International Marketing

Finca Manzanos
Finca Manzanos is a family run business since 1890. I did my internship in this company in 2009. They were producing great wines but were selling them mostly on their home market. Therefore, I wanted to think about an international action plan.

ISEG PARIS 2010 Arnaud HALVICK Att. Alon Rozen

International Marketing Manzanos 2010

CONTENTS
Introduction ................................................................................................................................ 2 II. 1. a. b. c. d. 2. e. f. III. 1. 2. 3. g. h. i. IV. 1. 2. 3. Marketing audit ................................................................................................................... 3 The 4 Cs .......................................................................................................................... 3 Customers.................................................................................................................... 3 CompeTItors ................................................................................................................ 3 Company...................................................................................................................... 4 Context ........................................................................................................................ 5 Comments ....................................................................................................................... 6 website ........................................................................................................................ 6 Their products ........................................................................................................... 12 Marketing plan .............................................................................................................. 13 Where are we? .............................................................................................................. 13 Where do we want to get? ............................................................................................ 14 How do we get there? ................................................................................................... 15 The sales agent .......................................................................................................... 16 The Importer & distributor ........................................................................................ 16 Direct sales ................................................................................................................ 16 Other ideas .................................................................................................................... 18 More event info ............................................................................................................. 18 RSS feeds & newsletters ................................................................................................ 18 E-Mailing lists................................................................................................................. 18

Conclusion ................................................................................................................................ 19 Indexes...................................................................................................................................... 20 1. 2. Index 1 Wine importers (every wine from every country) ......................................... 20 Index 2 Full description of advantages and drawbacks for the 3 main options ......... 20

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International Marketing Manzanos 2010

INTRODUCTION
The Finca1 Manzanos is the company in which I did my internship during summer 2009. I enjoyed this company and the people I worked with so I decided to make this paper on this company. This is a family business since 1890. From generation to generation they transmitted from father to son the know-how of winemaking and of selling it. It is nowadays a very big family business. They have four wine cellars and 160 hectares of vineyard. It is located in La Rioja and has the appellation of La Rioja (Denominacin de Origen La Rioja). For a long time it had been run by Guillermina Roldn and Vctor Fernndez de Manzanos who were married together. Unfortunately, the husband died this year in May. Now Guillermina and its two sons, Vctor and David, are directing the operations. They produce a large range of products from table wines to middle range wines. All of these products are of a very good quality and received many awards. They have a very good infrastructure to support their production and are able to organize order to be shipped all around Europe and even further. However, they are currently mostly focused on the Spanish Market where they have a very strong presence and most of their sales. They sell to a few other countries but mostly on their home market. They have no sales in France which is the biggest Spanish wine importer worldwide. In the first part, I will make an overview of the situation by talking about the 4Cs and by talking of their new website which is very good. I will also briefly present their products. In the second part I will deal with the 3 following questions: Where are we? Where do we want to go? How do we get there? And finally I will give a few additional ideas. As we will see, this company has a lot of strengths and there are a lot of opportunities but they need to set up an action plan to tap into foreign market. They sell to foreign customers that they met during showrooms but dont have a clear plan to tap into a market in particular.

FINCA = PROPERTY

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International Marketing Manzanos 2010

I. MARKETING AUDIT
1. THE 4 CS A. CUSTOMERS
The customers are mostly restaurants, hotels and wine merchants (brick and mortar + click and mortar + online only). Mostly, they are in Spain and there are some in Poland, Germany, Mexico, and other countries, but they are more occasional customers. The customer database has been build over the time and also through business showrooms. Most of the customers are concentrated in Spain were they have a strong position because of the quality of their products and the long history of the company. They are not very present on the foreign market and only sell to a few customers met during showrooms. They have not established a marketing plan to tap into specific market and focus efforts to penetrate it strongly. They have a lot of different clients so the diversification is good but could be even better.

B. COMPETITORS
There are many of them. Many countries are exporting wines and there are many companies and independent winemakers. We can distinguish various categories of competitors: Big industrial winemakers VS independent winemakers. National wines VS foreign wines. Low range VS middle range VS high range products. Their competitors will differ depending on the target. Restaurants and specialized shops prefer quality while supermarkets will look more for prices. Therefore most of the competition will be composed of winemakers offering good quality standards. Industrials focusing on the price will sometimes be present on the same market but are not competing exactly in the same way. In Spain most of competitors will be Spanish but a lot of wine are imported too. On other market there are also a lot of countries present.

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International Marketing Manzanos 2010

C. COMPANY
Finca Manzanos Independent winemaker producing middle range product (even the table wines can be considered middle range since they are better than the average). It is owned by Guillermina Roldn and the two sons (Vctor and David) are also helping. Their history, know-how, the quality of their products (low use of chemicals) and the fact that they are independent (vs. industrials) are the main points of differentiation.

STRENGHTS
- Strong presence in Spain

WEAKNESSES
- Low presence on foreign markets

- Loyal customers (because of history of the - Low real marketing (= they know how to sell family and the winery) - Diversified sources of revenues - Good know-how, good quality, lot of awards received which prove the quality - A new improved website - A large range of product (good to cover different segment of the market) - A good product design but they need to define a clear marketing strategy and put it in action. It has always worked more like a family business) - Recent death of the husband Vctor (in may 2010) affected the family and might affect the relation with some customers close to him.

OPPORTUNITIES

THREATS

- Increasing perceived quality of Spanish wines - Other Spanish independent winemakers (due to the increasing real quality of many - Industrial winemakers (professional are looking Spanish wines their images has improved)2 for low price since its the crisis).

- Increase in Spanish wine exportations: +25% in - Spanish wine consumption per capital slightly 20101 - The whole E.U. market is easily accessible but constantly decreasing since 20043. - Strong competition from other Spanish wines4

Alison Dillon (may 2010), The Wine Society Reports Major Growth in Sales of Spanish Wine, The Wine Society, http://www.winesfromspainuk.com/News/thewinesocietyre.html, accessed on 12-20-2010. 3 TDA (2010), Per Capita Wine consumption By Country, Wine Institute, http://www.wineinstitute.org/files/PerCapitaWineConsumptionCountries.pdf, accessed on 12-20-2010 4 TDA (2010), World Wine Production By Country, Wine Institute, http://www.wineinstitute.org/files/WorldWineProductionbyCountry.pdf, accessed on 12-20-2010

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D. CONTEXT
Political No significant risks. Despite of the crisis the main customers are in Spain or Europe so there is almost no risks here. Economical It is the crisis so the company is affected. Especially since it sells mostly in Spain which is greatly affected by the crisis. However, as previously said in the SWOT, there are also great opportunities thanks to the new trends. Social Technological/Technical Nothing special here. They are no special threats, risks or opportunities. They have a very good infrastructure and their own processes so there is no risk here, only opportunities. They have very nice installations that can be visited by anyone. Environmental High dependence on weather conditions. Usually they are very favorable in this region but there is always a risk. Legal The regulation is well known and not likely to change dramatically.

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International Marketing Manzanos 2010

2. COMMENTS E. WEBSITE
I would have changed a lot of things about their previous website but they recently changed it. It was already a good website but the improvements are significant. It is more commercial, more attractive and clear. Before it was only made to present the company and the places. You could buy product but the shop was not very well constructed and easy to use. And there was a very annoying music which was forcing me to turn off the sound. Basically, they have not added a lot of thing to the previous website; they just have organized it far better and made the purchase easier and better. All the information is now easy to get and the website is faster. Now there are better offers (Welcome pack, Barrels, monthly offers ) and it is easier to find products and to buy them. It is also more evident that you can buy (icons and text up + order now on the first page). You can register and the buying experience is far easier so it will help repeat purchase of customers. Also, they made a clear link to their Facebook page. It also looks more professional, more particularly thanks to a Business Solutions part. The flash animations are great and make us feel navigating on the website of a great and very professional company. Unfortunately, it is only in Spanish. It is great to target Spain first but foreign people will lack information to know more about the place and products. A part for foreign professional is missing. Previously they had a English and a German version of the website so I assume they will put it online too (most of the information on the new website being the same). The only thing which is missing would be a part concerning events and the possibility to subscribe to a newsletter. I think that they dont have much time to update constantly the website but it could be great to add the agenda of future events, past events, links to press notes, degustation notes, occasional newsletter when good comments are made on a wine, and so on. I went through the entire website and really appreciated it. I made a quick overview analysis of the main characteristics which make it good. Now they have to leverage it and to bring customer to it.

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International Marketing Manzanos 2010

Well positioned Easy to read This is the commercial part Here you can register to go visit the winery

Does not work yet

Easy to localize The F symbol

I really like this part. There are nice images and the slides open when pointing on. The colors are very nice too.

Special offers directly accessible

We know we can order since the first page + Other useful and necessary links Links to partners

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The cart, Price and total remind that there is a shop + are useful Very easy navigation between and through all different sections

The layout and the images are great

Contact info Easy to localize

Links redirecting to the shop Link to the presentation of the wines

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International Marketing Manzanos 2010

The Club part The feeling of being exclusive is good to build a strong Brand image

Special offer for professionals

Good explanation and history of the products

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VERY GOOD SHOP Easy navigation Clear full information

Quick Navigation between all products Also work with images on top and at the bottom

Full description + Image + Awards Everything on the same page and well disposed

All types of packaging available for personal use or to offer Possibility to download product info + Facebook link

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International Marketing Manzanos 2010

This part is great to facilitate the first contact with potential customers. It also gives an idea of which kind of customers exist. It is a very important part because it shows professionalism

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International Marketing Manzanos 2010

F. THEIR PRODUCTS
Their products are very good, got many awards and are produced with almost no chemicals. They made new design a few years ago to start selling foreign but they also use it in Spain. They have the means to produce labeling in any language and even allow some customers to use their own name to label the wine. Here are all the different wine categories: Via Berri: table wine. It can be red, white or ros. Marichalar. This is the first name used. There are young wines (red, white or ros) a Crianza and a Reserva (different composition and more ageing). Finca Manzanos. Exactly the same wines as Marichalar but with a new brand and packaging. There is an additional wine: the semi-crianza which is of a different composition than the Crianza V. Fernndez de Manzanos. Better wines, slightly better and more expensive.

(If you want to buy some bottles, I found that the Finca Manzanos Crianza was the best when I tasted it 1 year ago)

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International Marketing Manzanos 2010

II. MARKETING PLAN
There is a big opportunity for Spanish wines. Their quality increased a lot these last years and they are now getting recognized for their quality by foreign countries, especially the wine from La Rioja, and also all DO (Denominacin de Origen = Appellation) wines. The Spanish wine sales experienced a growth of 25% in 2010 despite of the crisis5. Thus, there is a great opportunity for Finca Manzanos.

1. WHERE ARE WE?

They already have a strong basis and a prospering business and now need to think about the main objectives for the future years. Here are three main elements to consider for setting up their objectives and reaching them: Spain is the 3rd largest producer of wine in the world6, which means a strong competition both on their home market and worldwide (being the 3rd producer is substantial since Spain has less than 47 million inhabitants). Wine consumption in Spain has been slightly but constantly decreasing since 20047, which means even more competition on their home market and the need for going foreign. By targeting European countries, they can diversify their sources of revenues without a lot of risks and costs. First, they need to keep and strengthen their position on their home market or they could have the same problem as the French wine. The French winemakers were too confident in their reputation and forgot about marketing8, the same thing could occur on the Spanish market if they focus too much on foreign market. As they have a strong position on their home market I would recommend strengthening it and even to expand and improve it so they secure their main sources of revenues. This is very important because companies sometimes forget to care about their home market when they want to target foreign markets. Also, I would recommend them to target European countries because they are the closest and easiest to target. Actually, when I worked with them they wanted to sell to the US, Canada and South America. Nevertheless, they is too much local competition, especially because of high shipping costs which increase too much the price per bottle and therefore decrease the quality/price ratio.

Alison Dillon (may 2010), The Wine Society Reports Major Growth in Sales of Spanish Wine, The Wine Society, http://www.winesfromspainuk.com/News/thewinesocietyre.html, accessed on 12-20-2010. 6 TDA (2010), World Wine Production By Country, Wine Institute, http://www.wineinstitute.org/files/WorldWineProductionbyCountry.pdf, accessed on 12-20-2010 7 TDA (2010), Per Capita Wine consumption By Country, Wine Institute, http://www.wineinstitute.org/files/PerCapitaWineConsumptionCountries.pdf, accessed on 12-20-2010 8 Emilie Boyer King (2003), Are French Wines Screwed?, Your PDF, page 41, http://www.brandchannel.com/features_effect.asp?pf_id=180, accessed on 12-20-2010

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International Marketing Manzanos 2010

Moreover, these regions of the world are constantly improving their processes and are now able to produce good quality wine at a reasonable price which makes the competition even more harsh. In addition, by targeting European countries they would avoid a lot of regulation problems. I remember that it was very complicated to export wine to the US and even to Canada where there are alcohol monopolies in every provinces and territories (except Alberta which privatized its monopoly in 1993)9. Other options are possible like Africa or Asia but it is a little bit hard to target these market which require very low prices and will be more attracted to French wine than to Spanish wine (often considered as low quality and low price in countries with a lesser wine culture). This is why it would be easier to target European countries first.

2. WHERE DO WE WANT TO GET?

Targeting European countries is easier for logistical reasons: easier to ship the wine, less risk for damaging the bottles or the wine itself because of bad shipping conditions and easier to keep contact with customers (less time difference). In addition, by focusing first on members of the European Union it is even simpler because of the open frontiers, the common currency and shared conventions and treaties. By focusing on European Members first, they would limit greatly their costs and their risks. So, we could sum up the three main objectives: Strengthen the position on their home market. Increase the diversification of the sources of revenues. Target a country member of the European country. Even if the purpose of this part is to deal about the exportation to a foreign country, it seemed very important to me to remember that it was vital to maintain their position on their home market. Also, their revenues are already diversified on their home market but going foreign could help them to increase the diversification while increasing the revenues. It appears that in addition of the great growth of Spanish wine exportations, 70% to 80% of the exportations are made in the European Union. Also, France is the main importer of wine and the Spanish wines represent 1/3 of the French importations. The importation of Spanish wines in France increased by 53% in value and 40% in volume in 2007. In Germany, the importations of Spanish wines increased by 13,6% in value and 13% in volume.10.

N.A, http://en.wikipedia.org/wiki/Alcohol_monopoly, accessed on 12-20-2010 Michel Veron (2008), Exportation de vins espagnols, Viticulture nologie Formation http://www.viticultureoenologie-formation.fr/vitioenoformlycee/vignobleeurop/espagne/exportation-vin-espagne.html, accessed on 12-20-2010
10

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International Marketing Manzanos 2010

By making a quick analysis of the value and volumes of wine exportation11, it appears that France and Portugal are importing cheaper wines, UK and Germany middle range wines and Switzerland high range wine. Given that the Finca Manzanos has a range of product covering only middle and low range products (high range are supposed to be very expensive wines), I recommend targeting Portugal, France, UK and Germany first. These countries are the most likely to import Spanish wine corresponding to the one sold by Finca Manzanos. Moreover, they are close and belong to the E.U. The only issue would be UK which is not using the Euro but it can be handled since its not a very volatile currency.

3. HOW DO WE GET THERE?

They already have designed a product to sale foreign. They already have a positioning of their product and the labeling is already done for foreign sales. Everything is ready to sell foreign to no real change has to be made here, only the way it has to be sold has to be considered. Their marketing and communication is already well established and defined. They have brochures in foreign languages to present their product, a well-defined identity and history. The only thing missing for now is the English version of their website. Therefore, I will deal about the main options for selling to the previously mentioned countries. To sale to these countries, I considered 3 main options: Sales agent Importer and Distributor Direct sales I will talk here about the main benefits and drawbacks of these different solutions and then conclude on which one to use12.

11 12

Index 1 Wine importers (every wine from every country) Index 2 Full description of advantages and drawbacks for the 3 main options

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International Marketing Manzanos 2010

G. THE SALES AGENT
PROS No fix costs. Its a good way for increasing the turnover. He knows the market. Control of the commercial policy. CONS He is not forced to sell Exclusive rights. More work. The non-payment risk is for the company The agent can go away with the customers.

H. THE IMPORTER & DISTRIBUTOR

PROS Simplification of logistics and administration. Low risk of change. Risk of non-payment transferred. Low investments CONS No control over the commercial policy. No knowledge of the market. Reduced profit margin. Total dependence.

I. DIRECT SALES
PROS Low investments. High profit margin. Better knowledge of clients. CONS Increased complexity of the prospection and sales. The period of time necessary to know a market.

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International Marketing Manzanos 2010

Considering the big drawbacks of direct sales, and that this company does not have enough financial and human resources to sale directly to these countries, a sales agent or a importer & distributor would be better. Usually, it is easier to target members of the E.U. with a sales agent and the other ones with an importer & distributor because of the common E.U. legislation and free traffic of goods. Therefore, I would recommend using sales agents. The main benefits of an importerdistributor are here of a lesser use and the drawbacks too high. Using sales agent would enable us to penetrate the foreign markets in the most efficient way. Low costs, low risks, a good knowledge of the market are necessary and the capacity and experience of the administration of logistic of the company will support this option. The translation of catalogs is not a problem since they already have it in German and English. The Portuguese and French version can be issued very quickly. However, it would mean giving the exclusive right to sell in an area which prevents the winery to sell through its website to this area. Therefore, the conditions of the contract have to be defined correctly so the little orders placed by clients who are not considered by the agent (= too small) would be able to order on the website (e.g.: define the maximum quantity that a person can order in this area + prohibition to sell to the agents customers). Anyway, the website should be essentially used and promoted in Spain, Andorra and eventually Portugal and south of France. This is simply because these areas are less expensive to deliver (more interested customers) and the logistic is easier to organize.

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International Marketing Manzanos 2010

III. OTHER IDEAS
1. MORE EVENT INFO
As I previously said, there is no event section on the website. Even if there is a Facebook to put the events, some people may not have a Facebook, or may not be willing to join the page. It could be a good thing to have an agenda of future events and a page talking about past or current events. The agenda of future event can be a good thing to promote sponsored event, participation to showrooms or special event organized by customers (e.g.: concerts, meetings ). Also, a part concerning current event and past events can show that the company is very active. To save time, it would be better to only put a link redirecting to the website of the events, or to the websites containing press notes about the events. This kind of thing gives more life to the website.

2. RSS FEEDS & NEWSLETTERS

To inform clients of events or new offer, the use of RSS feeds and/or newsletters can be a good idea. Nevertheless, all of this takes a lot of time and it might be difficult for the company to constantly actualize or create the content. This is why it might be better for the company to ask customers to write the articles concerning the events and to provide links to the events only. For the event organized by the winery itself, they will usually be able to provide information themselves. They already have organized events in the barrels room and plan to open a hotel in the winery. Building a community would be great to organize and support local events. Then, the online community and e-mail database could be leveraged to create more events.

3. E-MAILING LISTS
Buying lists of e-mail can be a good starting point to promote the website nationally. Actually, there wont be issues of exclusive selling rights since they sell directly and not through agents. The national market is very interesting since Spanish people might be interested in buying wine from their own country at a lower price than usual. Actually, when buying directly from the winery you usually have a better quality/price ratio. Moreover, new generation of customers are more willing to buy over the internet which is an additional opportunity. It is also possible to get foreign mailing lists with the agreement of the agents but it will be almost impossible in my opinion because if the agent is selling but to retailers it will take its customers away. Promoting the winery and selling through internet is a cheap solution with a potentially high ROI if it is done correctly. The website is great it would be very sad to have made such a good website and not using it to sell in Spain. The size of the company allows them to sell to the whole country by itself through this website; they just have to build their online customer database.

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International Marketing Manzanos 2010

CONCLUSION
This company is clearly performing very well on its own market but has almost no sales in foreign countries. The main issue is that they dont have a precise action plan to tap into foreign markets. Their new website will be a great tool to reinforce their position on their home market. There is a very good presentation of the company, everything is clear and it is agreeable to navigate through all the sections. It gives a more professional image and facilitates the contact with new customers. It will also be a good tool to boost direct sales but they will need to promote it widely on their home market. The main solution would be to buy lists of e-mails and to send a lot of invitations to buy their Welcome offer. Also, more information on events would be appreciated. It would help them to create a local community and to get a better brand image. Instead of going to tradeshow to try finding potential customers, it would be better to use sales agents. The main countries to target would be France, Germany because they are the main Spanish wine importers and also Portugal and UK because they import wines too and are close. Using sales agent is a very good mean to tap into a market. They usually already have customers and know better their market. In addition, there are no fix costs and no investments. The only investment consists of samples necessary for the tasting by customers before buying wines. They have the means to manage it and to get international sales. They will soon open the German and English version on the website (they already had it before with the old version) and they already have catalogs in these languages. The death of the husband and the crisis are greatly affecting them and their business but in they are willing to keep working on the winery representing their family and pride of their father. They have all the means to succeed and only need to use it and to have a better action plan to go foreign.

Words Introduction: 370 Marketing Audit: 1240 Marketing Plan: 1480 Other ideas: 500 Conclusion: 350 TOTAL: 3940

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International Marketing Manzanos 2010

INDEXES
1. INDEX 1 WINE IMPORTERS (EVERY WINE FROM EVERY COUNTRY) BY VALUE
Value (million USD) UK Germany USA France Switzerland Others Total 419,2 398,85 267,53 156,44 135,02 1118,06 2495,1 Share (%)

BY VOLUME
Volume (million liters) France Russia Germany Portugal UK Others Total 175,62 151,62 140,37 119,06 116,23 613,29 1316,19 Share (%)

16,8 15,99 10,72 6,27 5,41 44,81 100

13,34 11,52 10,66 9,05 8,83 46,6 100

2. INDEX 2 FULL DESCRIPTION OF ADVANTAGES AND DRAWBACKS FOR THE 3 MAIN OPTIONS
No source, I did it myself.

A. THE SALES AGENT

PROS No fix costs: actually, the sales agents are only paid on a commission basis. Thus, the risks are limited because there is no need for hiring someone and if we decide to stop our activity in a country we have no remaining costs. Its a good way for increasing the turnover: the sales agent is paid on a commission basis and is therefore more motivated to sale more. Moreover, he usually already have contacts on his market which is greatly helping the sales. He knows the market: the agent knows the market he is working on (economically, commercially and also culturally). This saves a lot of time and money. Control of the commercial policy: with an agent, the company has a good control over the prices, the communication policy, the brand image and so on. CONS He is not forced to sell: if the agent decides to stop selling the products, there is almost no means for pressuring him. Minimum results can be define in the contract so the company can break it if needed but it is quite hard and time is lost.

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Exclusive rights: the agent has the exclusive rights for selling on the defined area. If he does not do his job well or is forgetting big potential customers, the company cannot sell to them. More work: the company has to do all the administrative work, to take care of the logistics and finance. The agent only cares about the deal. The non-payment risk is for the company: if a deal is accepted and the client does not pay, it is the responsibility of the company to find a solution to get paid. The clause Ducroire can make the agent jointly liable for the payment but it is hard to make the agent accepting it. The agent can go away with the customers: if the contract is broken, there is a risk that the agent takes away the customers with him.

B. THE IMPORTER & DISTRIBUTOR

PROS Simplification of logistics and administration: the importer and distributor usually take care of all these tasks. In includes the shipping to the final clients, the invoicing, the debt recovery and customs clearance. Low risk of change: usually, the importer and distributor use stable currencies like the dollar or the euro. Risk of non-payment transferred: if the final clients do not pay, the importer & distributor has the charge of recovering the debt. We only care about one big client. Low investments: the importer and distributor will put at our disposal all its experience and its structures. CONS No control over the commercial policy: we have no control over the pricing, the distribution channels or the communication made on the products. No knowledge of the market: we do not know who the final clients are or where are sold our products. Reduced profit margin: the profit margin is much lower than for a sales agent or with direct sales. Total dependence: we are very dependent from the importer and distributor and from its performance since we have absolutely no local power of action.

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International Marketing Manzanos 2010

C. DIRECT SALES
PROS Low investments: no sales network has to be set up. High profit margin: there is no intermediary so we can either lower the prices (can be dangerous for the positioning) or increase profit margins (much better to maintain a good brand image). Better knowledge of clients: there is a direct contact with clients which enable us to know them better. Therefore, we can adapt our commercial policy to better meet their needs. CONS Increased complexity of the prospection and sales: actually, it is very hard to get known on a foreign market. It requires a lot of time and money invested since we have absolutely no local representative. The main advantage of the low costs and high margins is greatly lowered because of this. The negotiations take more time and are less comfortable. This leads to a loss of time and deals. The period of time necessary to know a market: it takes a long time to know a market (on economic, cultural, political levels). This involves costs that are lowering the benefits of direct sales.

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