COMPETING IN GLOBAL MARKETS

CASE SUBMISSION: MONTGRAS

GROUP 7
ANAND J S-1501066
ANAND K-1501067
PREM PRAKASH-1501092
RUSHIN P-1501098
ULKRISHT SIDDHARTHAN-1501112
VIGNESHWAR P-1501114
AKHIL SHAN-1501063

1. Evaluate MontGras international marketing strategy. Is it

positioned in attractive markets/segments, or will it suffer when
the industry enters a period of oversupply?
In 2000, 98% of MontGrass annual production was exported to 24 countries and
it was ranked 20th among 200 Chilean wine exporters. The US was the largest
export for Chilean wines but UK was the largest export market for MontGras.
From selling to third party private labels to selling it under its own label,
MontGrass average price per case has increased gradually. MontGras
maintained their exclusivity in each country in which they exported by ensuring
that there is only one distributor in the country/region and that person sells only
this Chilean wine. MontGrass marketing investment per case varied according to
each type of wine and each destination.
In the UK market largest export MontGras offered only its reserve lines. The
distributor persuaded to brand on-premise channel sales as DeGras while
MontGras label to be exclusively used in off-premise channel which accounts to
75% of their sales. UK markups are 10%-15% (national importer) and 20%
(retailer) which are lower than in the US. Middleton, CEO of MontGras, estimates
that 75%-80% of the wine sales are made on promotion. These are basically
done by supermarket chains which account to 60% of all wine sales by top 4
supermarket chains. They sold wines also to specialty stores like delicatessens,
gift shops, Harrods and even in restaurants at a premium price.
In the US imported wines rely only on 10 markets: Florida, New York, Connecticut,
New Jersey, Massachusetts, Georgia, Texas, California, Illinois and Oregon. They
have to be sold to an importer who would in turn sell it to a state-licensed
wholesaler. Each state has their specific laws. In some liquor stores were
prohibited while in some supermarkets and food stores they were not allowed.
The market segment in US is much different to that of UK. Here there are only
50-60 wholesalers. In 1996 MontGras was concentrating in the $10-$15 range
with a limited production while the entry strategy was built around varietals in
the $6.99-$7.99 range. But due to sudden change in distributor strategy mainly
to avoid conflict of interest in sales and distribution of the in house brand of the
US winery the contract was terminated in 1998.
MontGrass portfolio of MontGras Estate, MontGras Reserva, MontGras Special
Reserva and MontGras Ninquen Barrel Select were supplied to select markets in
both US and UK keeping the price lower for Estate while the premium level wine
Ninquen sold at $25. Of the total volume of sales of these wines UK and Ireland
share 50% and 18% respectively. Also the major chunk of marketing budget is
also allocated to these two markets. If we look at the exhibit 19 we can observe
that $14.99 wine provides more impetus to the economics of exports to the US
market.