Globalizing an Australian Wine Company Essay

The company’s strategic vision is to become the world’s first truly global wine company. As CEO and managing director of BRL Hardy Europe, Carson’s contribution and achievements had been significant with a 10 fold increase in sales volume, in a tenure spanning just seven years. He successfully turned around Hardy’s U. K. business by implementing cost cutting initiatives and ensuring strong systems, policies, and control. Millar, CEO and managing director at BRL Hardy followed a decentralized approach to management. He believed in delegation and adequately integrated culture and management style into the merged corporation. The U. K. market contributed significantly to BRL Hardy’s revenues and represented 40% of Australian wine exports. In U. K. , the fighting brands, namely, Stamps and Nottage Hill, were positioned at price points of 2. 99 and 3. 69 pounds respectively. As low price good quality wines, they accounted for 80% of the value and volume of the Hardy brand sales. As the image of these brands began to erode, Carson decided to relaunch them by relabeling and repositioning the wines. Carson insisted that sales performance in U. K. depended on efficient labeling that should not be completely dictated by the Australian management. Although management was skeptical about local control over branding, labeling, and pricing decisions, the move significantly boosted the fighting brands’ sales. As the fighting brands gradually moved up the price points, there was an opportunity for an entry level wine that could be priced lower than 4. 9 pounds. In line with the company’s vision of becoming an international wine company, Carson decided to tap non-Australian wine sources and develop a line of branded products that could utilize the company’s strong distribution channels. This strategy would provide vital scale economies, minimize harvest risk, capture rationalizing suppliers, and avoid currency-driven price variations. Carson propose d the brand D’istinto, an Italian venture with a Sicilian based winery. He wanted to develop a recognizable brand which was easy to buy and had global potential. The wine would be positioned to the average wine consumer and would help the company leverage distribution. The Australian headquarters believed that D’istinto would eat into the fighting brands’ share as they were positioned at almost similar price points. Carson’s earlier Chilean venture, Mapocho had proven troublesome and Millar was doubtful if the European unit could support another brand. While Millar recognized U. K. s strong performance and wanted to give Carson as much freedom as possible, the reality was that the Italian venture would stretch the tight human resources of the European unit and dilute focus from the overall corporate strategy. While the Italian venture was being proposed, the Australian headquarters had launched Banrock Station, an environmentally responsible product at a similar price point. Australian management believed that the brand had global po tential and had instructed areas to launch it appropriately. Miller, away from the frontline and external demands of the local customers, has to support Carson’s entrepreneurial experimentation and dynamism. However, the proposal to launch D’istinto should not be approved. It is imperative that the business strategy fit within the broader corporate strategy of the organization. Although Carson’s proposal represented strategic interests, it ran counter the corporate strategy of maximizing global efficiency. D’istinto’s launch would certainly come with financial implications and would also stretch the operating capabilities of the European unit. On the other hand, Banrock Station had already established itself in a few markets and a strong launch in Europe would only increase scale economies. D’istinto had an innovative strategy with catchy and attractive labeling and a distinct image capturing the Mediterranean lifestyle. This positioning would definitely appeal to the mature U. K. consumer and also to the U. K. retailers, who represented the majority of sales. However, there is no certainty that this strategy would prove equally successful globally. While D’istinto would provide short term results, it is important to understand the long term viability that Banrock Station offers. Global consumers are increasingly emerging into environmentally conscious populations that expect corporations to take responsibility of natural resources and the environment. Although through D’istinto, Carson aims to build a global brand, Banrock Station appears to be better positioned in a converging global market. In order to build a true global brand, Miller must establish consistency across organizational units and ensure that the vision is shared by all.