The case study discusses the growth of icewine and follows Vincor International, which creates an international market for its Inniskillin Icewine. Follow Roger Provost, an HBS graduate, who is the CMO of Vincor, as he develops the marketing strategy. The case analysis deals with various issues related to brand management, product development, and international marketing.
Geoffrey G. Jones; Jillian Hirasawa
Harvard Business Review (805129-PDF-ENG)
May 12, 2005
Case questions answered:
- The case mentions that the firm is part of “the ongoing consolidation in the wine industry”. Based on what we have discussed all semester, why do you feel there is so much consolidation in the wine industry and why would this firm be a target?
- We have discussed the role of the middlemen, the distributors in the system. The case provides two reasons for the existence of the middlemen. Do you feel that the middlemen benefit or harm the brands? What are the advantages of having the middlemen and what are the disadvantages?
- Once again in this case industry regulation plays a key role. Using your text discussion of converging markets, how did regulation impact the Canadian wine industry?
- What factors do you feel make the market for icewine unique?
- Discuss Inniskillin’s pricing and distribution strategies. How did the choice of distribution influence the price point?
- Being a first-mover in a market often requires a radical adjustment in strategy as other competitors move into the market. How did Inniskillin first establish the market for icewine and now how are they defending their position in it?
- What expansion route would you recommend that Inniskillin take?
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Case answers for Inniskillin and the Globalization of Icewine
1. The case mentions that the firm is part of “the ongoing consolidation in the wine industry”. Based on what we have discussed all semester, why do you feel there is so much consolidation in the wine industry and why would this firm be a target?
Unlike the beer and spirits industries, the wine industry is very fragmented. The top 14 producers in the global wine industry accounted for only 13% of total volume sales in 2004 (Jones, p6). Due to this, it makes sense for smaller wineries to combine to take advantage of economies of scale through marketing distribution and operations. Once they have done this, they become an attractive acquisition target for large wine firms.
These large wine firms, mostly based in the U.S. and Australia, seek out smaller targets as a way to expand from both a product and geographical perspective. (Jones, p6) This firm would be a target because they have become successful in selling a premium brand that is made differently from most of the traditional wines on the market. They are also locked into deals with the Duty-Free Shoppers Group, the world’s largest travel retailer. (Jones, p10) In addition, Inniskillin has a cult status among the Japanese, making buying the firm an attractive way to reach a new market.
2. We have discussed the role of the middlemen, the distributors in the system. The case provides two reasons for the existence of middlemen. Do you feel that the middlemen benefit or harm the brands? What are the advantages of having the middlemen and what are the disadvantages?
“Middlemen”, or distributors, were introduced as part of a three-tier alcohol distribution system after Prohibition ended. Tier 1 consisted of producers; Tier 2 consisted of wholesalers or distributors, and Tier 3 consisted of retailers. The reason this system was created was to prevent abuses that resulted from strong supplier-retailer relationships before prohibition. This system aims to ensure that alcohol beverage taxes were collected and that smaller retailers could compete in the market place successfully. (Jones, p4).
Having the middlemen in the alcohol industry ensures that…