Bishnu Neupane

MBA-IV Trimester/2010 batch

Preserve the Luxury or Extend the Brand? Preserve the Luxury or Extend the Brand?

Written by: Daniela Beyersdorfer &

Vincent Dessain

Overview� Introduction of the company

� The case

� Problems

Alternatives/ solutions� Alternatives/ solutions

� Recommendation

Introduction� Name: Chateau de Vallois

� Location: Bordeaux region of France

� Category: Wine producer

� Products: Grand Vin du, Puiné� Products: Grand Vin du, Puiné

� Classified as a Premier grand cru classé in 1855

.

The CaseCharacters:

�Gaspard de Sauveterre: owner

�Francois: son

Claire de Valhubert: granddaughter (MBA graduate)�Claire de Valhubert: granddaughter (MBA graduate)

�Jean-Paul Oudineaux: Agriculture engineer, expert

cont…

Back ground� de Vallois had been steadily profitable since the 1980s.

� Claire planed to join family business.

� She wanted de Vallois to enter the "affordable luxury" market, selling directly to customers.market, selling directly to customers.

� François, her uncle didn’t believe in that proposal.

Success of Vallois� The estate had fallen into a slow decline under its last

owner.

� Gaspard and Jean-Paul had restored it to its former glory.glory.

� In a ranking of Bordeaux wine estates that recognizes their long-term track record in quality and reputation, de Vallois had in 1855 been classified as a Premier grand cru classé.

De Vallois Today

� The château produced perhaps the greatest of Bordeaux's five grands crus classés.

� It sold about 150,000 bottles each year of its Grand Vin � It sold about 150,000 bottles each year of its Grand Vin du.

� The remaining grapes to produce a second wine, the Puiné ,averaging 200,000 bottles per year.

Problems:

� Château de Vallois is considering whether or not to target a new market – young drinkers who cannot regularly afford the expensive vintage wines.

� Should de Vallois spend on distribution channels, marketing and promotions or not? (Advertisement campaign & market research)

� Is it better to import grapes?

Claire’s Argue

� What might happen if the estate allowed less-expensive, lower-quality wine makers, tocapture and retain the next generation ofcapture and retain the next generation ofcustomers.

Claire’s Desire

� de Vallois to enter the "affordable luxury" market.

� She wants to make a branded wine and sell it directly, as some of the other top traditional Bordeaux estates as some of the other top traditional Bordeaux estates had done.

Jean-Paul (Agr. Er.) sighed!

� Without 100% dedication to excellence de Vallois cannot make outstanding wine. We Vallois cannot make outstanding wine. We already do two wines. Isn't that enough?"

Distribution processExisting distribution process New distribution process

� 70%of still-maturing wine had already been sold to specialist merchants called négociants.

� There is risk of merchants shifting.

� The négociants bought the wine a year before bottling and then sold it to distributors and importers.

� Customers could not purchase a bottle of wine directly from the château.

� They have to develop new distribution channel.

� set up own website to allow them to order directly

� Customers can directly purchase.

Alternatives

Alt.1: Claire’s Roadmap of introducing a new brand

Alt.2: Francois’ non-expansionary way

� launch a new brand wine

� spend on distribution

� In a good year, they don't have enough grapes.

� spend on distribution channels, marketing and promotions

� charge a high price for it because it's exclusive

� have to invest in a distribution channel

� there are risks to marketing the wine themselves.

Recommendation� In our opinion, it should go ahead and launch a more

affordable brand.

Reasons behind the recommendation

� In order to retain its competitive advantage, a company needs to realize its full potential, and this includes reaching out to new markets.

� A case of Microsoft: MS was an indomitable entity ten years ago, but has now lost its appeal to Apples, Googles, and Facebooks of today’s world.

Cont… Reasons

� There is no guarantee that the reputation of Chateau will continue to sustain the competitive edge enjoyed by the company at present.

Chateau must be careful about-� the needs and structure of the new market,

� efficient distribution, supplying, and support mechanisms, adaption is the way to go.

utilizing their own capabilities in a new territory.� utilizing their own capabilities in a new territory.

&

� Where the needs and support structures remarkably differ from the existing market, innovating a solution is necessary.

What do you think?What do you think?

Should not Chateau de vallois

introduce a new brand?introduce a new brand?

If no, Why?

If yes, thumb up!