The wine industry in Canada Free Essay Example

The white wine industry in Canada is among the best known worldwide. The function of this report is to concentrate on the worldwide marketing method of Inniskillin White wines, which is owned by Vincor International. This report begins with a short history of ice wine production in Canada and beyond, it assists us understand the factors that have actually helped Innisillin gain success in Canada, assesses the worldwide marketing method by using global marketing principles taking into light on the possible growth into global markets.

An environmental analysis is also consisted of, along with a SWOT and the 5 Forces Model. Finally the report concludes with presenting a Global Marketing Strategy for the company’s expansion into the Indian market.

Ice red wine is called “Eiswein” in Germany, which was its first producer. The distinction in between regular wine and ice white wine is that ice white wine is made from grapes delegated ferment and after that freeze on the vines in the vineyards.

It falls within the classification of desert white wines and has lower amount of alcohol. It has a high quantity of concentrated sugars, for this reason the very sweet taste (Premium ice white wine 2010).

Source: www.winesofcanada.com/icewine3.html.

A Short History of Inniskillin Formed by Ziraldo and Kaiser in Canada in 1975, Inniskillin White wines got recognized around the world for its well-known award-winning item “Ice white wine”. It acquired appeal by winning prestigious awards like 2004’s “Star Item of the Year” at the Frontier Awards event. In 1989, Labatt breweries chose to go out of organisation, its red wines started being sold by the name of “Cartier Red wines“.

Cartier Red wines bought out Inniskillin in 1992, and the next year the company merged with T.G. Bright and subsequently happened called Vincor International, Inc (White Wines of Canada 2011).

Source: www.iniskillin.com.

In October 2005, Constellation Brands, an American company and the world’s biggest red wine manufacturer (Kesmodel 2010) bid $944 million to take over Vincor International. However, the effort to get failed since it did not get the needed assistance of two-thirds of Vincor’s shareholders (Simon et al., 2005). But Constellation Brands did not give up, it returned with a deal of $36.5 per share ($ 1..5 billion), which had been accepted on April 3, 2006 (CBC News, 2006).

Environmental Factors leading to the development and success of Inniskillin in Canada The success of Inniskillen can be examined at by understanding the factors that led the company to achieve its status. By using the PEST analysis model both internal and external to understand the environmental factors as well as introducing an Environmental/climate examination. The reason for this is that the weather plays an important role in the success of the Inniskillin brand of ice wine. It can be said the change in the climate conditions could determine the future of the industry as a whole. Political Factors

Governmental Regulations: Canada has a strict regulation regarding the manufacturing and sales of alcoholic beverages in which it operates in. Iniskillin became the first Ontario winery to be granted a licence since 1929 by the LCBO.

By 1988 between the U.S and Canada the Free Trade Agreement (FTA) was signed which led to the formation of Vintners Quality Alliance (VQA) by Ontario and British Columbia governments to improve the standards of the wine produced. VQA has helped Inniskillin establish itself as a premium wine producer. Since no new licence was issued the bigger wineries bought licence from the smaller ones to expand their businesses, this also helped with the expansion of Inniskillin as it had competition from six other companies compared to what it could have faced otherwise.

Taking advantage of the clause in the USA Free Trade Agreement allowed Vincor to run 165 of its own stores. The “three-tier” system developed by lawmakers made sure that strong supplier relationships were reduced and the introduction of wholesalers in smaller retailers could compete successfully in the market place, which helped with in the growth of Inniskillin to establish its brand in the Canadian market. Today in the US and in Canada, the state government are now still responsible for /the regulation of Alcohol distribution. Like, the Liquor Control Board Ontario (LCBO) which is responsible for the distribution and sales of local/foreign alcoholic beverages within the state.

Economic Factors The Production of Ice wine required a lot more yield to produce a bottle of grape wine compared to table wine which results in a higher cost of production. The production of Innsikillin in Canada was idea as temperatures were very low every winter being appropriate climate condition ton grow grapes and allow them to freeze naturally which increased profit margins. With the increase in consumer income the demand for premium wines (Jones and Hirasawa 2007, p8) increased in sales, which also lead Vincor expanding its chain with 13 acquisitions between 1986 and 2004 became the largest wine company in Canada. With continuing the consolidation of the Canadian wine beverage industry will increase economy of scales, which will lead to a reduction in costs and with higher profit margins for many large players within this industry.

Social Factors The growing demand in wine sales was closely followed by consumer house hold income increase; this resulted in more spending power of consumers in high value wine such as Icewine. The global perception on consumers in relation to Canada’s wine industry was neither good nor bad, this was in contrast to the poor image that Germany and Austria had in this industry (Jones and Hirasawa 2007). Vincor International was therefore able to maintain a position of its Inniskillin icewine as a Canadian brand which was different from the mainstream wine industry. With the success of Innskilllin strategy, the Canadian wine industry, also including Vincor was able to penetrate the global market to a small degree.

It can be said that the Canadian Inniskillin icewine brand was associated with the cold climate; with the assumption this link can be applied by many icewine manufacturers to produce this wine in extreme polar locations around the world. The Canadian Innisikillin winery generated huge profits when Japanese tourists visited the winery on purchasing high levels of stock (Jones and Hirasawa 2007, p10). This offered an opportunity for the company to create a strategy around the loyal group of consumers.

Although this was not explicitly stated within the case study, it could be possible that the critical mass of consumers “word of mouth” a way of advertising the brand being cost effective. Consumer loyalty is all about attracting the right customer, by converting the Japanese segment of consumers from mere customers of product and brand. Drinking wine can be perceived of having a health benefit compared to spirits. The perception of wine being healthy can be backed with scientific research showing the increased life expectancy for wine drinkers and improved wellbeing of life, as the alcoholic content in wines was less than other alcoholic beverages. Also with regards to alcoholic desert beverages icewine was successfully linked to strategy that involved restaurants (Jones and Hirasawa 2007).

Technological Factors The use of technology determined the quality of the product which resulted in Vincor International successfully introducing a new product Inniskillin ice wine. Due to advance technology Icewine could be produced by harvesting the grapes even before it is frozen naturally with the production of a higher quantity of Icewine. Other countries also started too adapted to this in order to increase production. This was in order to differentiate the quality of wine produced with natural freezing of the grapes with the VQA regulatory termed used for the production of Icewine with the use of naturally frozen grapes known as “Authentic Icewine” and “Artificial or Synthetic Icewine” promoting and differentiating the wine as a premium product.

Environmental/Climate Factors A key success environmental factor is weather. Canada is well known for its extreme weather. Icewine is harvested once a year in January from vineyards found in Niagara Peninsula and the Okanagan Valley State in Canada. The Inniskillin product of icewine is produced under strict international VQA standards to enhance quality and reduce the synthetic production in order to produce ice wine the weather must sustain a specific temperature of negative 8-14 F. The grapes remain hanging from protective netting until these freezing weather conditions are picked below 14 F temperature, the sugar content varies with grape temperature, and as a result of the temperature dependency that has led to the success of Inniskillin icewine. The climate change is critical not just for Inniskillin but also its competitors in the market like New Zealand, Australia and Germany; these changes need to be adopted in their CSR strategies.

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