Iniskillin Case Study

In the span off decade Unskilled has gone from a brand made in the low profile, new world wine making nation of Canada, to the benchmark in cocaine production. The unprecedented premier Cocaine provider, and Canada as the largest exporter of the product. The success of Unskilled and the ‘Ice’ category in the last decade has increased Pincer’s competitive pressures. The high margins and low barriers of entry into the market have increased domestic competition from authentically produced cocaine in Canada, as well as global competitors in Germany and Austria.

While It’s global popularity Increased Iciness made through non-traditional methods.

The Influx of competitive rivalry has resulted In downward pressure on prices and an Increased oversupply of ice products. In 2006, Vinson was purchased by the Global wine giant Constellation for $1. 3 billion USED. A price based on the high levels of growth by Vinson over the last decade driven by Unskilled. Mr.

. Provost needs to figure out how he can maintain Instilling growth with increasing competitive rivalry.

SOOT ANALYSIS Strengths * Tradition and Accolades; The Unskilled winery was established in 1975 and was the first Canadian winery to achieve international recognition for its ice wine reduction by being awarded the Grand PRI denouncer in the 1991 Viviane. * Strong internal growth; The winery has seen a production capacity increase by 1,853% between 1993 and 2002 * Climatically; Canada has a climate that ideally accommodates the production of premium Ice wine through traditional winemaking practices. Tradition; Although not the first post prohibition winery in the region to make ice wine, Unskilled is one of the original producers of ice wine from Ontario.

* Product Range; Unskilled has an expansive range of ice wine products and brands covering a variety of sugar concentrations (brig) and prices. Reputation within Canaan over ten past cease. Pricing strategy; Due to ten Dulcetly to produce and its rarity on the global market the standard cost of Unskilled is $65 per bottle, putting it into the premium category of wines.

This is the standard retail price for Unskilled, however the demand for cheaper ice wine caused Vinson to create a wider range to facilitate demand. * Key Business Partnerships; The relationship with San Francisco based company Duty Free Stores has given the brand key exposure to key markets, and has grown to become a ‘core’ product for DES.

* Strong focus on arresting; In 1997 Unskilled ice wine was chosen as the flagship product in the Vinson International portfolio by Mr.. Robert Provost, the Chief Marketing Officer. Since then it’s seen unprecedented growth in global popularity and recognition. Popularity; Unskilled ice wine has gained global popularity through dealings with the Duty Free Stores.

The main market originated in Asian countries, however through the DES, Insulin’s popularity grew in Europe and North America * Free Trade Agreements; The North American Free Trade Agreement (NONFAT) gives Canadian companies like Unskilled a more open channel of distributing their products to the USA, the worlds leading wine market by value and volume. * Marketing Joint Ventures and Advertising; Unskilled has established a Joint venture with Ridded glassware, developing a set of specific glassware for cocaine.

This was targeting toward the Aqua’s on trade market to promote its sales in the US. They also have increased their media exposure through advertising and getting naming rights to the Unskilled Ice wine World Pastry Team Championship. * Packaging; Unskilled has developed a unique and recognizable bottle and label. Distribution; By 2004, Vinson had become one of the major wine groups in Canada through key acquisitions and sales giving wineries in its portfolio an increased influence in distribution in key markets.

Vinson was sold to constellation in 2006. Constellation was one of the top 2 wine producers in the world, substantially increasing the distributive power of Unskilled as a producer. Weaknesses * Reputation; Canada has a worldwide reputation for spirits production, however its reputation in wine production is historically undeveloped compared to the rest of the world. Global Performance; In 2003 Canadian wine sales accounted for MM Liters, with an approximate value of C$5. Billion (approximately 3% of total world Sales) * Maturity of Industry; Due to the Prohibition the Canadian wine industry remained relatively underdeveloped until the beginning of the sass’s, compounded by the Liquor Control Board of Ontario placing a moratorium on issuing wine producing licenses. * Consumption; Pincer’s traditional markets are in Canada and the USA where per capita wine consumption is very low have traditionally been very low (Less then 8%).

Production and Yield; Instilling Ice wine production is a very slow process with fractional yields by comparison to table wines (between 1/1 OTOH-10th). Climatic Conditions; Also the production of the wine occurs in the Canadian Winter to ensure the grapes are sufficiently frozen throughout the production process, these unfavorable conditions ensure the dehydration of the berry, and the concentration of the sugars. * Key Markets; Unskilled has no established sales in the I-J, Chinese and Australian markets outside of the duty free stores. Environmentally; I en global warming could lead to Increases In imperative in key growing regions, thus not allowing the grapes to freeze sufficiently in order for ice wine production.

Opportunities * Industry Growth; Canada’s wine industry is growing, in 2003 the value of sales increased by 8.

6%, while the volume increased by 4. 3%. * New World vs.. Old World; The oversupply of old world wines and the rising popularity of new world wines has led to increased opportunity for winemaking nations such as Canada to increase there global sales.

* Quality Control; Unskilled has the opportunity to market their wine as ‘Authentically produced’. A method of winemaking that extinguishes itself from competitive producers with alternate methods (fast freezing * Tradition; Canada, along with German and Austrian producers, have a etc. . History of cocaine production. Giving them the opportunity to distinguish themselves from new competitors trying to enter the market. * Recognition and Originality; Unskilled has the benefit of being the most noted Canadian producer of ice wine, and the most globally recognized label on the shelf.

Therefore they have the opportunity to market their product as the ‘Original’, and distinguish themselves from domestic competitors. New Markets; Key wine markets remain open to Unskilled to enter. The USA market entry model can be employed when entering other key English speaking nations such as Australian and the I-J. Health Benefits; Wine has the perceived health benefits to the cardiovascular system especially in the Asian markets. As a low alcohol product, ice wine can be marketed as not only heart conscious, but also weight conscious, as it has far less alcohol then other desert wine alternatives.

* Domestic Competition; Few domestic competitors producing in Canada on the global market. * International Competition; The main international imitators are in Germany, which suffers from a very fragmented industry.

And Austria who have a tarnished reputation due to their use of the prohibited additive antifreeze. * European Market; After years of very strict laws about Canadian wines being imported into EX. nations, the Canadian government’s lobbying has resulted in more relaxed barriers of entry into countries in the ELI.

* New Segments; Unskilled can reach the ideal target segment of young female drinkers by promoting Unskilled infused cocktails. Threats * Agricultural Land; In 2002 Canada only has 7,500 hectares of vineyards. Creating a further bottleneck to growth.

Domestic Competition and Product Exclusivity; The combination of high unit costs along with the low barriers to entry creates an environment where producers look to emulate the Unskilled model for their own global success. Therefore increasing the domestic rivals, and diminishing the exclusivity of the product.

* Price Pressure; The downward pressure on prices is created by increased domestic competition, primarily when new producers slash their prices to move excess stock with low marketability. Therefore the ‘Ice’ category becomes more price-elastic and consumers begin to wait to purchase during cyclical discounting periods.

Alternative Products; The ‘Ice’ category is filling with stoutest products Quo categories Like Apple clear nave already Eden experimented with, which leads to the possibilities of other drinks like Ice Pear Cider etc. The threat of these substitute products increases the industry competition.

* International Competition; Traditional cocaine producers Germany and Austria will see the global success of the Canadian cocaine and will strive to consolidate their production and improve the quality to intensify the competition. * New Technologies; Cheap alternatives to authentic cocaine being produced outside of Canada, Germany and

Austria. Wine being produced using unnatural freezing methods from countries in Asia, South America etc. Have been recently found on the market. * Reaches Decline Stage of Product Life Cycle; Insulin’s popularity begins cooling off in the market.

Therefore sales and profitability begin to slow and sales start to decline. * Worst Case Scenario; The ice wine sales have been a fad’ in the global wine market resulting in a sharp drop off in sales. * Packaging and Branding; Packaging for the ice wine product can be easily mimicked, resulting in the individuality of Unskilled being diminished.

Executive Pressure on Performance; The recent purchase of Canadian company Vinson International by Global wine company Constellation will see drastic restructuring of its infrastructure, as well as pressure to alter the successful business model to increase profits. * Executive Pressure on key relationships; Outside influence from new executives leads to souring of current company relations in key markets such as the Duty Free Stores.

Strategic Alternatives The Unskilled brand was a major component of the growth in value by Vinson since the employment of Mr.. Provost, as seen in Figure 1.

While Insulin’s influence on Pincer’s growth is graphically represented in the shifting balance from popular wines to premium wines, between 1995-2004, evident in Figure 2. Figure 1: Vinson Revenues 2000-2005 (in Millions of Canadian Dollars).

Figure 2: Vinson Sales, Volume and Revenue comparisons 1995, 2002, and 2004 The success that Mr.. Provost has accomplished with the Unskilled brand has seen unheralded growth, which is a precursor to increased competitive rivalry from other suppliers and substitute products (Kettle et al 2004). The competitive forces facing Mr..

Provost are best illustrated using Porters 5 forces model as seen in Figure 3 Porter. M. , 1979). Figure 3: Porters 5 Forces Model It is the goal of all wine marketers to maintain its growth position in the product lifestyle of its flagship brands (Contain, et al 2008). Figure 4 highlights the shift to maturity and finally decline phase of the PAL, which results in a sharp drop of in sales and revenue. Maintaining Insulin’s position in the growth phase is the primary task ahead of Constellations, Mr.

. Provost, and Unskilled. This case study will outline a set of strategic alternatives available to Mr..

Provost to maintain its growth in an Increasingly competitive market.

Figure 4: Product Life Cycle (source: GIBBS website) 1) Expansion of the product line into the off-premise sector of current markets. As evident in table 1, the global sales volumes are shifting towards sales through primarily through the off-premise sector. Supermarkets and discount liquor stores are fast becoming the norm for customers looking to purchase wines with the greatest convenience (Anderson. K. , 2004). Unskilled has to date sold through the UDF found in airports and major cities, and the on premise sector primarily trendy restaurants Cones.

G. 2008). The expansion of the Unskilled line into the off-premise sector could substantially increase exposure to the new and young wine drinker, and increase the volume of sales (Spartan. T. , 2009). Table 1 : Global Sales by Volume and Value 2003-2004 Advantages: * Increase volume of sales, thus maintaining the growth rate of the company (Spartan.

T. , 2009). * Unskilled has an increased supplier bargaining power due to; a) Being a winery within the portfolio of one of the largest wine companies Constellation Wines Cones. G. ,2008) b) The Unskilled brands have world-wide recognition and has a pre-existing following Cones. .

,2008) * Product availability o a wider customer range, thus increasing exposure of the Unskilled Brand (Spartan. T. , 2009) Disadvantages; * Pressure from the off-premise sector to include the Unskilled range in discounting cycles (Spartan. T. ,2009) * The increased availability reduces the perception of rarity among its customer base (Spartan. T.

,2009) * The Duty Free store soul supplier agreement may be in breach Cones. 6. ,2008) * Inability to supply volumes required for global off premise sales Cones. G. , 2008) 2) Seeking New Markets: Insulin’s largest sales destinations include prominent Asian countries Japan,

Singapore and Taiwan, and the USA Cones.

G. , 2008). Table 2 demonstrates Canada’s major destinations of cocaine exportation, and as Unskilled is the countries major exporter of ice wine, this information is relatively reflective of the company’s exportation hierarchy Cones. G. , 2008). Table 2: Exportation by Canada of Ice Wine by Destination (2005) As evident by table 2, there are several notable importing nations absent from the above list including Australia, Germany and the I-J (Anderson.

K. , 2004). To implement a successful marketing plan to attain sales into the USA on-premise sector Cones.

G. , 2008).

Considering the success of the US marketing plan, Mr.. Provost can utilize the same plan to target other English speaking countries. Therefore he should target the I-J and Australia for future global sales as they both have established business relationships with Constellations, a high per capita consumption rate, population please refer to Table 3, and the marketing blueprint used in the US can be re-used with less marketing costs Cones. G.

, 2008). Table 3: Per Capita Consumption Rate in 2006, and Population 2009 (source wintertime’s. Erg) Implementation: Target high end restaurants and clubs through Constellation distribution team Cones. 6. ,2008) * Combines listings with promotional Ridded glassware as set forth in the US marketing blueprint Cones.

G. , 2008). * Utilize the established drinking cultures in both these countries by promoting and expanding the blending of Unskilled in cocktails in high-end clubs (Table 3). I. E. Expand line from Just Mart- unskilled to include; A) Cosmos-skills B) Monitor-skills C) Dakar-instilling etc.

* Create a cocktail book and look into Unskilled cocktail bars to target young female wine drinkers (Brewer. J. , 2007).

Look into using a celebrity endorsement, Madonna has already shown interest in the product and may be an interesting angle to promote in new countries Cones, G. , 2008). Figure 4: 2006 Australian dollar to Canadian Dollar Exchange Rate.

Source http:// add. Fix-exchange. Com/cad/exchange-rates-history. HTML * Markets already pre-exposed to the brand due to UDF in major cities Cones. G. , 2008).

* Listings in on-premise locations increases margins (Table 1) * Encourages the perceptions of exclusivity among its customers (Brewer. J. , 2007). * Cocktail marketing reaches a target audience of younger, female wine drinkers (Brewer.

J. , 007) * Only a low increase in volume is needed to facilitate new markets in the on- premise sector, and increase margins Cones.

G. , 2008). * High consumption rates and populations in target countries (Table 3) * Low marketing costs to implement cones. G. , 2008) * Pre-established Joint venture with Ridded Glassware Cones.

G. ,2008) * Low level of cocaine competition in Australia (Anderson. K. ,2004) * Can approach the Australian market with the New Zealand brand Kim Crawford Cones. 6.

,2008) * Favorable exchange rate with Australia, Approaching CAN $0. 92: ADD$I . (Figure 4) * Very Favorable exchange rate with the I-J for exportation. Average of 2. 1239 Pounds to the Canadian Dollar in 2006. (wry.

And. Com) * Constellation’s pre- standalone Illustration Ana cones. G. , 2009). Disadvantages: on-premise relationship In Don ten I-J Ana Australia * Geographically distant to develop relationships with key on-premise establishments, increased reliance on distributors.

* High competitive rivalry for shelf space in the I-J market (Spartan. T. ,2009) * Canadian wine industry has not earned a reputation for premium wines in Australia and I-J yet Cones. 6. 2008) * Australia has its own wine industry, that doesn’t highly promote cocaine.

Therefore there will be lots of substitute products for the customer (Anderson. K. , 2004). * Low consumer education on cocaine in these countries (Anderson. K.

, 2004). 3) New Marketing Approaches to Labeling and Packaging to combat substitute products. The brand labeling and packaging at present is unique and classic, which is both proven beneficial to the growth and individuality of the Unskilled brand Cones. G. , 2008). However, with the influx of new entrants into the market, as well as substitute products Mr.

.

Provost could look into additions to the label that separates themselves room competitive rivals, and distinguishes themselves from low quality rivals and substitutes, and tarnishing the swine’s perception of quality (Kettle et al, 2004). * Lobby the controlling body, (The Liquor Board of Ontario) to include a seal of approval that can be included on the label for Authentically made iciness. * Redesign the bottles and packaging label to include the seal of approval * Also design advertising campaigns reflecting Unskilled as ‘Unskilled Original’ or ‘Unskilled, Canada’s leading cocaine’. By forcing the competitors of substitute products, or producers using quick reeking methods to either adopt the traditional method or be seen as an inferior product, reducing the threat of substitutes and increasing Insulin’s competitiveness (Porter.

M. , 1979) * Original, elite, number 1, are all marketing terms that increase the Unskilled brand positively and distinguish itself from the brands trying to piggyback the success and hard work of Mr.. Provost and Vinson over the past 9 years, thus making it more competitive against its rivals (Porter. M. , 1979).

Can maintain current branding with only a small label change, so it would be relatively inexpensive marred to getting the regions name heritage listed Cones. G. , 2008). * Unskilled products become easier to sell for the global distribution team, therefore increasing its competitiveness and giving them a greater supplier bargaining power (Kettle. P. , et al 2004).

Disadvantages * Could be a slow process to lobby the LOB Cones. G. , 2008). * Unknown legal costs to tall seal AT approval * Could strengthen rivals competitiveness who also make cocaine authentically (Kettle.

P. , et al.

,2004) * ‘Original’ could be questioned due to some older, non- commercial iciness from Canada Cones. 6. 2008) * Seal of approval could make the label less extrinsically attractive (Conation. M. , et al 2008). Recommendations 1) I recommend not taking Unskilled ice wine to the off premise sector.

Due to; a) Low yields of ice wine (10th of table wine) Cones. G. , 2008) does not suit the demands of the off-premise sector (Spartan. T. ,2009) b) Bargaining power of the buyer would place downwards pressure on prices and margins (Spartan.

T.

, 2009). C) Current soul supplier relationship with UDF would be in breach Cones. G. , 2008). D) High availability of products diminish perception of rarity and exclusivity of the Unskilled Brand (Conation et al.

2008) 2) I recommend Mr.. Provost expand into the on premise sector of new English speaking markets Australian and the I-J. Due to; a) High wine consumption rates from well populated nations (Table 3) b) Educated wine drinking nations (Brewer. J. , et a12002) c) The I-J wine consumption is almost exclusively from imports (Anderson.

K. ,2004) d) Favorable exchange rate with these countries for exportation (Figure 4 and wry. And. Com) e) Distribution network in place through Constellations Cones. 6.

,2008) f) Higher margins available in the on-trade market, hush earning healthier profits, and remaining in the growth phase of the product lifestyle (Conation. M. , et al 2008) 3) I recommend Mr.. Provost begin the process of attaining label based ‘seal of authenticity for Instilling label from the VGA regarding his traditional ice wine making methods. ) It will distinguish Canadian as an upper echelon producer of wines in the ‘Ice’ category, and distance itself from new entrants (Kettle.

P. , et al 2004). B) Will distinguish themselves with substitute products made from non traditional methods (Kettle. P. , et a12004) c) Will give distributors an added sales advantage when selling there Unskilled wine around the world, making the brand more competitive among it rivals (Kettle.

P. , et al 2004) 4) I recommend creating a range of Unskilled blended cocktails, with the possibility of releasing a cocktail book, and bar at the winery.