Bishnu Neupane MBA-IV Trimester/2010 batch

Preserve the Luxury or Extend the Brand? Written by: Daniela Beyersdorfer & Vincent Dessain

Overview
Introduction of the company The case Problems Alternatives/ solutions Recommendation

Introduction
Name: Chateau de Vallois Location: Bordeaux region of France Category: Wine producer Products: Grand Vin du, Puin Classified as a Premier grand cru class in 1855 .

The Case
Characters: Gaspard de Sauveterre: owner Francois: son Claire de Valhubert: granddaughter (MBA graduate) Jean-Paul Oudineaux: Agriculture engineer, expert

cont

Back ground
de Vallois had been steadily profitable since the 1980s. Claire planed to join family business. She wanted de Vallois to enter the "affordable luxury" market, selling directly to customers. Franois, her uncle didnt believe in that proposal.

Success of Vallois
The estate had fallen into a slow decline under its last owner. Gaspard and Jean-Paul had restored it to its former glory. In a ranking of Bordeaux wine estates that recognizes their long-term track record in quality and reputation, de Vallois had in 1855 been classified as a Premier grand cru class.

De Vallois Today
The chteau produced perhaps the greatest of Bordeaux's five grands crus classs. It sold about 150,000 bottles each year of its Grand Vin du. The remaining grapes to produce a second wine, the Puin ,averaging 200,000 bottles per year.

Problems:
Chteau de Vallois is considering whether or not to target a new market young drinkers who cannot regularly afford the expensive vintage wines. Should de Vallois spend on distribution channels, marketing and promotions or not? (Advertisement
campaign & market research)

Is it better to import grapes?

Claires Argue
What might happen if the estate allowed lessexpensive, lower-quality wine makers, to capture and retain the next generation of customers.

Claires Desire
de Vallois to enter the "affordable luxury" market. She wants to make a branded wine and sell it directly, as some of the other top traditional Bordeaux estates had done.

Jean-Paul (Agr. Er.) sighed!

Without 100% dedication to excellence de Vallois cannot make outstanding wine. We already do two wines. Isn't that enough?"

Distribution process
Existing distribution process

New distribution process

70%of still-maturing wine had already been sold to specialist merchants called ngociants. The ngociants bought the wine a year before bottling and then sold it to distributors and importers. Customers could not purchase a bottle of wine directly from the chteau.

There is risk of merchants shifting. They have to develop new distribution channel. set up own website to allow them to order directly Customers can directly purchase.

Alternatives
Alt.1: Claires Roadmap of introducing a new brand launch a new brand wine spend on distribution channels, marketing and promotions charge a high price for it because it's exclusive

Alt.2: Francois nonexpansionary way

In a good year, they don't have enough grapes. have to invest in a distribution channel there are risks to marketing the wine themselves.

Recommendation
In our opinion, it should go ahead and launch a more affordable brand.

Reasons behind the recommendation

In order to retain its competitive advantage, a company needs to realize its full potential, and this includes reaching out to new markets. A case of Microsoft: MS was an indomitable entity ten years ago, but has now lost its appeal to Apples, Googles, and Facebooks of todays world.

Cont

Reasons

There is no guarantee that the reputation of Chateau will continue to sustain the competitive edge enjoyed by the company at present.

Chateau must be careful aboutthe needs and structure of the new market, efficient distribution, supplying, and support mechanisms, adaption is the way to go. utilizing their own capabilities in a new territory.

&
Where the needs and support structures remarkably differ from the existing market, innovating a solution is necessary.

What do you think? Should not Chateau de vallois introduce a new brand? If no, Why? If yes, thumb up!