company’s internal competitive ability as an organization, so as to define the positioning of the product in the market. Within this concept we can mention the SWOT analysis that deals with the strengths, weaknesses, opportunities and threats to a new product or project
The marketing mix chosen, in turn, enables the marketing area to introduce a new idea, constantly controlling and organizing itself so that it may attain its objective. Several activities can be undertaken, such as advertising, promotion, category management, dissemination on the web and public relations.
The concepts mentioned above would be used to create the strategic marketing proposal for Brazilian organic wines. In addition, the chart below illustrates the SWOT Analysis for the product:
Chart 9: SWOT analysis for the "New World" players.
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|SWOT |Brazil |Australia |South Africa |Chile |USA (California) |
|Strengths |Abundant and unexplored |Abundant natural resources|Cheap Labor |High technology and |Abundant natural resources|
| |natural resources |High technology and |Favorable climate |coordination |High technology and |
| |Cheap labor |coordination | |Cheap labor |coordination |
| |Economies of scale |Economies of scale | |Favorable climate |Economies of scale |
|Weaknesses |Lack of coordination and |Expensive labor |Lack of coordination and |Small scale |Expensive labor |
| |quality control | |quality control |Limited natural resources|Low-quality grapes |
| |Few production incentives | |Institutional problems | | |
|Opportunities |Exotic and sustainable |Exotic and sustainable |Exotic and sustainable |Holds Kupay certification|Country’s economic |
| |culture aligned with the |culture aligned with the |culture aligned with the | |strength |
| |country |country |country | | |
|Threats |Unable to obtain |Produces a very expensive |Unable to resolve its |Unable to produce on a |Produces a very expensive |
| |recognition of quality for|product |political and institutional|large scale, and |product |
| |its product, and | |problems |instability of the dollar| |
| |instability of the dollar | | | | |
Source: Juliana Clemente Troula - 2009
The Brazilian winegrowing industry has enormous potential for exploiting the markets of developed countries using strategies focused on low costs and economies of scale. Furthermore, the country can focus on strategies for differentiating its product, such as, for example, the production of organic wines that are positioned in the market as “exotic” or even “sustainable”.
The concept of exotic or sustainable is intrinsically linked to Brazilian culture, which facilitates the communication of a Brazilian brand with this proposal. In addition, Brazil is now seen internationally as the “world’s lung”.
In spite of the favorable climate and abundant water, Brazil shows a major weakness that does not specifically influence the production of organic products. This weakness arises from the fact that Brazil currently needs to import 80% of the fertilizer used in its agricultural production.
In that case we can therefore assert that as a means of breaking the paradigm, and in spite of all the difficulties of certification in terms of cleanliness, organization, etc., the production of organic wines is highly advantageous for Brazil.
At the same time, an easy way of divulging Brazilian wine so as to initially penetrate the market, would be to introduce it as the companion for the Brazilian beef served in barbecue restaurants worldwide.
Figure 8: Marketing proposal for Brazilian organic wine.
[pic]
Source: Juliana Clemente Troula - 2009.
Key to the illustration
Product: organic wine in a long-life carton/ tetra pack
Price: competitive against other imported wines
Place: countries where wine consumption is appreciated, e.g. Germany
Promotion: promote the product at youth parties and Brazilian barbecue restaurants
Segmentation: demographic or psychographic
Target market: young people or those who appreciate organic products
Positioning: exotic, sustainable, youthful quality image at a competitive price
Salton Moscatel sparkling wine has a great chance of capturing the German market, as it has an excellent sweet flavor and it is quite simple and familiar to the taste of traditional German consumers of beers.
In addition, a tasty, quality wine like Salton Moscatel could open the doors of the German market to import other Brazilian products, including food and beverages.
Although traditionally recognized as an exporter of raw materials, Brazil must also reveal to the world its quality processed foods and beverages, thereby exploring new market niches where its products exhibit higher added value.
Responding to the questions from Aaker (2005) we can draw the following conclusions:
• Is the market an attractive one in terms of size and growth possibilities?
Yes. The German market is one of the world’s largest importers of wine and the consumption of this beverage will tend to increase in the years to come.
• Is the competition strong? Who are the market players?
Yes, there is strong competition. But the organics niche, for example, is still untapped. The major players that compete with Brazil are: Chile, the USA, South Africa and Australia.
• Can the company add value to the market?
Yes, as already mentioned, organic products are held in high esteem in this market. Besides, Salton Moscatel, with its simple sweetish flavor, stands a good chance of pleasing German palates.
• Are there barriers in that market?
Yes, Germany uses the government office in Wiesbaden, which is in charge of controlling imports and exports using quotas but still the country imports a good variety of wines from America.
Figure 9: Summary of the marketing proposal for Moscatel wine
[pic]
Source: Juliana Clemente Troula - 2009.
Key to the illustration
Product: Asti-type Salton Sweet Sparkling Moscatel
Price: competitive against other imports
Place: countries where wine consumption is appreciated, e.g. Germany
Promotion: divulge the product at parties
Segmentation: demographic or psychographic
Target market: consumers of sparkling wines
Positioning: exotic, sustainable, quality image at a competitive price
In addition to the Yellow Tail case study, an attempt was made to divulge Brazilian wines in an uncomplicated and innovative manner:
• Salton Moscatel has an uncomplicated, smooth and sweetish flavor that may be appreciated by traditional consumers of German beers.
• Organic wine, in turn, is undertapped, besides the fact the German consumer is more than a little interested in preservative-free products. Furthermore, we came up with a young, colorful and uncomplicated packaging, in tune with the image of Brazil.
In regard to brand loyalty and pricing, we believe that the best strategy would be to launch the wine with a competitive price and a daring image, so as to captivate those consumers who are not always loyal to traditional winemakers, while capturing new consumers who previously only drank beer.
One can say that the strategic positioning of Brazilian organic wine would be that of a specialist since it works in a specific market niche, while the fundamental critical factor that would motivate the consumer to try this new wine would be innovation, health and sustainability.
Lastly, the suggestion is that a focus group type of research be carried out afterwards to confirm the theories of the critical factors influencing the wine purchasing process. Nevertheless, it is suggested that price and taste are the determining factors in Germany.
5 FINAL REMARKS
This study has endeavored to identify an international market niche for some Brazilian wines. These are: Salton Moscatel by Vinícola Salton and the organic wines.
The German market has shown to be very receptive in the following aspects:
• It is among the world’s largest consumers of alcohol and importers of wine.
• In spite of the presence of many European wines, it still is a growing market.
• Consumption of wine has not declined, even in times of crisis, since consumers switch to cheaper brands.
• Organic products are highly appreciated in Germany. Nuremberg, where the research was carried out. This city hosts the Biofach.
• Sweetish sparkling wines such as the Salton Moscatel stands a good chance of conquering the palate of traditional German consumers of beer.
• A quality wine from Brazil may be the showcase for many Brazilian foods and beverages.
• For a wine to be accepted globally, it first needs to be tested and approved in the most competitive market of all: Europe.
Exploring international niches has been shown as an important strategy in recent decades, not only because it enables the development of new consumer markets, but also because it ensures sufficient critical mass for companies to compete with large global enterprises, which in the majority of the cases, have their origins in rich countries.
Several global trends were shown in regard to agribusiness production systems and also the principal difficulties that specifically the Brazilian winegrowing industry faces.
As has already been described with regard to the German winegrowing industry, there are several crucial differences between the production systems of the two countries that need to be adjusted in order to improve the quality of the Brazilian product.
Improvements, both in the positioning within the international market and in the organization of the Brazilian agribusiness system are crucial, so that the country can finally become the “world’s granary”.
Because of its enormous agribusiness power, and without going into details about winemaking, Brazil has shown to be fully capable of competing with New World producers on the international market. In other words, if Chile, Argentina and South Africa can penetrate the German market at the price of 2 Euros, there is no reason why the Brazilian product cannot achieve this level of pricing.
By introducing the organic wine and the Salton Moscatel sparkling wine, Brazil can use the blue ocean strategy to meet a pent-up demand for sustainable and healthier products in the first case, and in the second case, win over the traditional German consumer of beer.
Nevertheless, by using the example of German coordination and control and the exploration of the market niche for the organic products and the Salton Moscatel sparkling wine, Brazilian wine has an excellent chance of increasing its market share within the global context.
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Recognizing the problem (perceiving the need) > Searching for information about the product > Evaluating the alternatives > Purchase decision.
Identify motivations > Group and structure motivations > Evaluate the importance of the motivations >Give strategic roles to the motivations.
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