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Romanian Wines in the U.S. Market . Marketing Strategy . Otilia Flandro. VIN. VIN. Recession and competition from import wines decreased local demand . EXPORT. Increase in i nterest to export to foreign markets. Second largest wine consuming country (volume). - PowerPoint PPT Presentation

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Marketing Strategy Otilia Flandro

Romanian Wines in the U.S. Market

VIN

Recession and competition from import wines decreased local demand Second largest wine consuming country (volume)

VIN

EXPORTIncrease in interest to export to foreign marketsOpen to foreign wines regardless of country of origin3

VINThe challenge: finding and creating demand for the product

Marketing is a crucial complement to successfully entering the US market4

VIN5

VINIndustry

VIN

External threat:beer, liqueur

Extremely competitiveSurviving in this industry is tough

Relatively low barriers of entry Reasons to enter:Creative natureGlamor Family traditionUncontrollable forces of nature: DiseaseFrostPredators Small vineyardsPerceived intricacies of choosing a wine Multinational companies &MoneyCraft and traditionWines are thought of as pretentious 7

VINThe wine belt is the stretch of land around the globe between 35th and 51th parallel of north and south latitude where the climate is favorable for growing wine grapes.

8

VINWithin the wine belt, the industry distinguishes between two major regions:Old World New World

NNNNOON9

VINThe Old World-New World division does not include emerging wine producing countries such as China and India and does not account for particularities of Eastern European countries. Old-Old Old-New New-Old New-New

ONONNNNNONO10

VINSource: OIV 2011

The competitive landscape is dominated by Italy and France who have been battling for the top position in wine production. Romania fell below the 12th position in 201011

VIN

Source: OIV 2011

Germany and United States consume more than they produce Significant consumption-production gaps in China and Russiagrowing middle and upper-class is increasing demand for wine12

VIN

Source: OIV 2011

The top three producers are also the top exporters Export ProductionAustralia surpasses USA, Argentina, and China in exportMoldova, Romanias neighbor is a Top 12 exporter13

VINRomanian Wines

VIN

1947198915

VINBureaucratic and slow to process external funds

Efforts to revitalize wine industry:USAIDEuropean Union Little industry support from the Romanian governmentDirected to vine replanting; no marketing and business development toolsCeased because of the threat of competing with US wines

16

VINDomestic entrenchmentGlobal economic crisis Decreasing internal demandExport17

VINExportRomanian ethnic communitiesBulk wine Communistblock countriesDistant markets where country image is neutralChina, RussiaUnited States Blended and sold as table wineItaly, Spain18

VINResearch Method

VINUnited States 2011Romania 2010

Interviews20

VINFindings

VINFarming practices (not using pesticides, natural yeasts) Fit with the wine list/selectionFit with the image establishmentBrand names trusted for their quality*based on survey results22

VIN

*Boutique priceAverage shelf price: $10 23

VINA good wine is dry, full body, slightly fruityA good wine stays with you, its memorable speaks for the place where its fromit speaks for terroir, tradition, weatherOur customer is more important than our idea of good wineSource: Interviews and survey24

VINWhy is it important?Navigating wine listcategoriesDemand for variety is seasonal Pop culture can create demand for a varietal

25

VINShelf talkersIn-store expert advicePackagingNamingShelf placement In-store newsletterTastingsStory Writers/Bloggers

Word of mouth26

VINBeautiful mountains, pastoral setting, lively folk music, friendly people, medieval castles, gypsiesCastles, Transylvania, DraculaGypsy, untouched countryside, embroidery, folk art, lambs wool, pork products, castlesVery poor country, Old world charm3rd world country, former communist block countryGymnastsSource: Survey27

VINSource: Survey28

VINSource: Survey New-New World

Old-New World

New-Old World

Old-Old World29

VINSource: SurveyChardonnay, Zinfandel typeWould taste like other countriesMore like a German wine

30

VIN YESCuriosityOpenness to trying new thingsA price low enough to permit experimentation Previous experience with Romanian wine, mostly based on travel to RomaniaA recommendation NOLack of information about Romanian winesBias about the region Low quality of Romanian wines available on the US market through ethnic distributorsSource: Survey31

VINThe restaurant segment looks more promising for the Romanian wines compared to wine retail stores

Boutique retailers who are focusing on a limited, unusual selection of wines are intrigued by the obscurity of Romanian winesOnly 17% of the consumers purchase wines once a month or more often at boutique wine shopsSource: Survey32

VINSource: SurveyConsumers are willing to pay less for a bottle of Romanian wines33

VINHipsters

One grape varietyDomestic grape

Curiosity Reasons:Consumers like simplicityPurchase based on varietyStrategy proven to be successful by Australia (Shiraz), Germany (Riesling)Reason: DifferentiationSuccess of the Malbec

Always looking for new thingsMainstream consumers curious to try something unusual

Trend setters

34Focus on the ethnic consumer

VINLack ofcooperation

Distribution

Monopoly Consistent supply Economies of scaleQualityImporters

Exclusion of small producersPriceShipping conditions PriceOverpriced winesOxidized wineRelationshipswith retailers and distributorsQualityReasons:Effect on:Result:QualityPriceEntrenchment in ethnic community Abuse from Communist forms of cooperatives Relationshipswithin the industry35

VINRecommendations

VINCompetitive advantage stands in differentiationDomestic grapes intrigue the consumerConsider shortening the names of varietals 3 tier distribution system Offer marketing supportBuilding relationships with retailers 37

VINBuild trust and a trade platform between US and Romanian partnersGood quality wines produced by small vintners do not have a chance to be tasted on the US marketEconomies of scale may drive down significantly the cost of import to the USRomania is tightly associated with countries in its geographic proximity38

VINProved to be a successful strategy for countries like Argentina or Australia Glass pour may represent a good opportunity to try a wine without committing a bottleFull control of quality and quantityExperimentation price for a bottle of wine is less than ten dollarsOrganize Eastern European or Romanian wine festivalsWork with bloggersRefrain from gimmicks 39