V o t t o V i n e s I m p o r t i n g L L C

International Marketing Plan Manuel Andres Dr. Marc Fetscherin | INB 337 | Rollins College | April 26 2016

 

 

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Table of Contents EXECUTIVE SUMMARY .............................................................................................. 4

1. COMPANY SITUATION ANALYSIS ................................................................... 5 1.1 The Company .................................................................................................... 5

1.1.1 Overview ......................................................................................................... 5 1.1.2 History ............................................................................................................. 5 1.1.3 Products .......................................................................................................... 6

1.2 Organization Structure .................................................................................... 7 1.2.1 Company Structure ......................................................................................... 7 1.2.2 Financial Information ..................................................................................... 7 1.2.3 Domestic Business Involvement ...................................................................... 7 1.2.4 Value Chain .................................................................................................... 8 1.2.5 SWOT Analysis ................................................................................................ 9

1.3 Industry Analysis .............................................................................................. 9 1.3.1 Industry Overview ........................................................................................... 9 1.3.2 Competition ................................................................................................... 10 1.3.3 Porter’s Five Forces ..................................................................................... 10 1.3.4 Conclusions and Recommendations ............................................................. 12

2 GLOBAL MARKET SEARCH ............................................................................. 12 2.1 Country Selection ............................................................................................ 12

2.1.1 Region Selection ............................................................................................ 12 2.1.2 Criteria Selection .......................................................................................... 12 2.1.3 Country Comparison ..................................................................................... 14

3 MARKET ANALYSIS ........................................................................................... 16 3.1 PEST Analysis ....................................................................................................... 16

3.1.1 Canada .......................................................................................................... 16 3.1.2 Mexico ........................................................................................................... 17 3.1.3 Argentina ....................................................................................................... 18

3.2 Competitive Analysis ...................................................................................... 19 3.2.1 Main Competition ......................................................................................... 19

3.3 Country Selection ............................................................................................ 19 3.3.1 Criteria Selection .......................................................................................... 19 3.3.2 Country Comparison ..................................................................................... 22 3.3.3 Country Selection .......................................................................................... 23

3.4 Conclusions and Recommendations .............................................................. 23 4 MARKET ENTRY .................................................................................................. 23

4.1 Risk of Internationalization ........................................................................... 23 4.2 Canada’s Wine Industry ................................................................................ 24

4.2.1 Overview ....................................................................................................... 24 4.2.2 Competition ................................................................................................... 24

4.3 Market Entry Mode ........................................................................................ 26 4.4 Herfindahl-Hirschman Index (HHI) Culture Diversity .............................. 26 4.5 Marketing Mix (4 P’s) .................................................................................... 27

4.5.1 Product .......................................................................................................... 27 4.5.2 Price .............................................................................................................. 27 4.5.3 Promotion ..................................................................................................... 28

 

 

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4.5.4 Placement ...................................................................................................... 30 4.6 Segmenting, Targeting, Positioning .............................................................. 30

4.6.1 Segmenting .................................................................................................... 30 4.6.2 Targeting ...................................................................................................... 31 4.6.3 Positioning .................................................................................................... 31

4.7 Conclusions and Recommendations .............................................................. 31

REFERENCES ................................................................................................................ 32 APPENDIX ...................................................................................................................... 35      

 

 

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EXECUTIVE SUMMARY This marketing plan has been developed for Votto Vines, a family owned wine company who distributes premium wines imported from Europe, South America, and Australia, as well as their own portable wine. Votto Vines currently operates in 35 states in the United States and is looking to expand domestically and globally. This marketing plan follows four different phases, each containing different analysis of international markets to find the top markets and finally the top country in which Votto Vines should enter first. The first phase includes an overview of the company as well as an industry analysis for the United States wine industry. The second phase includes a global market research, selecting a region of countries in which Votto Vines could potentially enter. These eleven countries are all from the continent of the Americas (North, Central, and South). The third phase analyses the top three countries selected, based on a set of criteria, and reviews the external factors using a PEST analysis. Phase four analyses the top country selected and determines the best mode of entry, the marketing mix, and the STP process for Votto Vines in the country. Based on research in this report, the best country for Votto Vines to enter is Canada. The key factors in choosing this country are population, consumer expenditure on wine per capita, GDP per capita, and ease of business. The main competitors for Votto Vines in this market are Constellation Brands, Andrew Peller, and Treasury Wine Estates. The industry is in the growth stage with a high level of competition. Votto Vines should enter the market using indirect export, partnering up with Liquor Control Board of Ontario as their wholesaler and retailer in the market. Votto Vines should expand their operations further into more provinces in Canada and if considering expanding to another country, they should stay in the Americas before they expand over seas.    

 

 

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1.   COMPANY SITUATION ANALYSIS

1.1 The Company 1.1.1 Overview Votto Vines is a family-operated business focused on the importation and wholesale distribution of fine wines produced by leading boutique vineyards from around the world as well as high profile private label and wine licensing transactions. Votto Vines collection features more than 90 top rated wines produced in Europe, Australia, and South America. Votto Vines works with leading wholesale distributors throughout the United States. Votto Vines is headquartered in Connecticut and currently distributes solely in 35 states in the United States. Chairman & CEO Michael Votto leads the company with his other three brothers, brother-in-law, and sister. They currently have 10 employees. They generated $6.4 million in 2014.1 1.1.2 History Michael P. Votto saw an opportunity for success back when he sold wines locally in his home state of Connecticut out of the back of co-founder Nick Votto’s Subaru wagon at the height of the economic downturn in 2009. Since then, the six members of the Votto family have become the first wine importing company ever to earn a spot on the INC 500 as one of America's fastest growing companies in 2014.2 In 2009, the Order Sons of Italy in America (OSIA) selected Votto Vines as its sole US wine importing partner in connection with the development of the Leone D’Oro line of fine Italian wines. Through the years, Votto Vines has collaborated with people such as Danny Seo and blues legend B.B King by releasing signature wines and selling them to the public.3 In 3 years Votto Vines grew 1,023% based on sales of $384,000 in 2010 and $4.3M in 2013.4

Figure 1: Votto Vine Logo Figure 2: VINaaGO (by Votto Vine) Logo

                                                                                                               1 http://www.vottovines.com/who-we-are/ 2 http://www.vinaago.com/meet-the-creators.html 3 http://www.vottovines.com/proprietary-brands/ 4 http://www.vottovines.com/votto-vines-first-ever-wine-importing-company-to-make-the-inc-500/  

 

 

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1.1.3 Products Votto Vines has a collection of over 90 fine wines imported from Spain, Italy, Portugal, France, Australia, Argentina and United States. They also have their own propriety brands with collaborations from various people and organizations. Philosophy Wines is collaboration between Danny Seo and Votto Vines with the goal of creating high-quality, delicious organic wines at an affordable price point across America. Star Trek Wine is collaboration between CBS Consumer Products and Votto Vines of collectible wines to commemorate Star Trek’s 50 years of greatness. A limited 1701 cases were produced. BB King and Votto Vines collaborated to create the blue’s hall of famer signature wine called “Lucille”.5 Votto Vines also produce VINaaGO, a brand created in collaboration with one of the most well respected wine producers in Portugal. VINaaGO is a single serve 187ml portable, unbreakable and ready to drink package, no glass necessary. A personalized wine experience so people can drink what they want, when they want, where they want. VINaaGO has four varieties: Chardonnay, Cabernet Sauvignon, Rosé, and Moscato; at $2.99 or less per serving.6 Figure 1: Philosophy Figure 2: Star Trek Wine Figure 3: Lucille

Figure 4: VINaaGO                                                                                                                5 http://www.vottovines.com/portfolio/ 6 http://chilledmagazine.com/votto-vines-launches-vinaago-single-serve-wines/  

 

 

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1.2 Organization Structure 1.2.1 Company Structure Michael P. Votto is the chief executive officer of Votto Vines. He is responsible for securing and negotiating contracts with producers, distributors, and third party companies both in the United States and Italy. Peter Votto is chief operating officer of Votto Vines and responsible for international and domestic logistics. He manages the day-to-day operations of the business. Leah Votto is the director of public relations and senior sales representatives. Nicholas Votto is senior vice president of marketing and agrotourism. He works in developing relationships with Votto Vines distribution partners throughout the United States. Stephen Votto is chief financial officer and manager of investor relations. He works on all financing and accounting related issues and on logistics, sales analytics and strategic development. Jeremy Jerome is senior vice president of distribution and sales. He is responsible for contract negotiation with suppliers, distributors and retail establishments as well as brand promotion.7 1.2.2 Financial Information Votto Vines is a private company; therefore, they do not disclose their financial information after each quarter. However, Inc.5000 reported Votto Vines having revenue of $6.4M in 2014 and three-year revenue growth of 1,023% based on sales of $384,000 in 2010 and $4.3M in 2013.8 1.2.3 Domestic Business Involvement Votto Vines currently only distributes its wines in 35 states in the United States, due to their low number of employees. Yet, with their recent success and great potential of growth, they are looking to expand their operations along the country with a possibility of going abroad. Votto Vines works largely with alcoholic beverage distributor Republic National Distributing Company and leading national retailers including Costco, Wines Til Sold Out and Total Wine & More. 9

Figure 5: Votto Vines’ Distribution Map

                                                                                                               7 http://www.vottovines.com/our-team/ 8 http://www.inc.com/profile/votto-vines 9 http://www.wineindustryinsight.com/yourturn.php?id=881  

 

 

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1.2.4 Value Chain Votto Vines makes its revenue by selling their imported, proprietary brand, and VINaaGO wines to distributers and online retailers. Given its expertise in building successful partnerships and collaborations, their products have been featured in many wine reviews and have been awarded awards and recognition.

Figure 6: Votto Vines Value Chain

:

 

 

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1.2.5 SWOT Analysis Votto Vines rise and growth over the years has given it a great reputation, showing it excels in various areas. Some of its weaknesses however, are due to the nature of competition in the wine industry, but Votto Vines does a superb job collaborating and partnering up with winemakers and distributers. Table 1 shows Votto Vines’ Strengths, Weaknesses, Opportunities, and Threats.

Table 1: SWOT Analysis

1.3 Industry Analysis 1.3.1 Industry Overview While Votto Vines is described as being part of the Food and Beverage Industry it operates completely under the Alcoholic Beverage Industry. Wine, beer, and spirits competes in a highly regulated marketplace, but is a huge business. The total wine production in the United States in 2014 was 835,468,643 gallons of wine or about 375,400,000 9-liter cases (a total of 3,378,600,000 liters of wine).10 The United States wine industry’s total retail value in 2014 was of $37.6 billion.11 The United States wine industry total revenue was of $18.7 billion in 2015. 12 Compared with many other consumer product categories, the US wine market is fairly concentrated, though to a

                                                                                                               10 http://www.wineinstitute.org/resources/statistics/article83 11 http://www.wineinstitute.org/resources/pressroom/05192015 12 http://www.wineinstitute.org/resources/pressroom/05192015

Strengths Weaknesses Opportunities Threats -   Strong Industry

Partners -   Unique approach

to wine sourcing and marketing

-   Esteemed portfolio of boutique wine producers and proprietary brands

-   Wide range of wines

-   Top rated wines for quality price ratio

-   Innovative product (VINaaGO)

-   Markets product to those willing to by fine wines

-   Doesn’t sell product directly to consumer

-   Strongly relies on wholesale and third parties

-   Potential to grow and broaden their distribution map

-   New potential partnerships with other wineries/distributers

-   Seize of partnerships with wineries or distributers

-   Problems with production of wine (lack of resources/quality)

-   Change in consumer taste and preferences

 

 

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lesser degree than the beer or distilled spirits segment. Wine consumption, for 2014, reached 10.25 liters per capita.13 The largest wine-consumer demographic in the US, as of 2015, are the millennials aged 21-28, making up 36% of all wine consumers in the country. The US is the leading country in wine consumption, behind Italy and France.14 1.3.2 Competition While the Wine industry has a variety of producers, there are 5 US wine companies accounted for about that lead in the industry based on revenue. These wine marketers include E.&J. Gallo Winery, The Wine Group Inc., Constellation Brands, , Treasury Wine Estates, and Bronco Wine Company. E.&J. Gallo Winery is the lead supplier in 2014, accounting for 24,778,000 9-liter cases (223,002,000 liters). Constellation Wines came in second, producing 19,390,000 9-liter cases (174,510,000) of wine. The Wine Group had 4,675,000 9-liter cases (32,075,000 liters). Finally Treasury Wine Estates producing 178,000 cases (1,602,000 liters) followed by Bronco Wine Company with 170,000 cases (1,530,000 liters).15

Table 2: Competitors table16 17 1.3.3 Porter’s Five Forces Threat of New Entry: The initial barriers of entry for alcoholic beverages are not that high. Small and local breweries/wineries may achieve local success, but often have difficulty attaining profitability and may find it virtually impossible to go national.                                                                                                                13 http://www.wineinstitute.org/resources/pressroom/05192015 14 http://www.thedrinksbusiness.com/2016/02/millennials-now-drinking-half-of-all-wine-in-the-us/ 15 http://bnawinegroup.com/wp-content/uploads/2014/03/2014_Growth_Brands.pdf 16 http://clients1.ibisworld.com/reports/us/industry/majorcompanies.aspx?entid=289 17 https://wineeconomist.com/2014/03/04/how-many-employees

Company Date Created

Revenue In

Millions $ (2014)

States where they

distribute in the US

Number of Employees

U.S Production

(in Mil. cases 2014)

E&J Gallo Winery

1933 3,779.8 50 5000 80

Constellation Brands

1945 2,243.8 50 4300 50

The Wine Group Inc.

1981 1,448.3 50 1000 57.5

Treasury Wine Estates

2011 794.8 50 1140 15.4

Bronco Wine Company

1973 733.0 50 1000 20

Votto Vines 2009 6.4 35 10 0.1

 

 

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Economies of scale in manufacturing, distribution, and marketing create high barriers to the national and global markets. Therefore, the threat for new entries is low. Power of Suppliers: There are many suppliers to choose from in the wine industry making the bargaining power of suppliers is low. The wineries generally don’t have that much bargaining power to set prices and make definitive decisions on deals. Vineyards and wine makers need help from firms to distribute their product to stay in business. Firms who buy wine such as Votto Vines have many suppliers to choose from and have a flexible range of choosing whom to partner up with. Threat of Substitution: Given that the wine industry has a big demand and has many products to choose from, the threat of substitution is high. Firms need to make sure they match the consumers’ wants and needs, and be able to differentiate or else they risk loosing to competition. Power of Buyers: Bargaining power of buyers is high in this industry as there are many products to choose from and the cost of substitution is very low. 18

Figure 7: Porter’s 5 Forces

                                                                                                               18http://www.netadvantage.standardandpoors.com/NASApp/NetAdvantage/showIndustrySurvey.do?task=showIndustrySurvey&code=abt (how the industry operates)

Food  and  Beverage  Industry  

Competition:  High

Threat  of  New  Entry:  

Low

Power  of  Buyers:  High

Threat  of  Substitution:  

High

Power  of  Suppliers:  Low

 

 

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1.3.4 Conclusions and Recommendations Votto Vines has received various recognitions due to their innovative business practices, key partnerships and new product ideas. The wine industry is a very competitive, but also very demanding. Consumption for wine is set to increase not only in the United States but also globally. Votto vines can find success selling in foreign markets, especially those with high wine consumption and demand.

2 GLOBAL MARKET SEARCH

2.1 Country Selection 2.1.1 Region Selection Votto Vines is currently not international, giving them the opportunity to choose from a variety of countries and enter the international wine and alcohol industry. It would be more reasonable to move into the United States neighboring countries due to the size of Votto Vines and easier to operate and manage. Therefore, Votto Vines should consider the following countries in these regions: North America, Central America, and South America. 2.1.2 Criteria Selection Votto Vines aims to promote their brand to wine consumers and connoisseurs. Countries in the region of the Americas are known to consume alcohol, especially wine. A large population should be taken into account to target the most profitable segment. A larger gross domestic product per capita would also be beneficial, as more disposable income leads to demand of the product. Population: 19 It is imperative that Votto Vines enters a country that has a large population for a larger potential market. Countries with less than 10 million people were left out of the country list. Consumer Expenditure on Wine per capita: 20 Votto Vines sells wines therefore the consumption of wine is a big role when choosing which countries have a high consumption for the product, as it will influence the company’s success. GDP per Capita:21 The gross domestic product is a good indicator of how well the country’s economy is doing. Ease of Entry:22 Votto Vines aims to enter a country that will not pose any meaningful threats and which competition isn’t as strong. All data is from 2015. A Likert Scale is used to group each country according to each variable into a scale from 1 to 5 to be able to compare each country on an equivalent scale.

                                                                                                               19 https://www.cia.gov/library/publications/resources/the-world-factbook/wfbExt/region_cam.html 20 http://www.portal.euromonitor.com/portal/statistics/tab 21 https://www.cia.gov/library/publications/resources/the-world-factbook/wfbExt/region_cam.html 22 http://www.globaledge.msu.edu/countries/  

 

 

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Factors 1 2 3 4 5 Weight Population (in Millions)

0-31 31-62 62-93 93-124 >124 30%

Consumer Expenditure on Wine per capita ($USD)

0-25 25-50 50-75 75-100 >100 27%

GDP per capita (PPP)(thousands of $USD)

0-6 6-12 12-18 18-24 >24 25%

Ease of Entry Index

>128 128-96 96-64 64-32 32-0 18%

Table 3: Likert Scale Each criterion in this Likert Scale is extremely important when choosing what country Votto Vines should move into. The weights are very close in value, as all 4 criteria are essential, however some are more important than others. Population should be seen as the most important, as population is the size of the market. Consumer expenditure on wine per capita comes next, as it is important to consider how much the customer consumes. Thirdly, GDP per capita indicates the economic situation of the country. Lastly, Ease of entry is not as important as the previous 3 factors, but it still is important when considering how easy it is to move into the country’s market. Table 4 shows the real numbers per country and their Likert Scale rating.

 

 

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Table 4: Country’s Real Numbers and Likert Scale Weighted and Base Score

2.1.3 Country Comparison According to each country’s numbers and weighted score, Votto Vines should consider moving into Canada, Mexico, and Argentina. The table below shows the comparison between these 3 countries.                                                                                                                23 Population (in Millions) 24 Consumer Expenditure on Wine per capita ($USD) 25 GDP per capita (PPP)(thousands of $USD) 26 Ease of Entry

Country Pop. In Millions

23

C.E on Wine per

capita ($)24

GDP Per Capita (K)25

E.E26 Weighted Score

Base Score

Argentina 43.4 89.5 22.4 124 2 4 4 2 3.04 3

Bolivia 10.9 1.2 6.5 157 1 1 2 1 1.25 1.25

Brazil 204.3 13.1 15.8 120 5 1 3 2 2.88 2.75

Canada 35.1 216.2 49.5 16 2 5 5 5 4.1 4.25

Chile 17.5 23.9 23.8 41 1 1 4 4 2.29 2.5

Colombia 46.7 7.1 14 34 2 1 3 4 2.34 2.5

Ecuador 15.9 0.7 11.3 115 1 1 2 2 1.43 1.5

Guatemala 14.9 3.7 7.9 73 1 1 2 3 1.61 1.75

Mexico 121.7 5.3 18.5 39 4 1 4 4 3.19 3.25

Peru 30.4 30 12.3 35 1 2 3 4 2.31 2.5

Venezuela 29.3 2 16.1 182 1 1 3 1 1.5 1.5

United States (for reference)

321.4 117.1 56.3 7 5 5 5 5 5 5

 

 

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Table 5: Final Three Countries Numbers and Scores    

Figure 8: Perceptual Map on Final 3 Countries The sizes of the circles indicate the total GDP of each country, GDP per capita multiplied by the population. Based on the data from Table 5 and Figure 8, Canada is the leader in all categories except for population however, it excels in the other three categories against Mexico and Argentina. Mexico has the largest population out of the three countries but has the lowest consumer expenditure on wine. Argentina has a consumer expenditure on wine but has a low population and GDP per capita.

Country Canada Mexico Argentina

Pop. (in Millions) 35.1 2 121.7 4 43.4 2 C.E on Wine per capita ($) 216.2 5 5.3 1 89.5 4

GDP Per Capita (in K) 49.5 5 18.5 4 22.4 4 E.E 16 5 39 4 124 2 Weighted Score

4.1 3.19 3.04 Base Score 4.25 3.25 3

Canada

Mexico

Argentina

Hig

h G

DP

per c

apita

High Consumer expenditure on

wine

Low

GD

P pe

r cap

ita

Low Consumer expenditure on wine

 

 

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3 MARKET ANALYSIS

3.1 PEST Analysis All data is from 2015 unless indicated otherwise. 3.1.1 Canada Political Factors: Canada has the largest trading partnership in the world with the United States. Canada makes part of several international organizations such as, International Monetary Fund (IMF), Big Seven (G-7), North American Free Trade Agreement (NAFTA), and Food and Agriculture Organization (FAO). Its government type is a federation, a parliamentary democracy, and a constitutional monarchy. It has common law system except in Quebec, where they enact French code civil law.27 Their ease of doing business rank is 14.28

Figure 9: Map of Canada

Economic Factors: Canada is a high-technology industrial society, with abundant resources, highly skilled labor force, and modern capital plant. It has a gross domestic product of USD $1.573 trillion and a GDP per capita of $49,500, with an industry growth of 2.3%. Canada’s labor force is of 19.3 million, a low unemployment rate of 6.9%, public debt of 95.4% of GDP, inflation rate of 1.2% and an exchange rate of 1.275 Canadian dollars for every USD.29 The United States accounts for 54.5% of the imports and 76.8% of the exports for Canada.30 Consumer expenditure on wine is of $216.2.31 Social Factors: Canada has a population of 35.09 million people. Their growth rate is 0.75%. The age distribution of the population is as follows: 0-14 years: 15.46%, 15-24 years: 12.39%, 24-54 years: 40.69%, 55-64 years: 13.74%, 65 years and over: 17.73%.

                                                                                                               27 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 28 http://www.doingbusiness.org/rankings 29 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 30 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 31 http://www.portal.euromonitor.com/portal/statistics/tab  

 

 

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The official languages are English and French. Canada’s major cities, with over 1 million in population, are Toronto, Montreal, Vancouver Calgary, Ottawa, and Edmonton.32 Technological Factors: Canada has excellent communications services provided by modern technology. 16.6 million fixed-line telephone subscribers, 29.5 million cellular phones subscribers, and 32.4 million Internet users (92.9% of the population). Canada has a well-built infrastructure that includes 1,467 airports, 77,932 km of railways, 1,042,300 km of roadways, and 636 km of waterways.33 3.1.2 Mexico Political Factors: Mexico is the United State’s third largest trading partner. Mexico makes part of many international organizations such as, the North American Free Trade Agreement (NAFTA), International Monetary Fund (IMF), and Group of 20 (G-20). The government of Mexico is a federal republic. It enacts a civil law system with the United States constitutional law influence and judicial review of legislative acts.34 Their ease of doing business rank is 38.35

Figure 10: Map of Mexico

Economic Factors: Mexico has become oriented toward a manufacturing economy. The GDP is $1.161 trillion USD, with a growth rate of 2.3%, GDP per capita of $18,500, industrial production growth of 3.3%, labor force of 52.81 million, and an unemployment rate of 4.5%. Inflation rate on consumer prices is 2.7% and an exchange rate of 15.88 Mexican pesos per US dollar. Mexico is the United State’s second largest exporter (80.2% (2014)) and third largest source of imports (48.8% (2014)). 36 Consumer expenditure on wine per person is $5.3.37 Social Factors: Mexico has a population of 121.7 million. Their growth rate is 1.18%. The age distribution of the population is as follows: 0-14 years: 27.6%, 15-24 years:                                                                                                                32 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 33 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 34 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 35 http://www.doingbusiness.org/rankings 36 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 37 http://www.portal.euromonitor.com/portal/statistics/tab

 

 

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17.9%, 25-54 years: 40.6%, 55-64 years: 7.2%, 65 years and older: 6.77%. The official language is Spanish. Mexico’s major cities, with more than 1 million people, are Mexico City, Guadalajara, Monterrey, Puebla, Toluca de Lerdo, and Tijuana.38 Technological Factors: Mexico has an adequate, but improving, communications services for business and government. 21.1 million fixed-line telephone subscribers, 102.2 million cellular telephone subscribers, and 49.5 million Internet users (41.1% of the population (2014)). Mexico has a well-built infrastructure with 1,714 airports (2013), 15,389 km of railways, 377,660 km of roadways, and 2,900 km of waterways.39 3.1.3 Argentina

Political Factors: Argentina is involved in many international organizations such as: International Monetary Fund (IMF), Group of 20 (G-20), and the Inter-American Development Bank (IADB). The government of Argentina is a republic with a civil law system based on West European legal system.40 Argentina’s ease of business is 121 due to recent political instability.41 Economic Factors: Argentina prospers from rich natural resources, highly literate population, an export-oriented agricultural sector, and diversified industrial base. Argentina has a GDP of $578.7 billion USD, with a growth of 0.4%, GDP per capita of $22,400 USD. Argentina has a labor force of 17.47 million, 7.6% unemployment, and inflation of 27.6%. Brazil is Argentina’s top exporter (20.5% (2014)) and importer (22.1% (2014)). The exchange rate is 9.2 Argentinian pesos per US dollar.42 Consumer expenditure on wine is $89.5 per person.43

Figure 11: Map of Argentina Social Factors: Argentina’s population is 43.4 million. The growth rate is .93%. The age distribution of the population is as follows: 0-14 years: 24.74%, 15-24: 15.59%, 25-54 years: 39.01%, 55-64: 9.11%, 65 years and older 11.55%. The official language is Spanish. Argentina’s major cities with over 1 million people are Buenos Aires, Cordoba, Rosario, and Mendoza.44

                                                                                                               38 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 39 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 40 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 41 http://www.doingbusiness.org/rankings http://www.delcredereducroire.be/en/country-risks/#focusCountry=CA&focusContinent=&filter=TransferRisk&min=0&max=7&tab=1 42 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 43 http://www.portal.euromonitor.com/portal/statistics/tab 44 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html

 

 

19

Technological Factors: Argentina’s communications services are improving and growing with 9.4 million fixed-line telephone subscriptions, 66.4 million cellular telephone subscriptions, and 25.7 million Internet users (59.7% of the population (2014)). Argentina has a moderate level of infrastructure with 1,138 airports, 36,917.4 km of railways, 231,374 km of roadways, and 11,000 km of waterways.45

3.2 Competitive Analysis 3.2.1 Main Competition Canada’s biggest wine producer and marketer of wines is Constellation Brands (formerly known as Vincor Canada) holding 17% of total volume sales of all wines in Canada in 2014.46 In 2015, their wine and spirits business achieved operating income growth of 6% and increased operating margin.47 Mexico’s wine industry is lead by La Madrileña SA de CV with 21% volume share in 2014.48 The company owns well know wine brands with a presence in the country for many decades. Grupo Peñaflor SA led Argentina’s wine industry with a 23% total volume share in 2014. The company owns seven wineries, their major wine brands offer various options for all consumer segments, and enjoys large economies of scale in distribution and is present in every single production region in Argentina. 49

3.3 Country Selection 3.3.1 Criteria Selection To compare the top three countries even further, a new Likert Scale is used. The new scale will include the original four criteria used, as well as three new criteria to rate the countries. Below are the original criteria: Population: 50 It is imperative that Votto Vines enters a country that has a large population for a larger potential market. Countries with less than 10 million people were left out of the country list. Consumer Expenditure on Wine per capita: 51 Votto Vines sells wines therefore the consumption a big role when choosing which countries have a high consumption for the product, as it will influence the company’s success. GDP per Capita:52 The gross domestic product is a good indicator of how well the country’s economy is doing. Ease of Entry:53 Votto Vines aims to enter a country that will not pose any meaningful threats and which competition isn’t as strong.

                                                                                                               45 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 46 http://www.euromonitor.com/wine-in-canada/report 47 http://www.cbrands.com/investors/financial-information 48 http://www.euromonitor.com/wine-in-mexico/report 49 http://www.euromonitor.com/wine-in-argentina/report 50 https://www.cia.gov/library/publications/resources/the-world-factbook/wfbExt/region_cam.html 51 http://www.portal.euromonitor.com/portal/statistics/tab 52 https://www.cia.gov/library/publications/resources/the-world-factbook/wfbExt/region_cam.html

 

 

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All data is from 2015. The new variables are: Culture Distance:54 The Geert Hofstede model compares six different variables (power distance, individualism, masculinity, uncertainty avoidance, long term orientation, and indulgence) that make up a national culture. To calculate the culture distance one uses the following formula:

|𝐶𝑜 − 𝐶𝑑|&

'()

Co = Home country score Cd = Destination country score

Global Competitive Index:55 Index calculated by the World Economic Forum. The index determines the level of productivity of a country to see if it can provide high levels of prosperity for its citizens. It takes into account 12 pillars of competitiveness: institutions, infrastructure macroeconomic environment, innovation, business sophistication, market size, technological readiness, financial market development, labor market efficiency, goods market efficiency, higher education and training, and health and primary education. Import Tax:56 Each country has their own tariff for importing goods into their country. It is important to assess the rate of these taxes as it could influence the cost of company trying to export their goods to the country selected. The results of each country will show the MFN duty rate on wines with <15% alcohol volume. The table below shows the results for each variable of the Hofstede model. Power distance expresses the attitude of the culture toward power inequalities amongst us. Individualism expresses the degree of interdependence a society maintains among its members. Masculinity expresses what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine). Uncertainty Avoidance expresses the way that a society deals with the fact that the future can never be known. Long term orientation expresses how every society has to maintain some links with its own past while dealing with the challenges of the present and future. Finally, indulgence expresses the extent to which people try to control their desires and impulses.57 The culture distance is the absolute difference between the United States’ score and the destination country’s score.

                                                                                                                                                                                                                                                                                                                                         53 http://www.globaledge.msu.edu/countries/  54 http://geert-hofstede.com/countries.html 55 http://reports.weforum.org/global-competitiveness-report-2014-2015/methodology/#/view/fig-1 56 http://www.dutycalculator.com/hs-code-duty-rate-import-restrictions/220421/red-wine-14-15-vol/2204.21.8060/2204.21.9621/5583/ 57 https://geert-hofstede.com/united-states.html

 

 

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Table 6: Culture Distance58 The original 4 criteria account for 83% of the rating, while the new three criteria account for 17%. Table 6, below, shows the new Likert Scale with a total of 7 criteria and their respected scales and weights

Table 7: Likert Scale                                                                                                                58 Hofstede country comparisons can be found in the appendix

Country United States Canada Mexico Argentina Power Distance 40 39

(1) 81

(41) 49 (9)

Individualism 91 80 (11)

30 (61)

46 (45)

Masculinity 62 52 (10)

69 (7)

56 (6)

Uncertainty Avoidance

46 48 (2)

82 (36)

86 (40)

Long Term Orientation

26 36 (10)

24 (2)

20 (6)

Indulgence 68 68 (0)

97 (29)

62 (6)

Culture Distance

0 34

176

112

Factors 1 2 3 4 5 Weight Population (in

millions) 0-31 31-62 62-93 93-124 >124 25%

Consumer Expenditure on Wine per capita

($USD)

0-25 25-50 50-75 75-100 >100 23%

GDP per capita (PPP)(thousands

of $USD)

0-6 6-12 12-18 18-24 >24 21%

Ease of Entry Index

>128 128-96 96-64 64-32 32-0 15%

Culture Distance

140+ 140-105 105-70 70-35 35-0 6%

Global Competitive

Index

0-1.2 1.2-2.4 2.4-3.6 3.6-4.8 4.8-6 5%

Import Tax Rate

>20% 20-15% 15-10% 10-5% 5-0% 5%

 

 

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3.3.2 Country Comparison

Table 8: Final Three Countries Numbers and Scores

                                                                                                               59 Canada and Mexico are both in the NAFTA and therefore inquire no import tax from the United States

Country Canada Mexico Argentina

Population (in millions) 35.1 2

121.7 4

43.4 2

Consumer Expenditure on Wine per capita

($USD)

216.2 5

5.3 1

89.5 4

GDP per capita (PPP)(thousands of

$USD)

49.5 5

18.5 4

22.4 4

Ease of Entry Index 16 5

39 4

124 2

Culture Distance 34 5

176 1

112 2

Global Competitive Index

5.3 5

4.3 4

3.8 4

Import Tax Rate59 0% 5

0% 5

20% 1

Base Score 4.57 3.29 2.71

Weighted Score 4.3 3.23 2.94

 

 

23

3.3.3 Country Selection Table 7 shows that Canada is the top country for Votto Vines to enter. Canada has a base score of 4.57 and a weighted score 4.3. The scores were significantly higher than those of Mexico and Argentina. Canadians have been increasing their consumption of wine and are open to new products such as Votto Vines offers. It makes sense for Votto Vines to move to Canada.

Table 9: Final Country

3.4 Conclusions and Recommendations Canada is a great new market for Votto Vines to enter as its first international operations. Canada shares a lot of similarities with the United States and is the neighboring country. Therefore, the marketing mix has to fit for the country. After considering the Segmenting-Targeting-Positioning (STP) process will be followed and allow Votto Vines to sell to their target market.

4 MARKET ENTRY

4.1 Risk of Internationalization While there are many opportunities to go internationally, one must also consider the potential risks this investment might bring. These risks are important to take into consideration as they could lead to failure. This is especially important for Votto Vines as they have never entered a foreign country. The risks include: political instability, sudden changes in laws and regulations, unexpected currency exchange rate fluctuations, misunderstanding of customer preferences, and lack of managers’ international experience. Votto Vines entry mode will be indirect export to Canada, the company must make sure the risks of selling their products through Canadian alcohol wholesalers are

Country Canada

Population (in millions) 2

Consumer Expenditure on Wine per capita ($USD) 5

GDP per capita (PPP)(thousands of $USD) 5

Ease of Entry Index 5

Culture Distance 5

Global Competitive Index 5

Import Tax Rate 5 Base Score 4.57

Weighted Score 4.3

 

 

24

minimal. The risk assessment of political risk, commercial risk, war risk, risk of expropriation and government action, and transfer risk are all feasible in Canada.60 To know the environment you will be doing business in is essential. Canada has the lowest risk rating in political, war, expropriation and government action, and transfer risk. However, Canada does have a normal commercial risk, nothing to be concerned about, but still something to consider.

4.2 Canada’s Wine Industry 4.2.1 Overview The Canadian the wine industry is highly regulated, even more than the United States. Government-run liquor boards in each province play a significant role in distribution and marketing of wine. 13 different major liquor agencies are in charge of enforcing the wholesale, distribution and retail of alcohol.61The top three agencies, Liquor Control Board of Ontario (LCBO), Societe des alcools du Quebec (SAQ) in Quebec, and BC Liquor Distribution Branch (BCLDB) in British Columbia help meet consumer demand by increasing product offerings, and their promotional and educational activities of wines in their own provinces provide a boost to local wine brands.62 The total volume of the wine industry in Canada, for 2014, was 521 million liters and C$11.2 billion, increasing 3% in volume and value. The wine industry is projected to keep growing, as consumer trends and tastes seem to have a preference for wine over other alcoholic beverages. Wine consumption, for 2014, reached 15 liters per capita.63 The group of adults aged 20 to 64 accounts for a large portion of this industry's sales drive demand wine as this demographic includes most of Canada's drinking-aged population. Yet the millenials, (20-28 years old) are a growing number of consumers.64 The number of adults aged 20 to 64 is expected to slowly increase, presenting an opportunity for the industry.65 4.2.2 Competition      The Canadian wine industry remains relatively fragmented, with the two top players, Constellation Brands Inc and Andrew Peller Ltd, holding 17% and 12% respectively of total revenue of wine in 2014. They are followed by other private companies Treasury Wine Estates, E&J Gallo Winery, Familia Zuccardi, Viña Concha y Toro and Casella Wines, who hold between 1% and 5%. The top 30 companies of the industry own about half of the total market share.66

                                                                                                               60http://www.delcredereducroire.be/en/country-risks/#focusCountry=CA&focusContinent=&filter=TransferRisk&min=0&max=7&tab=1 61http://search.proquest.com/docview/1613595166/fulltextPDF/E40DB37A29214534PQ/2?accountid=13584 62 http://clients1.ibisworld.com/reports/ca/industry/majorcompanies.aspx?entid=991 63 http://search.proquest.com/docview/1718277727/B6F836C18AB24553PQ/7?accountid=13584 64 http://clients1.ibisworld.com/reports/us/industry/ataglance.aspx?entid=289 65 http://clients1.ibisworld.com/reports/ca/industry/currentperformance.aspx?indid=1051 66http://search.proquest.com/abicomplete/docview/1700282678/fulltextPDF/A4AA4AA58B834DCAPQ/7?accountid=13584

 

 

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Figure 12: Competitors’ Logos

The market shares are used to calculate the HHI of the wine market in Canada. The HHI is found by squaring each market share, and summing the results. The HHI of a given industry can range from 0 to 10,000. An HHI that is close to 0 indicates near perfect competition, while a score of 10,000 indicates a monopoly.

Company Total Sales In C$ in Millions Market Share % Percent^2

Constellation Brands Inc 1,870.40 16.70% 278.89

Andrew Peller Ltd 1,310.40 11.70% 136.89

Treasury Wine Estates Canada Inc 425.60 3.80% 14.44

E&J Gallo Winery Canada Ltd 324.80 2.90% 8.41

Familia Zuccardi 235.20 2.10% 4.41

Viña Concha y Toro SA 190.40 1.70% 2.89

Casella Wines Ltd 168.00 1.50% 2.25

Others67 6,675.20 59.60% 2250

Total 11,200.00 100% 2698.18

Table 10: HHI of Wine producers in Canada68

                                                                                                               67 Assuming all other company (1000) have less than 1.5% market share. 68http://search.proquest.com/abicomplete/docview/1700282678/fulltextPDF/A4AA4AA58B834DCAPQ/7?accountid=13584

 

 

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Canada has a score of 2698.18 meaning it is a highly concentrated market.69

4.3 Market Entry Mode Votto Vines should enter the Canadian wine market through indirect exporting. They should sell their products through intermediaries who specialize in wholesaling and retailing alcohol in each province and save costs by not setting up a physical store in the country. Due to Canada’s many regulations on alcohol sales, agencies such as Liquor Control Board of Ontario (LCBO), Societe des alcools du Quebec (SAQ) in Quebec, and BC Liquor Distribution Branch (BCLDB) in British Columbia are the top wholesalers and retailers of alcohol in the country. Therefore, it would be logical for Votto Vines to work with one of these agencies to help them distribute and sell their products to the consumers. The Liquor Board of Ontario (LCBO), which is owned by the Ontario government, is one of the world's largest buyers and retailers of alcoholic beverages.70 They operate in Canada’s largest cities such as Toronto with 5.993 million people, Ottawa with 1.326 million people, and Brampton with 600,000 people and own 26% market share of all alcohol retailers in the country.71 Votto Vines should begin working with LCBO and in the cities they operate in to work their way into the market.  

4.4 Herfindahl-Hirschman Index (HHI) Culture Diversity It is essential for Votto Vines to understand the cultural diversity of the country they are entering for researching and creating an accurate marketing mix. The HHI cultural diversity is made up of three variables: language, religion, and ethnicity. The formula to calculate culture diversity is (HHI*1/3) +(HHI*1/3) +(HHI*1/3). Language % Religion % Ethnicity %

English 58.7 Catholic 40.6 Canadian 32.2 French 22 Protestant 20.3 English 19.8 Punjabi 1.4 Other Christian 6.3 French 15.5 Italian 1.3 Muslim 3.2 Scottish 14.4

Spanish 1.3 Hindu 1.5 Irish 13.8 German 1.3 Sikh 1.4 German 9.8

Cantonese 1.2 Buddhist 1.1 Italian 4.5 Tagalog 1.2 Jewish 1 Chinese 4.5 Arabic 1.1 Other 0.6 North American Indian 4.2 Other 10.5 Nondenominational 23.9 Other 50.9

HHI Score 1354.39 896.12 1620.94 Cultural Diversity Score: 3871.45

Table 11: Language, Religion, and Ethnicity Percentage in Canada    

                                                                                                               69 https://www.justice.gov/atr/herfindahl-hirschman-index 70 http://www.doingbusinesswithlcbo.com/tro/Forms-Documents/pmpp/index.html#/10/zoomed 71 http://clients1.ibisworld.com/reports/ca/industry/majorcompanies.aspx?entid=1051

 

 

27

The HHI score can range from 100 to 10,000, the latter indicating no culture diversity. The HHI score of Canada is 3871.45 which indicates a very diverse culture. This information is essential to Votto Vines as an indicator as to who to market to.

4.5 Marketing Mix (4 P’s) Votto Vines should adapt their price and placement to the Canadian market, while standardizing their product and promotion with the rest of their operations as seen in the figure below.

Figure 13: Standardizing vs Adapting  4.5.1 Product While Votto Vines’ wines will essentially be selling the exact same wine in Canada as it does to the United States, they will need to slightly adapt the packaging to also include the French language, as 22% of Canada’s population speaks French, especially in the region of Quebec. The packaging and labeling of the product, which would be the bottle containing the wine, will include information about the wine in both English and French. The contents inside the bottle, will remain the same. Most of the products Votto Vines be selling to costumers are new brands in the market, especially their VINaaGO portable 187ml wine brand, is the first in its type.  4.5.2 Price Before selecting a price for their products, Votto Vines needs to consider the exchange rate between the United States Dollar (USD$) and the Canadian Dollar (C$) and Canada’s inflation rate. The current exchange rate, as of 2015, is 1.275 C$: 1 USD$ and the inflation rate is 1.2%.72 The expected exchange rate between the two countries, Ee, can be calculated using the equation Ee = Es(1+if)/ (1+id), where Es is the current spot exchange rate, Ee is the expected exchange rate, id is the domestic inflation rate, and if is the foreign inflation rate. Using the inflation rate of 1.2% for Canada and 0.2% for U.S, and exchange rate of 1.275 C$, the expected exchange rate is 1.288%.73 Votto Vines will need to set their price according to the expected exchange rate in order to keep the same margin of profit as it would when selling in the U.S. The average price of a 750ml bottle

                                                                                                               72 https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ca.html 73 Ee=1.275(1+.012)/(1+.002)

 

 

28

of wine is 18 C$ (14.12 USD$).74 Because Votto Vines wines are premium wines, their 750ml bottle range from 19-35 USD$. Votto Vines’ VINaaGO portable wine sells for 2.99 USD$ in the U.S.75 While the company’s 750ml bottles are above the average price, a cost based pricing strategy, setting the price based on cost to communicate its value, evokes the message that the wines are of superior quality, exclusivity, and guarantee personal satisfaction. For the 187ml personal wines, it would be a one of its kind, allowing for less competition and more flexibility with pricing. There has also been a shift in consumer tastes for more premium wines, increasing the price the consumers are willing to pay.76 Potential price for VINaaGO 187ml portable wine: 3.99 C$. Potential range of prices for Votto Vines 750ml wines 20.99-39.99 C$.

Company Number of Brands Product Price Ranges (USD$)

Constellation Brands Inc 100 8.99-90.00

Andrew Peller Ltd 180 10.00-100.00

Treasury Wine Estates Canada Inc 45 7.00-80.00

E&J Gallo Winery Canada Ltd 37 5.99-26.99

Familia Zuccardi 21 12.99-59.99

Viña Concha y Toro SA 17 8.00-29.99

Casella Wines Ltd 5 4.99-26.99

Table 12: Competitors Table for Canada77 4.5.3 Promotion Promoting Votto Vines’ products to the consumers is crucial to the success of the company. There are various communication tools the company can use to promote their products to the consumers such as: advertising (newspapers, magazine, journals, television, and internet), public relations (annual reports, house magazines, press relations), and sales promotion (e.g. rebates and price discounts, catalogues and brochures). Due to the fact Votto Vines is advertising for an alcoholic beverage, it must follow Canadian Advertising Standards. The Advertising Standards Canada (ASC) requires alcoholic beverage broadcast advertising to ensure compliance with the Canadian Radio-television and Telecommunications Commission Code for Broadcast

                                                                                                               74 http://www.numbeo.com/cost-of-living/city_result.jsp?country=Canada&city=Vancouver 75 http://chilledmagazine.com/votto-vines-launches-vinaago-single-serve-wines/ 76http://clients1.ibisworld.com/reports/ca/industry/currentperformance.aspx?entid=1051  77 https://www.tweglobal.com/brands http://www.cbrands.com/our-brands/wine?field_country_value=&pagesize=1000&sort=asc&order=value0 http://www.andrewpeller.com/Peller.php http://gallo.com/wine/Canada/Brand%20Names/BrowsebyBrandName.html http://www.zuccardiwines.com/6/Vinos/ http://www.conchaytoro.com/descubre-vinos/?lang=en_us

 

 

29

Advertising of Alcoholic Beverages (CRTC Code).78 Votto Vines must make sure that when they are advertising, they make sure that they do not advertise in a way that appeals to those under the legal drinking age, which is 18 in Alberta, Manitoba, and Quebec and 19 in all other provinces.79 It would be wise to promote the products to the demographic who consumes the most wine, those aged 25-65, and to the growing number of consumers, those aged 20-28.80 A study made by IAB Canada in 2014, showed that 98% of Canadians watch the TV, 90% listen to the radio, 66% read magazines, and 81% of adults go on the internet.81 Based on these numbers, Votto Vines should consider these mediums when trying to advertise their product to reach the most amount of people. They should make sure to also follow the AIDA concept in order for a sale to occur. Attention must be noticed by the consumer through advertisement and public relations. Once attention is gained, interest for the product and the company is vital, which can be gained through sales promotion. Once interest is achieved, desire for the product should be created through sales promotion and direct marketing. The final and ultimate goal is for

the consumer to take action and buy the product. The advertisements should be mostly in English, but also in French when advertising in cities where there is a large French-speaking population, such as Quebec. The presentation of the product should remain standardized to promote brand-image and recognition. Based on the Hofstede model, Canada and the United States are relatively close in cultural difference with an absolute difference of only 34. Based on these results, Canadian consumers and American

Figure 14: Hofstede United States vs Canada consumers have very few cultural differences and tend to have similar mindsets. Hence, it is safe to say that Canada has a similar advertising style preference as United States: Lecture, direct appeals, hard-sell, and argumentative.82

                                                                                                               78http://www.adstandards.com/en/Clearance/AlcoholicBeverages/alcoholicBeverages.aspx 79http://clients1.ibisworld.com/reports/ca/industry/productsandmarkets.aspx?entid=991 80 http://clients1.ibisworld.com/reports/us/industry/ataglance.aspx?entid=289 81http://iabcanada.com/wp-content/uploads/2014/12/V2-Total-Canada-2014-CMUST-Exec-Summary-Nov-18-2014.pdf 82 Chapter 13 Global Marketing

40

91

62

46

26

68

39

80

52

48

36

68

Power Distance

Individualism

Masculinity

Uncertainty Avoidance

Long Term Orientation

Indulgence

Canada United States

 

 

30

4.5.4 Placement Votto Vines is entering the market through indirect exporting, meaning they won’t have a physical store that they control. They will hand the control of distributing and selling the product through an intermediary. The intermediary Votto Vines should work with is Liquor Control Board of Ontario through a selective distribution. LCBO is the biggest wholesaler and retailer of alcohol in Canada. Not only do government-controlled agencies such as LCBO run the wine wholesaling and retailing industry, but private retailers have trouble tapping the market due to regulations and restrictions. They also work directly with the supplier, (in this case Votto Vines) to effectively market the product to the consumers.83This would mean Votto Vines will have a length channel of 2 (manufacturer -> wholesaler/retailer -> consumer) and a depth of one wholesaler/retailer as they should start of by only partnering with LCBO. Votto Vines’ products would reach consumers in the cities of Toronto, Burlington, Kanata North, Brampton, Sudbury, Ottawa, Chatham, Kitchener, Orangeville and Sault Ste. Marie. 84 Having only one intermediary between Votto Vines and the consumer means a lower final price. Because Votto Vines is exporting their product to Canada, they need to follow incoterms (international Commercial Terms). To reduce costs, Votto Vines should export their products by ship and agree with LCBO to an EXW transport type (Ex Works) where Votto Vines is only responsible to for making the goods available to the seller’s premise. The buyer (LCBO) bears the full risk from there to the destination.85

4.6 Segmenting, Targeting, Positioning 4.6.1 Segmenting    The key of the segmentation process is to identify a distinct group of consumers with similar tastes and preferences that aligns with the product Votto Vines is offering. The first type of segmentation is country-based (geographic and demographic). Figure 15 shows consumer consumption on type of wine based on age group.

 Figure 15: Wine type consumption breakdown by age group86

                                                                                                               83http://www.doingbusinesswithlcbo.com/tro/Forms-Documents/pmpp/index.html#/10/zoomed 84 http://clients1.ibisworld.com/reports/ca/industry/majorcompanies.aspx?entid=1051 85 http://www.conship.biz/Glossary.aspx?year=2010 86https://www.researchgate.net/publication/251630956_Consumption_dynamics_and_demographics_of_Canadian_wine_consumers_Retailing_insights_from_the_tasting_room_channel

38.0%

49.7% 50.5%

65.6%

53.6% 55.8%51.0%

46.9%48.0%

39.0%35.7%

27.5%

38.7% 35.9%38.6%

47.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

19–24 years 25–28 years 29–34 years 35–40 years 41–45 years 46–54 years 55–65 years 65+ years

Red Wine (%) White Wine (%)

 

 

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Based on the figure above, you can see those aged 35-40 are the biggest consumers of red wine while those aged 19-24 are those for white wine. It is important to note as well that out of the eight different age groups represented in the figure, six preferred red wine (those aged 25-65) to white wine (those aged 19-24 and 65+). As mentioned before, it is vital for Votto Vines to appeal to those above the the legal drinking age given each provinces law on alcohol consumption. Based on the results, we can now divide the market to those who prefer consuming red wine and white wine. The second type of segmentation is costumer-based (behavioral and psychographic). Votto Vines needs to understand the how the consumers think, which is discussed in section 4.5.3. 4.6.2 Targeting When targeting the most attractive segments, Votto Vines should use a differentiated approach. This means they will aim at two or more market segments, each of which has a distinct set of needs and preferences, and offer specific products to each target market. For example, as seen in the results above, Votto Vines should concentrate their sale and promotion of white wines to young adults and senior citizens (those aged 19-24 and 65+), while for red wines they should concentrate their promotion to millenials and middle aged adults (those aged 25-65). Votto Vines should be able to fulfill their differentiated approach given their variety of products available for consumers. 4.6.3 Positioning Votto Vines should make sure to differentiate themselves from the competition to gain market share. Given their products are of premium quality and price, above the average price of wine for Canada, they should position their products as more price for more benefits. They should also position their portable wine as unique, one of a kind in the market. Votto Vines has to make sure to give the intended perception of their products to consumers, which is premium imported and limited edition wines. Positioning is key to the stability and growth for Votto Vines.                     Figure 16: LCBO Store Figure 17: LCBO online store

4.7 Conclusions and Recommendations The growing wine industry of Canada is perfect for Votto Vines to enter. With a growing consumer market, with a taste for premium wines, Votto Vines can find success in this market. The marketing mix and the STP process must be considered and researched before Votto Vines enters this market. A fault in one of these areas could prove costly to the company, hence careful consideration in these areas should be made. Votto Vines should differentiate themselves against their competitors to gain vital market share. Votto Vines will find success in Canada’s wine industry if all steps in this marketing plan are followed.

 

 

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APPENDIX  

 Table 1: Hofstede Framework for Argentina87

 Table 2: Hofstede Framework for Canada88

 Table 3: Hofstede Framework for Mexico89

                                                                                                               87 https://geert-hofstede.com/united-states.html 88 https://geert-hofstede.com/united-states.html 89 https://geert-hofstede.com/united-states.html