The American Wine Market: Internationalization Strategies for the Promotion of Made in Italy
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Department of Business and Management Chair of Luxury Management The American wine market: internationalization strategies for the promotion of Made in Italy. Guado al Melo case study. SUPERVISOR CANDIDATE Prof. Alberto Festa Niccolò Barsotti ID 666021 CO-SUPERVISOR Prof. Paolo Cuccia ACADEMIC YEAR 2015/2016 SUMMARY INTRODUCTION ..................................................................................................................... 4 CHAPTER 1 ............................................................................................................................... 7 1.1. STRUCTURAL AND STRATEGIC TRENDS OF THE WINE SECTOR ........................................ 7 1.2. THE ITALIAN WINE MARKET ........................................................................................ 16 1.3. THE RECIPIENT COUNTRIES ......................................................................................... 20 1.4. WHAT FOREIGN CONSUMERS LOOK FOR IN THE ITALIAN WINE? ................................... 22 1.5. INTERNATIONALIZATION PROCESS DETERMINANTS ..................................................... 24 1.6. OPPORTUNITIES AND OBSTACLES OF THE EXPANSION PROCESS ................................... 28 1.7. RELOCATION OF PRODUCTION AS AN OPPORTUNITY .................................................... 33 1.8. THE GROWTH PATTERN OF SMALL WINE COMPANIES ABROAD .................................... 36 CHAPTER 2 ............................................................................................................................. 41 2.1. THE MARKETING OF WINE ........................................................................................... 41 2.2. FROM MARKETING TO MARKETING MIX ...................................................................... 43 2.3. PRODUCT .................................................................................................................... 46 2.4. PRICE .......................................................................................................................... 48 2.5. PROMOTION ................................................................................................................ 50 2.6. PLACEMENT ................................................................................................................ 53 2.7. PACKAGING ................................................................................................................. 54 2.8. THE MAIN COMPETITIVE STRATEGIES AIMED TO STRENGTHENING THE “MADE IN ITALY ” WINE AT INTERNATIONAL LEVEL ............................................................................................. 56 2.9. THE BRAND MANAGEMENT : STRATEGIES FOR ACHIEVING A HIGH COMPETITIVE ADVANTAGE ........................................................................................................................... 57 2.10. DEFINITION OF BRAND AND STAGES OF DEVELOPMENT ............................................... 59 2.11. BRANDING POLICIES IN THE WINE SECTOR : INFORMATIVE AND TRANSFORMATIVE STRATEGIES AND PROMOTIONS ............................................................................................... 61 2.12. THE VALUE OF THE BRAND AND THE CREATION OF BRAND EQUITY ............................. 64 2.13. THE IMAGE OF WINE : THE FORCE IS IN THE BRAND OR THE TERRITORY ? ..................... 68 2.14. STRATEGIES FOR THE RENEWAL OF ITALIAN WINE ...................................................... 72 2.15. EUROPEAN INITIATIVES AND THE ROLE OF EVENTS ..................................................... 73 2.16. THE USE OF THE WEB AND OTHER STRATEGIES TO PROMOTE ITALIAN WINE IN THE WORLD ............................................................................................................................ 75 CHAPTER 3 ............................................................................................................................. 81 3.1. PESTL ANALYSIS ....................................................................................................... 81 3.1.1. Political .................................................................................................................. 81 3.1.2. Economic ............................................................................................................... 81 3.1.3. Social ..................................................................................................................... 83 3.1.4. Technological ........................................................................................................ 85 3.1.5. Legal ...................................................................................................................... 85 3.2. THE WINE IN THE UNITED STATES ................................................................................ 87 3.3. THE AMERICAN CONSUMERS OF WINE ......................................................................... 89 3.4. AMERICAN DISTRIBUTION SYSTEM .............................................................................. 97 3.5. THE PRICE FORMATION PROCESS , FROM THE PRODUCER TO THE FINAL CONSUMER ... 102 2 3.6. GUADO AL MELO CASE STUDY .................................................................................. 109 3.7. THE SUSTAINABILITY , THE WINE CELLAR AND THE WINES ......................................... 110 3.8. PERFORMANCES AND EXPORT MARKETS ................................................................... 114 3.9. THE PRESENCE IN FOREIGN MARKETS : STRATEGIES ................................................... 118 3.10. FUTURE MARKETING STRATEGIES FOR THE CONQUEST OF FOREIGN MARKETS .......... 119 CONCLUSIONS .................................................................................................................... 124 BIBLIOGRAPHY AND WEBSITES .................................................................................. 128 3 Introduction «The grapevine makes it feel to man the flavour of the earth. Perceives and then manifests through its bunches, the secrets of the ground» Sidonie-Gabrielle Colette. Wine, a delicious drink of ancient origins, represents an important part of our culture and economy. When telling the story of wine, one has to talk about the territory, to which the grapevine is deeply tied, and that of the people who have always worked patiently. The slow and careful work that accompanies the cultivation, harvesting, vinification and patience, fits today’s vision of wine: the quality having replaced the quantity. Through the rite of the tasting, combined with typical dishes of our land, wine can be exalted in thousand different ways accompanying worthily elegant banquets. Enjoying a good glass of wine represents not only a pleasure for the palate, but for the most attentive people, it can reveal numerous flavours, those of their own land and their own culture. The history of grapevine is intimately linked with that of man and it is therefore difficult to trace the path up to the modern age. Some archaeological finds have demonstrated that this climbing plant, scientifically called vitis vinifera , grew spontaneously in the forests between the Caspian Sea and the Himalayan peaks already 300,000 years ago. The first traces of cultivation of wine seem to relate to Bronze Age, between 3400 and 2100 B.C., where grapevine is no longer considered as a wild plant but rather a domestic plant. In fact traces of grapevine can be found in areas such as Egypt, Jordan and Palestine where it had never grown before. Men had thus begun to cultivate it because they had discovered its value and, in particular, the potential of its juice and the intoxicating effects and benefits that imbued in those who drank it. Wine therefore gains a mystical and religious aura. 4 Thanks to the Greeks and then to the Phoenicians, knowledge relating to the cultivation of the best species of wine grapes spread gradually toward the West, following the routes of the sea trade. For instance, in central Italy, Etruscans begin to produce wine starting from the 8 th century B.C. by using varieties of grapevines typically found in Tuscany. However, it is the Romans who truly began to produce wine at greater level in southern France around 600 B.C. and then spread the production to what we now call the Old World and in North Africa. Wine is no longer reserved to certain classes, but is now opened to all ranks of society, including the lowest. However, wine back in roman times is far from being what we consider wine today. Its taste is syrupy, dense and high in alcohol content due to the processes of boiling allowing it to be preserved for a longer time. The descent of the Barbarians, at the end of the 3 rd century, led to a period of darkness for wine. It was mainly replaced by the consumption of beer, a beverage linked to traditions and to the Nordic culture dominating in that time. Only the monks continued to cultivate vines near abbeys, convents and monasteries. From this moment onwards wine begins to be stored in the basement cellars instead of being stored in houses. The rebirth of the wine began at the end of 11 th century with the resumption of trade when it was, together with wool, one of the best assets required by middle-class. Wine’s rebirth was also favoured by the poor hygienic conditions of water due to the rudimentary extraction techniques. In the 17 th century, under the new fierce competition of beverages such as chocolate, coffee and tea, and with the huge spread of beer and spirits in general, wine was subjected to further improving