1. THE BIG FOUR
AUSTRALIAN
WINE COMPANIES
From exporter to global producers
Case study

2. BY Mohammed Sobahan
Nicole Falterbaum
Sonja Bertling
DATE 03.12.2015
MODULE Strategies for International Market Entry
COURSE MSc. International Marketing

3. AGENDA
1) THE FOUR AUSTRALIAN WINE COMPANIES
2) SWOT ANALYSIS OF THE AUSTRALIAN WINE INDUSTRY
3) THE “BIG FOUR’S” EXPANSION STRATEGIES ABROAD
4) REASONS TO ENTER FOREIGN MARKETS
5) FOREIGN MARKET ENTRY STRATEGIES USED BY THE AUSTRALIAN COMPANIES
6) INFLUENCING FACTORS “BIG FOUR”
7) CHALLENGES THEY FACE
8) FACTORS OF SUCCESS IN THE UK
9) REPLICATING SUCCESS IN OTHER COUNTRIES
10) STATISTICS
11) REFERENCES
3

4. THE FOUR AUSTRALIAN WINE
COMPANIES
BERINGER BLASS SOUTHCORP
BRL HARDY
ORLANDO WYNDHAM
AUSTRALIAN
WINE
COMPANIES
4

5. BERINGER BLASS
• acquired by Foster‘s Brewing Group
• three-channel-strategy: maintaining its traditional channels,
acquisition of specialist wine packaging operations and acquisition
of wine clubs
• benefits from Mildara Blass extensive international distribution
network
• Beringer acquisition is expected to assist the distribution of Mildara
Blass brands in the US market
5

6. SOUTHCORP
• Corporation of Lindemans and Penfolds brands
• signed a number of JV in the 1990s
• focusing on exporting to Languedoc in France
• aim: becoming the world‘s leading global branded wine company
• 50/50 JV with Californian producer Robert Mondavi
• 2001: acquisition of Rosemount  high-valued brands; well-recognized
in international markets
6

7. BRL HARDY
7
• Merger of Berri Renmano and Thomas Hardy
• well-established distribution channels in New Zealand, the UK and US
• Still developing its channels in Continental Europe
• 50/50 JV with Casa Vinicola Calatrasi (Italy)

8. ORLANDO WYNDHAM
8
• Pernod Ricard acquired the two Australian companies Orlando and
Wyndham
• focus on a single brand: Jacob‘s Creek (leading wine brand sold in
UK)
• new vineyards in Argentina, Chile, South Africa and China 
“New World”-portfolio
• has intensified its distribution in Asia

9. TIMELINE
1989/90
Pernod
Ricard
acquired
Orlando
and
Wyndham
1990
Thomas Hardy
purchases in
the
Languedoc-
Rousisillion
region of
France,
Domaine de la
Baume
1991
Merger
between
Wolf
Blass
and
Mildara
1992
BRL Hardy
is a result
of the
merger of
Berri
Renmano
and
Thomas
Hardy
1993
Jacob’s
Creek
(Orlando
Wyndham)
becomes the
leading wine
brand sold in
the UK
1995
Mildara
Blass was
acquired
Foster’s
Brewing
Group
2000
Foster
acquired
Beringer
Wine
Estates
2001
Southcorp
acquires
Australian
producer
Rosemount
2001
50/50 JV with
US company
Constellation
Brands
9

10. Q1
Carry out a SWOT analysis of the Australian wine industry and
indicate whether the „Big Four“ have adopted the same or different
strategies to expand abroad.
10

11. SWOT ANALYSIS OF THE AUSTRALIAN
WINE INDUSTRY
SWOT analysis is the analysis and evaluation of a
company’s internal environment
 strengths and weaknesses, and
the external environment 
opportunities and threats (Kotler and Keller 2012).
Weak-
nesses
Threats
Oppor-
tunities
Strengths
11

12. • C
• Technological innovation
• Production focus
• Financial resources
SWOT ANALYSIS OF THE AUSTRALIAN
WINE INDUSTRY - STRENGTHS
Strengths
“The internal
environment of
a cooperation
consists of
variables (strengths and
weaknesses) that are within the
organization itself”
(Wheelen and Hunger, 2010, pp.
64-65).
12
• Core strengths
• Consistent product quality
• Fair prizing
• Product portfolio
• Australian Wine Export Council  Exporting
• UK market dominance
• Low psychic distance between UK and Australia 
successful in countries with low psychic distance
• Low competition in the UK  strong market position
• Positive image and high reputation in the UK 
strong market position
• Diversification of production location
• E.g. Joint Ventures in Chile and the US

13. SWOT ANALYSIS OF THE AUSTRALIAN
WINE INDUSTRY - WEAKNESSES
• Export orientation:
• High dependence on export markets (especially UK)
• Struggle to diversify
• Ability to operate successfully in export markets with high
psychic distance
• Focus on production rather than marketing
• Low awareness of Australian wine in Germany
• Southcorp, BRL Hardy and Foster  potential takeover
targets
Weak-
nesses
“The internal
environment of
a cooperation
consists of
variables
(strengths and weaknesses) that
are within the organization itself”
(Wheelen and Hunger, 2010, pp.
64-65).
13

14. • UK market  market expansion
•
• Increase of wine consumption
• Acquisition of distribution channels and production facilities
• Acquisition of know-how and expertise
• Market development:
• US as the most profitable market
• New world brand portfolio and option to produce in “New
World” countries
• Southcorp, BRL Hardy and Foster  potential takeover targets
• Rise of stock price
• Synergies
•
• Low domestic competition
•
• Low psychic distance
• Greater excess to know-how
and resources
SWOT ANALYSIS OF THE AUSTRALIAN
WINE INDUSTRY - OPPORTUNITIES
Oppor-
tunities
“A marketing opportunity is an area
of buyer need and interest that a
company has a high probability of
profitably satisfying”
(Kotler and
Keller, 2012,
p. 70).
14

15. SWOT ANALYSIS OF THE AUSTRALIAN
WINE INDUSTRY - THREATS
• Southcorp, BRL Hardy and Foster  potential takeover targets
• High dependence on the UK market
• Challenging export markets:
• Low awareness of Australian wine in Germany
• Low wine consumption in Japan
• Complex distribution channels in the US
• Increased competition
• Competition from other European wine companies
• France as a major competitor
• New market entrants  low-cost new world producers
• Cultural specific factors influence wine consumption in different markets
• Global wine glut
Threats
“An environmental threat is
a challenge posed by an
unfavourable trend or
development that, in the absence
of defensive marketing action,
would
lead to
lower sales
or profit”
(Kotler and
Keller, 2012,
p.71).
15

16. • Three-channel
strategy
• Traditional
channels
• Acquisition 
Specialist wine
packaging
operations
• Acquisition  Wine
clubs
• Joint Venture
(JV)  production
• Acquisition 
Wine company
Beringer Blass
• New World
investments 
production and
distribution
• Focus: developed
European and
Asian countries
• Single brand and
“New World
brand”
Orlando Wyndham
• Stakes in
distribution
companies
• 50/50 JV 
production,
product launch
and distribution
• Global and local
brand strategy
BRL Hardy
• Sourcing strategy
• JV and
Partnerships 
product launch
• Purchase of land
 vineyards
• Acquisition 
production
• Global and local
brand strategy
Southcorp
• Three-channel
strategy
• Traditional
channels
• Acquisition 
Specialist wine
packaging
operations
• Acquisition 
Wine clubs
• Joint Venture
(JV)  production
• Acquisition 
Wine company
Beringer Blass
• New World
investments 
production and
distribution
• Focus: developed
European and
Asian countries
• Single brand and
“New World
brand”
Orlando Wyndham
• Stakes in
distribution
companies
• 50/50 JV 
production,
product launch
and distribution
• Global and local
brand strategy
BRL Hardy
• Sourcing strategy
• JV and
Partnerships 
product launch
• Purchase of land
 vineyards
• Acquisition 
production
• Global and local
brand strategy
Southcorp
• Three-channel
strategy
• Traditional
channels
• Acquisition 
Specialist wine
packaging
operations
• Acquisition 
Wine clubs
• Joint Venture
(JV) 
production
• Acquisition 
Wine company
Beringer Blass
• New World
investments 
production and
distribution
• Focus: developed
European and
Asian countries
• Single brand and
“New World
brand”
Orlando Wyndham
• Stakes in
distribution
companies
• 50/50 JV 
production,
product launch
and distribution
• Global and local
brand strategy
BRL Hardy
• Sourcing strategy
• JV and
Partnerships 
product launch
• Purchase of land
 vineyards
• Acquisition 
production
• Global and local
brand strategy
Southcorp
THE “BIG FOUR’S” EXPANSION
STRATEGIES ABROAD -
CHARACTERISTICS
16

17. THE “BIG FOUR’S” EXPANSION
STRATEGIES ABROAD - SIMILARITIES
① 1980s: export growth
② 1990s: market development
③ 2000s: global operators
• Same aim: “from exporters to global producers”
• Lower dependence on the UK market
• Extent production period during the year
Decrease of operational risks
• Approach of foreign markets: more simultaneous
• Foreign Market Expansion Strategy: Investment Entry
• Change from export to alliances and FDI
Increase of control and profits
• Mainly vertical alliances or acquisitions
Export
Joint ventures
and strategic
alliances
FDI
Adapted from Bradley, Frank (2005),
International Marketing Strategy
5th. ed. Harlow Prentice Hall pp. 291,
264
risks,,amountof
requiredresources
high
low
Franchising and
licensing
highlow control
17

18. THE “BIG FOUR’S” EXPANSION
STRATEGIES ABROAD - CONCLUSION
18
• Purpose of Joint Ventures and acquisitionsDifferences
• However they all develop from export to JV and/or FDI
• Investment entry
• More simultaneous approach to enter markets
Similarities
• Overall they used similar expansion strategies abroadConclusion

19. Q2
Identify and discuss the influencing factors behind the decision of the
„Big Four“ to switch from the use of exporting to other foreign market
entry strategies and discuss the challenges resulting from a switch.
19

20. REASONS TO ENTER FOREIGN
MARKETS
• Reducing their dependence on the UK market
• Diversify their export market
• Access to new geographic markets
• Increase the sales & profit
20

21. FOREIGN MARKET ENTRY
STRATEGIES USED BY THE
AUSTRALIAN COMPANIES
21
Joint Ventures
Acquisitions
Partnerships

22. INFLUENCING FACTORS “BIG FOUR”
• To access distribution networks in international market. E.g. US
• Create new brand portfolio  e.g. “New World”-Brand
• Lunch global brand of Italian Wine
• To become high value brand
• Joint Ventures: sharing of risks and costs with a partner
Exporting
Joint Venture
Acquistion
Partnerships
22

23. INFLUENCING FACTORS “BIG FOUR”
• Access to greater resources, including specialised staff, technology and finance ,
• reduce production cost
• market entry barrier : It overcomes market entry barrier by acquiring an existing organization
• Partnerships with local companies can help to understand cultural differences in business and
consumer behaviour
• Increase profit and control in foreign country
• Increase market share in foreign country
• Reduce potential competition
• Access local infrastructure and need of raw materials
Exporting
Joint Venture
Acquistion
Partnerships
23

24. CHALLENGES RESULTING FROM THE
SWITCH
• High dependence on the UK & US market, leaving the industry venerable
to develop in this 2 market.
• The Australian 4 company have number of partnership in different country
-the liability of the partners for the debts of the business is unlimited
• there is a risk of disagreements and friction among partners and
management
• Integration problems in accusation :The activities of new and old
organizations may be difficult to integrate
• Production oriented-Australian companies have been criticised for being
production rather than marketing orientated.
• Capital investment , they are investing everywhere without happy return
24

25. CHALLENGES RESULTING FROM THE
SWITCH
• rumoured to be takeover targets- While Southcorp, BLR Hardly and foster
have been making acquisitions.
• Australia face stiff competition from the established European market
• Australia ,s Low cost New world brand cannibalised other Australian whine
in chilli , south Africa and Argentina.
• Big 4 companies have number of joint venture around the world– which
may conflicting goal and objectives between partners.
• Unpredicted increase of new whine plant may leas to global whine glut
• Managerial difficulties due to multicultural clashes
25

26. Q3
Discuss whether the „Big Four“ Australian wine companies are able to
replicate the same success experienced in the UK market in other
export markets such as the U.S., France, Italy, New Zealand, Japan
and China. If not, why not?
26

27. 27

28. FACTORS OF SUCCESS IN THE UK
 consumers favoured the Australian wine
 no domestic competition
 “consumers shift away from beer”
 low psychic distance (Australia vs. UK)
 individualistic countries; share the same values, Australia used to be a
British colony
 Australian wines are high-valued
 full flavour and generic images of Australia are positive
 Success was underpinned by help from the Australian Wine Export Council
 Steady growing consumption over the last ten years
28

29. ARE THEY ABLE TO REPLICATE
THE SUCCESS IN OTHER
COUNTRIES LIKE
29

30. REPLICATE THE SUCCESS IN
UNITED STATES
• booming economy
• increasing spend and
consumption habit of its wine
drinking population (rise of
13.12%)
• AUSFTA  free trade agreement
• Low psychic distance
• More than 2/3 of production goes
to U.S. and UK
• Growing number of wineries/
• 4th biggest wine production in the
world
• Complex distribution channels
30

31. REPLICATE THE SUCCESS IN
CHINA
• premium wine is high valued
• is expected to make a return to the
top 5 consumption countries more
middle class Chinese buy everyday
wine for consumption at home
• Chinese-Australian Free Trade
Agreement
• short transport route
• Wine has a cultural function 
“keeping face”
•Wobbling economy, government
crackdown on goods
•2nd largest vineyard acreage in the
world (11% of the world)
• fast rising vineyard acreage
(+33,9%!)
• production of own wine “Sake”
• psychic distance: high
• Competitors: France (42.28%),
Australia (12.4%)
• Fast growing export market
31

32. REPLICATE THE SUCCESS IN
JAPAN
• Economic Partnership Agreement
(JAEPA)
• Wine from Australia is high valued
• Short transport route
• Expensive
• Production of own “yellow wine”
• Overall consumption remains
modest
32

33. REPLICATE THE SUCCESS IN
NEW ZEALAND
• ANZFTA
 free trade agreement;
• Rising wine consumption
• Short transport route
• Low psychic distance
• Rich country
 Purchasing power
• Low level of consumption
• Small amount of population
• Similar climate
33

34. REPLICATE THE SUCCESS IN
ITALY
• Wine is highly valued
• 3rd highest wine consumption per
capita
• Wine is part of the culture “la
dolce vita”
• Declining wine consumption
 -11.50%
• 4th biggest vineyard acreage
• Established market
• High psychic distance
• Long transport route
• Traditional supplier
34

35. REPLICATE THE SUCCESS IN
FRANCE
• Growing market (+11.38%
consumption)
• Highest consumption per capita,
• Wine is an important part of their
culture, high values
• Many competitors, difficult to
penetrate; 84% of the most
famous wine brands are
French
• Long transport route
• 3rd biggest vineyard acreage
• high import restrictions (without
partnerships with french companies)
35

36. STATISTICS - WINE CONSUMPTION BY
COUNTRY
Population Wine consumption
000 Liters
Consumption per
capita
US 313.847.465 3.217.500 10.25
France 65.630.692 2.790.000 42.51
Italy 61.261.254 2.040.000 33.30
New Zealand 4.327.944 93.000 21.49
Japan 127.368.088 348.000 2.73
China 1.343.239.23 1.580.000 1.18
36

37. STATISTICS - CHANGE IN WINE
CONSUMPTION
Ranking Country % change in
consumption 2011-
2014
% of world
consumption
1 US +1.71% 13.12%
2 France - 4.85% 11.38%
3 Italy - 11,50% 8.32%
5 China + 3,93% 6.45%
16 Japan + 21.25% 1.42%
35 New Zealand + 3.45% 0.38%
37
Source: TDA

38. STATISTICS - VINEYARD ACREAGE BY
COUNTRY
Ranking Country Acreage % of world total Difference
2014/2011
2 China 1.974 11% +33.9%
3 France 1.876 10.4% -0.6%
4 Italy 1.705 9.5% -3.8%
6 US 1.035 5.8% +6.0%
32 New Zealand 88 0.5% +6.3%
40 Japan 43 0.2% -1,7%
38
Source: TDA

39. STATISTICS - WINE PRODUCTION BY
COUNTRY
Ranking Country Wine
production
% of world
production
Difference
2014/2011
1 France 4.670.100 16.54% +5.4%
2 Italy 4.473.900 15.85% -4.3%
4 US 3.021.400 10.70% +12.2%
8 China 1.117.800 3.96% -3.4%
15 New Zealand 320.400 1.13% +13.9%
28 Japan 82.000 0.29% -1.2%
39
Source: TDA

40. REPLICATING SUCCESS IN OTHER
COUNTRIES
 Trade Agreement
 Short transport routes
Wine is high valued
40

41. WHY NOT NZ, ITALY AND FRANCE?
 European markets are established
 High Australian Dollar makes them less price competitive

41

42. CONCLUSION Q3
Successful Unsuccessful
42

43. REFERENCES
• Kotler, P. and Keller, K. L. (2012) Marketing Management. 14th
Edition. Harlow: Person Education Limited.
• https://d28wbuch0jlv7v.cloudfront.net/images/infografik/normal/chart
oftheday_3445_the_worlds_biggest_wine_producers_n.jpg
• Statista
• Trade Data And Analysis (TDA)
• Wheelen, T. L. and Hunger, J. D. (2010) Strategic Management and
Business Policy: Achieving Sustainability. 12th Edition. New Jersey:
Prentice Hall.
43

44. THANK YOU
FOR YOUR
ATTENTION.
ANY QUESTIONS
44