Export Business Plan Zandberg the Netherlands Final

Export business plan The Netherlands Stellenbosch, South Africa

Export business plan

Export business plan the Netherlands

Student information Name: Terry Berends Education: Bachelor of Commerce ID-code: 428116 Phone number: 06-23691556 Address: Zweerslaan 40 6711 GG Ede Organization information Supervisor: Nick Ridley Wine Marketing and Sales Manager Address:

Tel: Fax: Cell: Internet:

96 Winery Road P O Box 5337 Heldervue, 7130, Somerset West South Africa +27 (0) 21 842 2945 +27 (0) 21 842 2085 +27 (0) 71 332 8922 [email protected] www.zandberg.co.za

University information Name: HAN University (Arnhem Business School) Address: Ruitenberglaan 31 City: Arnhem Postal Code: 6826 CC Arnhem Tel: +31 (0)26 369 1111 Fax: +31 (0)26 369 1369 Internet: www.han.nl [email protected] Tutor: Internet:

Marlou Landman [email protected]

Assistant: Internet:

Loes Cuppen [email protected]

2


Export business plan the Netherlands

Student information Name: Terry Berends Education: Bachelor of Commerce ID-code: 428116 Phone number: 06-23691556 Address: Zweerslaan 40 6711 GG Ede Organization information Supervisor: Nick Ridley Wine Marketing and Sales Manager Address:

Tel: Fax: Cell: Internet:

96 Winery Road P O Box 5337 Heldervue, 7130, Somerset West South Africa +27 (0) 21 842 2945 +27 (0) 21 842 2085 +27 (0) 71 332 8922 [email protected] www.zandberg.co.za

University information Name: HAN University (Arnhem Business School) Address: Ruitenberglaan 31 City: Arnhem Postal Code: 6826 CC Arnhem Tel: +31 (0)26 369 1111 Fax: +31 (0)26 369 1369 Internet: www.han.nl [email protected] Tutor: Internet:

Marlou Landman [email protected]

Assistant: Internet:

Loes Cuppen [email protected]

2


Management summary: Zandberg is owned by a rich Russian business man (Igor kimaschinkov), who bought the estate a few years ago, the General G eneral Manager Manager (Dmitri Dos Santos) is Russian as well. The management consist the owner and the general manager. Both managers has no experience and knowhow in wine making and marketing, therefore the management of Zandberg hired Mr. Ridley. He has a lot of knowhow of marketing and is very passionated about wine. wine. Mr. Ridley is responsible for the winelabels winelabels and sales of the t he wines. When Mr. Ridley started to work for Zandberg the image of the estate was not very well, there was no range of wines and the reveneu became less e.g. trough the economical recession. That is the reason that Zandberg want to introduce new wines and work on a better image of the company and become more profitable. Zandberg has not a clear view how they have to launch its wines to the Netherlands and with what kind of strategy. Assignment description: Develop an international marketing strategy for Zandberg Wine Estate, which enables the company to expand the brand and increase sales in the Netherlands. Goal Develop an international marketing strategy, which will gain revenue of ZAR 3.290.000 in the Netherlands in 2012. According to this business export plan, the goal of a revenue ZAR 3.290.000 will not be achieved by entering the Netherlands using this export businessplan. In a normal scenario Zandberg will gain a revenue of ZAR 1.165.620 in 2012, which is significant lower as

the goal. Research question: what is the most suitable strategy to launch Zandberg its wines to the Netherlands Netherlands and accomplish a revenue of ZAR 3.290.000 in 2012? In order to enter the Netherlands Netherlands the student has researched what the best suitable strategy is to enter the Netherlands by using deskresearch and fieldresearch: intervieuws with wine specialists in the wine business ( importers, Dutch and South African embassy, WOSA, reports of the Stellenbosch Stellenbosch business school). The best option to enter the Netherlands is using an indirect strategy and cooperate with an reliable Dutch importer who distribute the wines through it’s own distribution network. Furthermore, Zandberg will use market development development as market expansion strategy. This means that Zandberg will offer the excisting wine range and enter new markets, in this case the Netherlands. Netherlands. Summary internal analysis: Zandberg is founded in 1699 and since then it has a rich history. The vineyards are situated in a beautiful terroir nearby the Helderberg Mountain. Zandberg is situated in the Stellenbosch wine area, which people know all over the world. Due the knowledge of the wine maker combined with the wine marketing knowledge of Mr. Ridley, Zandberg produces quality wines which has won several wine awards. Currently, Zandberg produces a Cabernet Sauvignon 2005, 2006, 2007 , a dry Rosé and the first South African white Merlot. Zandberg is selling the wine to BWC Boucheron wines, a domestic distributor in the Gauteng area. Furthermore, Zandberg is selling the wine most of the wines to wine tourists in the wine tasting centre on the estate. Zandberg export on a small scale to Canada, Germany and Switzerland.

3


Conclusion internal analysis: Zandberg has potential for the future in terms of market expansion but has to invest in client systems, stock systems and has to expand the wine range. Zandberg is analysed if it is ready to export by using the nine strategic window’s. According to these strategic window’s Zandberg need to focus on a niche market in the Netherlands. The Cabernet Sauvignon will be sold domestically towards big restaurant chains (Primi Piatti and Odega) and will be not available for the international market. Summary External analysis: The Netherlands will be an interesting country for Zandberg to sell it’s wine. An interesting option for Zandberg is doing business with distributors, wine importers or an agent. South Africa and the Netherlands have strong historical ties, which is important for doing business. During the redit crunch, the consumers don’t spend much money on expensive wines but prefer cheaper wines which are mostly being bought in supermarkets. The Dutch wine market consists of 4.2 milliard euros in 2008. Concerning the niche markets which is worked out, Zandberg will gain a total market potential of € 10.482.879,85,Conclusion External Analysis: Potential niche markets: Beach companies, lounge bars and golf clubs is been analysed by the student. The biggest threat for Zandberg is the credit crunch, consumers are not spending extra money on luxery goods. The traditional Dutch wine market which consist the supermarkets (off trade), the restaurants and hotelbusiness (on trade) is saturated in the Netherlands. Export business plan: Zandberg will enter the Netherlands and focus on 46 lounge bars in the Netherlands. It is a interesting niche market to start for Zandberg. The lounge bars will be operated by offering the dry Rosé and the white Merlot. Profit and loss account: The student has made a profit and loss account of the export business plan in order to see if this plan will achieve the goal of ZAR 3.290.000 in the Netherlands in 2012. The income in the profit and loss account is based on a best, normal and worst case scenario. Best case scenario: This scenario is based on the goals in the marketing and sales plan; these are high formulated and could only be reached in a best case scenario. Normal case: This scenario is based on 60% of the best case scenario what will be achieved, this because it is a more realistic goal. Worst case: This scenario is based on no sales in the Netherlands; the account manager will not achieve in finding a Dutch business partner and selling any wines.

Worst case scenario

Normal scenario

Best case scenario

2010 2011 2012 -ZAR ZAR 143312 ZAR146900 156900 -€15.085 €15.463 €16.515 ZAR ZAR ZAR 428.012 749.750 1.165.620 €45.054.10 €78921,89 €122.697,47 ZAR ZAR ZAR 1.838.100 617.812 1.151.650 € €65.032,84 €121.200,16 193.484,79

4


Table of contents 1. The decision whether to internationalise............................................................................ 9 2. Organizational audit..........................................................................................................11 2.1 Market definition .........................................................................................................11 2.2 Company profile .........................................................................................................12 2.3 Vision .........................................................................................................................12 2.4 Mision.........................................................................................................................12 2.5 Company strategy ......................................................................................................12 2.6 Current export strategy ...............................................................................................13 2.7 Current Situation Zandberg:........................................................................................13 2.8 Internationalization motives. .......................................................................................14 2.9 Triggers of export initiation..........................................................................................15 2.10 Internationalization barriers/risks. .............................................................................15 2.11 Internal organization: ................................................................................................16 2.12 Conclusion 7-S framework........................................................................................19 2.13 Growth stage of Zandberg ........................................................................................20 3. Marketing audit.................................................................................................................21 3.1Product ........................................................................................................................21 3.2Place Strategy .............................................................................................................26 3.3 Promotion Strategy.....................................................................................................28 3.4 Pricing strategy...........................................................................................................30 3.5 Conclusion marketing mix:..........................................................................................31 3.6 Value Chain:...............................................................................................................31 3.7 Sales analysis.............................................................................................................36 Sales process...................................................................................................................36 4.Financial audit ...................................................................................................................38 5.Conclusion internal analysis ..............................................................................................38 External analysis ..................................................................................................................39 1. Market definition and market analysis...............................................................................39 1.1 Introduction.................................................................................................................39 1.2 Market definitions .......................................................................................................39 2. Market environment Zandberg:.........................................................................................41 2.1 General structure of the international wine market......................................................41 2.2 Potential in the Global wine market:............................................................................41 2.3 South-African wine export:..........................................................................................41 3. DESTEP- analysis the Netherlands..................................................................................43 3.1 Demographical aspects: .............................................................................................43 3.2 Economic aspects ......................................................................................................44 3.3 social and environmental aspects...............................................................................46 3.4 Technical aspects.......................................................................................................47 3.5 Ecological aspects:.....................................................................................................49 5


3.6 Political and juridical aspects: .....................................................................................50 4. Dutch wine market............................................................................................................51 4.1 Dutch wine market size and potential: ........................................................................51 4.2 Wine market segmentation: ........................................................................................52 4.3 Imports from other countries:......................................................................................52 5. Wine Consumer Analysis the Netherlands:.......................................................................54 5.1 Wine consumption the Netherlands: ...........................................................................54 5.2 Identification wine consumer the Netherlands.............................................................55 5.3 Preference in Wine .....................................................................................................55 5.3 Trends en developments Dutch wine-consumers: ......................................................56 6. Wine markets the Netherlands:.........................................................................................58 6.1 Beach companies .......................................................................................................58 6.2 Cafe (bars) .................................................................................................................59 6.3 Golf clubs ...................................................................................................................62 7. Distribution analysis:.........................................................................................................65 8. Competitor Analysis:.........................................................................................................67 8.1 Five Forces analysis The Netherlands:.......................................................................67 9. Conclusion external analysis: ...........................................................................................70 8.1 Potential for Zandberg in the Netherlands:..................................................................70 8.2 Overall Conclusion:.....................................................................................................70 SWOT-Analysis and confrontation matrix .............................................................................71 1. Swot analyses ..................................................................................................................71 1.1 Introduction:................................................................................................................71 1.2 SWOT-Analyses:........................................................................................................71 1.3 Confrontation matrix ...................................................................................................72 2. International Market selection...........................................................................................73 2.1 Market expansion strategies.......................................................................................75 2.2 Conclusion International Market selection...................................................................75 Export plan business plan ....................................................................................................76 1. Stratetgy...........................................................................................................................76 1.1 Strategicall summary ..................................................................................................76 1.3 Target group in the Netherlands .................................................................................77 1.5 Competititor Analysis: .................................................................................................78 1.7 Revenue goal .............................................................................................................80 1.9 Strategy Typology.......................................................................................................82 2. Marketing: ........................................................................................................................83 2.1 Product:......................................................................................................................84 2.3 Price plan: ..................................................................................................................94 2.4 Distribution plan:.........................................................................................................96

6


3 Sales plan .........................................................................................................................98 4 International law and customs .........................................................................................101 5 Financial plan ..................................................................................................................103 6 Risk Management ...........................................................................................................111 7 Bibliography ....................................................................................................................112

7


Introduction: This report consist the situational analysis; internal and external analysis. Furthermore, this report consist the export business plan, which is written for Zandberg. Zandberg is a wine producer and supplier which is located in Somerset West, the Stellenbosch wine area in South Africa. This report will be written for a period, 2009 till 2012. First, the organisation of Zandberg is been analysed in the internal analysis. This analysis is focused on the internal factors that characterize the organisation; its purpose is to attain insight in the success-increasing factors (strengths) and the value-decreasing (weaknesses) factors in this specific organisation. This is done with the help of a SWOT-analysis. In this case, Zandberg, the SWOT-analysis focuses on the exporting Zandberg its wines towards the Netherlands. The external analysis will give information about the environment of Zandberg. The market environment consists of both the macro environment and the micro environment. After a detailed analysis the last chapter consist a SWOT-analysis and a confrontation matrix to have a clear view of all the Strengths, Weaknesses, Opportunities and Threats. The export business plan consist suggestions of how to enter the Dutch wine market. Furthermore, this business plan will be implemented by the account manager (the student).

8


1. The decision whether to internationalise Introduction Internationalization is unlikely to be succesful unless the firm, in this case Zandberg, prepares in advance. Advance planning has often been regarded as important to the success of new international ventures (Knight, 2000). The following nine strategic windows of Solberg will be used to decide of Zandberg should ‘stay at home’ or further ‘strenghten the global position’ as two extremes. The framework in Figure 1.1 is based on the following two dimenseions: Industry globalism and Preparedness for internationalization Fig. 1.1 Solberg, nine strategic windows

1.1Industry globalism Basicly, Zandberg cannot influence the degree of industry globalism, as it is mainly determined by the international marketing environment. On the one hand, the wine industry has a international competitive structure with increasing interdependencies between the wine market, customers and suppliers. The wine industry is not very international like software, movies and aircrafts. On the other hand, the wine industry is not part of a multidomestic market environment. When we take a look at the wine industry of South Africa, partically to Zandberg the market is potentially global. The South African wineries are more focussed on exports these days. Currently, Zandberg is exporting already on a small scale. Therefore Zandberg is based in the potentially global column. 1.2 Preparedness for internationalization This degree is basicly dependent on the ability of Zandberg to carry out strategies in the international marketplace, i.e. the actual skills in international business operations. When we take a look at the peronal skills of Zandberg. Mr. Ridley is the only person who is well educated (Bcom Marketing, wine marketing at the UCT, serveral wine certificates), has the knowledge of exporting wine and speaks well English. Zandberg is a small winery and has therefore not enough financial sources to invest in appropiate marketing campaign’s. However, Zandberg has a lot of potential to grow both domestically and internationally, according to an intervieuw with Anette Badenhorst of WOSA. The winerange will be expand by de demands of the international consumer and the objective of Mr. Ridley is to build an brand domestically. This means, in this stage Zandberg is immature. However, Zandberg has potential to grow and evantually be Mature.

9


1.3 decision As analysed in paragraph 1.1 and 1.2, Zandberg is based in the potentially global column and in the immature row. This means that Zandberg has to seek for a niche market in the Netherlands (window number 4). Zandberg has the ability to enter the Dutch market but is immature and should therefore searching for small profit making market(s). 1.4 Development of the ‘global marketing’ concept The form of zandberg’s response to global market opportunities depends greatly on the management’s assumtions or beliefs, both concious and unconscious, about the nature of doing business in other countries, which is called the EPRG framework. It consist of four orientations as follows: Ethnocentric, Polycentric, Regiocentric, Geocentric. In this case, Zandberg is currently Etnocentric, which means that the home country is superior. The focus is on selling wine domestically with the USP’s terroir, quality of the wine. Zandberg aims to be Polycentric within the next three years, which means seeing each country as a unique market and therefore targeted in a different way. Therefore, Zandberg aims to be market orientated and making wine what the wine consumer desires of particilar markets.

10


2. Organizational audit Introduction The internal analysis will be analyzed throughout an organizational audit, marketing audit and a financial analysis. This organizational analysis will function as an overview of the core business of Zandberg.

2.1 Market definition The current market definition of Zandberg in South Africa will be clarified by using the three dimensional business definition graph (abell). This is a definition graph of the domain where the market is analyzed by using three dimensions, customer’s functions, customer groups and the alternative technologies which could used to satisfy the client needs. The customer groups consist of current customer groups of Zandberg. The current market of Zandberg is selling wine to one distributor (boucheron wines), export small volumes to Germany and Canada and wine tourists in the wine tasting centre. The potential buyers are importers of new export markets and big chains in order to provide restaurants and super markets in South Africa. Currently, Zandberg is trying to satisfy the customer by offering a quality product and a appropriate price-quality relationship.

Customer Functions

Delivery liability Wine range Price-quality relationship Price policy Product policy

Customer groups

1 customer groups: 1 Distributor, export, wine tourists

Logistics

11


2.2 Company profile Zandberg is founded in 1699 and is owned by several owners of the last ages. Zandberg is a wine producer and supplier of wine. Currently, Zandberg sell its wines both domestic and internationally. Zandberg is located in Somerset West, in the Stellenbosch wine area. Legal structure: When taking a look at the legal structure, Zandberg is a subsidiary of Chesterfield Group Holding. Chesterfield owns multiple companies, e.g a golf club in Russia,other wineries, hotels. all over the world; the owner of Zandberg is Igor kimaschinkov, an wealthy Russian businessman. The Russian management has bought the estate for an investment and has no knowledge of wine making. Further legal information is unfortunately not available e.g. the company is a plc or an ltd, this because the Chesterfield is not registered at a Chamber of Commerce and is not willing to provide more information to the student.

Conclusion company profile It is a weakness that the management of Zandberg has no knowledge of making wine. This means, the management has to depend on other people who has the wine knowledge.

2.3 Vision No vision has been formulated. Within Zandberg are multiple visions (management and employees) about the future. Furthermore, there is no clear view for the future. This is a weakness for Zandberg.

2.4 Mision The current mission of Zandberg is:

“Zandberg aims to provide quality wines with appropriate packaging and presentation to the domestic and international aspirant wine markets at youthful and mature consumer levels and create sustained consumer brand loyalty relationships with their products at both entry levels.” The way Zandberg currently work does not live up with the mission. The mission is about entering domestic and international aspirant markets at multiple entry levels. Zandberg does not have a complete wine range yet to accomplish the described mission.

2.5 Company strategy • • • •

Produce quality wines; Building long term business partnerships both domestic and internationally; Building an wine range; Building a brand.

12


2.6 Current export strategy • • •

Building the brand internationally. Building long term international business partnerships. Explore aspirant international market to gain revenue.

2.7 Current Situation Zandberg: The following analysis is based on the own experience of the student. During five months, the student has made several interviews, with particular employees and management to create a clear view of the situation of Zandberg. Zandberg is a wine estate which is founded in 1699. However, the wine estate has been producing quality grapes since 2001 which resulted in quality wines. The wine maker of Zandberg is the 6th generation of winemakers. Unfortunately, Zandberg is selling small amounts throughout the world, especially to Russia, Canada, Belgium and Germany. The wines of Zandberg have not been marketed for domestic sales channels or other international markets. The effect of this is that there is no real profit margins and limited brand awareness. Zandberg has to realize that they cannot survive of only producing wine and selling it. Wine tourism has to be the integrated in the company strategy. The wine estate has a lot of potentials, such as the wine tasting what is focused on wine tourists. According to the viticultulist, the vine yard of Zandberg is not in a good shape. According to WOSA, consumers judge these days not only on the image of the brand and the relation between the quality and the price when the buying wine. The consumers judge also on the state of the vine yard. According to a survey of estimated 100 wine consumers, the 2005 and the 2003 wine which was the first run resulted in a bad image for Zandberg. On the label of the 2005 bottle where traditional faces printed and on the 2003 where golf players printed, which resulted on a poor packaging and branding for a good product. The effect of the poor packaging is that the product was not accepted by wine consumers domestically and internationally. At this stage Zandberg only tried to sell something with no strategy. The image of Zandberg is been damaged, the products where launched without any research what consumers want and what kind of label suits the best for the product. Mr. Ridley was hired in the end of 2006, to become the new wine marketing manager. His goal is to improve the image, which will result in more revenue. Before he launched the product of the second run, he researched the market well and designed a new label as shown in figure 2.1 Zandberg has now a clear logo which is the basis for a new brand. Fig 2.1 Cabernet Sauvignon 2005

The talent of the winemaker combined with the terroir has resulted, that the second run of cabernet Sauvignon wins a gold medal wine award of the Concours Mondial in Bruxelles and a silver medal Michelangelo in 2008 for the Cabernet Sauvignon 2005. Compared with the African Faces, it has the same terroir as the new developed Cab. 2005, it has only a different method of production. The cabernet Sauvignon 2005 which is shown in figure 2.1 is further

emphasized in the product paragraph of this analysis.

13


2.8 Internationalization motives. The most important reason for Zandberg to export its wine is that the South African market is too saturated. As analysed in the external analyses there are hundreds of wineries in South Africa who are trying to sell its wines domestically. Furthermore, there is an over production of 43% which result in a fall in selling prices. Zandberg is a small winery which has to distinguish of all those wineries, this is difficult for Zandberg. The biggest wineries have the largest market share in the off – and on trade businesses. Zandberg has to focus on potential international markets to survive, especially during the economical recession. The revenue is not really high for a wine estate like Zandberg. A way of earning more money is to penetrate more countries and markets. Using desk research, will be researched if it is wise to export the wine to the Netherlands. The entry strategy is an important part of the export policy of the company. It is necessary to make a choice on which period of time and on which way the market has to be approached. The goals on a longer term are very important for the market entry choice at the beginning of entering a new market. When choosing the entry strategy, possible choices for exporting the Zandberg products are, direct and indirect export. Currently Zandberg is a small wine estate with no subsidiaries or agents in foreign countries. Zandberg is only exporting wine with small amounts throughout the world as mentioned before, especially to Russia, Canada, Belgium and Germany. Zandberg has not a clear export strategy so far. They grab every opportunity to sell wine internationally and domestically. Zandberg is not a market focussed organisation with Nick in place, Zandberg knows that it has to be market orientated but it takes time and understanding of the Russian managers to be really market orientated. The following motives are diveded in Proactive motives, which represent stimuli to attempt strategy change, based on Zandberg’s interest in expoiting competences or market possibilities. Reactive motives indicate that Zandberg reacts to the pressures or threaths in South Africa or in foreign markets, in this case the Netherlands and adjusts passively to them by changing its activities over time Proactive motives • • • • •

Spread the risks out of more markets; Build the brand of Zandberg internationally; Gain an better image internationally; Profit and growth goals; Economies of scale.

Reactive motives Extremely satisfied market in South Africa (43% is overproduction); Cometitive pressures; Proximity to international customers. • • •

14


2.9 Triggers of export initiation. For internationalization to take place someone or something within or outside of Zandberg, must initiate the process and carry it through to implementation. Zandberg has the following internationalization triggers, which are divided in internal and external triggers: Internal triggers: Specific internal event; Mr. Ridley as specifically looking for potential markets and is trying to emphasis of export. Importing as inward internationalization; using capabilities and network of business relationships in order to focus on a new market. •

•

External Triggers: Market demand in the Netherlands; According to deskresarch and intervieuws with the Dutch Ambassy, Wine importers (wijnunie, De Bruijn Wijnkopers and Bart Wijnkopers) the Netherlands has potential for South African wines. Competing firms; Competitive wineries who could damage the market for Zandberg. Outside Experts; Outside experts who knows the wine market abroad and could advise Zandberg what to do, such as the viticultulist, who travel’s a lot to other wine producing countries. •

•

•

2.10 Internationalization barriers/risks. There is a wide variety of barriers for zandberg to succesful export operations an be identified. Some problems mainly affect the export start; other are encountered in the process of exporting for Zandberg. Critical factors hindering the internationalization initiation of Zandberg include the following barriers: • • •

Lack of capital to finance expansion into foreign markets; Insuffcient knowledge of the management of Zandberg; Lack of export commitment of the management of Zandberg.

General market risks: Language and cultural differences; Difficulties in finding the right importer/distributor in the Netherlands; Complexity of shipping services to overseas buyers. • • •

Commercial risks: Exchange rate fluctuations between the Euro and South African Rand; Delays and/or damage in the export shipment process; Difficulties in obtaining export financing. • • •

Political risks: Confusing Dutch import regulations and procedures; Export policy of South Africa; Dutch government restrictions. • • •

15


2.11 Internal organization: The internal organization will be analysed using McKinsey’s 7-s framework. This framework consists seven parts (Strategy, Structure, Systems, Style, Staff, Skills and shared values). This analysis is based on information witch is gained from personal experience of the student, as well as in-depth interviews with Mr. Ridley, the viticulturist, General Manager and other employees. This framework will be used to judge the quality of the company. The result reveals if the different aspects of Zandberg are in balance and eventually the affectivity of Zandberg will be measured. Strategy Zandberg currently produces wines, which the company sells to both consumers and businesses. At the moment Zandberg grabs every opportunity to increase sales. However, there is no clear sales strategy at the moment. Currently Zandberg is focused on building a brand and completing the wine range based on the demands of the wine market. The potential clients from overseas want to experience the South Africa culture and the quality of wine. Therefore, Zandberg has to focus on the South African authenticity what potential clients want. The effect is that Zandberg still is searching for a clear position in the wine market, both internationally and domestically. Currently, Zandberg depend on the Russian management who invest extra money each year to survive. This is also the reason why Zandberg is suriving the credit crunch. Zandberg could accomplish this goal to search for new international sales channels and introducing innovative wine products and focus on the packaging, wine label, demands of the wine consumer in specific countries. The revenue goal of Zandberg concerning the export will be three million South African rand in 2012. Furthermore, Zandberg will focus in the future more on the market demands to eventually become a market orientated organisation. Structure The structure of Zandberg is divided in the wine department and the hotel department. The management team consists of the Directing manager and the General Manager, both are wealthy Russians. As shown in the organ gram in figure 3.1 you will see that the wine department consist a wine marketing manager and wine experts which are take care of the wine yards of Zandberg. Fig. 3.1

Remarkable to see is that only one manager, Mr Ridley is responsible for the marketing, sales, export, logistics, building the brand etc. This is a weakness of Zandberg and is not the most ideal situation when Zandberg want to be a market orientated organization and want to Export to the Netherlands. When Zandberg want to export more wine, Zandberg need more sales managers. The structure of the company has to be changed especially when Zandberg

16


want to focus on exporting its wine. The structure of the organization could be defined as a flat structure. Even though there is a flat structure within Zandberg, the structure is hierarchically. There is a large gap between the vineyard crew and the management of Zandberg, this is due to the national culture and is the same all over South-Africa. Systems The wine-section of Zandberg uses only a few standard procedures. There is a standard procedure for e.g. - Invoicing, - Logistics, - Finances, These procedures are known to whoever has to deal with them. However, they are not documented and have to be taught personally. Furthermore, these procedures are quite basic and can be made a lot easier with the implementation of more advanced, but still simple, software. When comparing the systems used by Zandberg with the average European company, it becomes clear that Zandberg is behind quite a bit. There is no client database, automated order/invoice program etc. Because these systems are not available, it is impossible for Zandberg to clearly monitor their customers, their demands and their buying patterns. The company does not know who their best customers are and what these customers really want. Style The style of leadership at Zandberg is different compared with a Dutch organization because of the cultural difference between the countries. Therefore, the student will not compare the leadership of managers at Zandberg with Dutch managers. Instead of that the student will analyse the style of leadership with an objective point of view. The management of Zandberg consist a Russian Directing manager and a General Manager. Both are leading Zandberg on a Russian management style which could be defined as hard and formal. It is very clear who leads the organization, the employees has there own responsibilities. The General Manager is in charge during the daily activities. The Directing Manager is a wealthy Russian business man which owns a lot of real estate al over the world, he only visit Zandberg a few times a year. Furthermore; both are communicate in Russian with each other and communicate in English with all the employees. There is an informal atmosphere between the employees compared with the formal way of communication between an employee and the employer.

Staff As there is not a real emphasis on educating staff within Zandberg, it is important that the right people get selected for a vacant position. If staff wants to get further developed, it is upon their own responsibility and, most of the time, for their own costs. As with most SouthAfrican companies, Zandberg uses a lot of untrained staff as well for day-to-day chores. When hiring new, untrained, staff, the selection is based upon reliability of the staff. As Zandberg is a small company, with only a few positions which require specific knowledge, all people applying for vacant positions are external. These people do not know the company, which is a big disadvantage in the first months of employment. However, this is the only option for Zandberg to get new employees. The functioning of staff is assessed continuously by Mr. Dos Santos, General Manager of Zandberg. He asks people what they are doing and what their progress is. If there is not enough progress, Mr. Dos Santos will either try to put in new ideas, or he will have a discussion with that member of staff, from where he will take action. The way staff threats each other depends on their relationship in the hierarchical structure of the company. People

17


on the same ‘level’ communicate with each other in an informal, casual way. However, when communicating with someone on a different ‘level’ in the hierarchical structure, communication is quite formal. Zandberg does not have any corporate events or team building days for their staff outside of work.

Skills because there are a lot of wineries active in the South-African market, it is hard for Zandberg to distinguish themselves. Competitors offer similar products in the same price class with the same or better service. However, Zandberg has to have core skills, serving demands in the market, to survive. These core skills are: Quality of the product The biggest asset of Zandberg is the quality of its products. The Zandberg ‘Cabernet Sauvignon 2005’ for example, was awarded with a gold medal at the Concours Mondial de Bruxelles in 2007. Other products have won awards as well and customers praise the quality of the products Zandberg delivers. Price Because the wines of Zandberg are produced in bulk, it is possible to sell products against a very competitive price. As in every market, a competitive price is necessary to survive in the wine industry. Even though there are two core skills present at Zandberg, the company does not have some other vital skills. The most vital skill missing is a range of wines. However, the company is busy developing a range of wines, so, within the near future, this will be a skill as well. Other vital skills, missing at Zandberg are e.g. a proper distribution system or an efficient sales system. This is because the wine marketing department is still at a developmental stage. Shared values The culture of Zandberg is experienced as informal. However, there is not really a team spirit at Zandberg. The wine and hotel department operate separately from each other and hardly cooperate. The effect of this is that the cooperation within the company will be less; Zandberg will be less capable in doing business. Furthermore; there is a difference opinion between the GM and the wine department concerning the business priorities and vision at Zandberg. The GM is more focused on the accommodation and the development of real estate instead of the wine department. Zandberg has realist that they have to distinguish from the market, because of that Zandberg is busy with building a brand and work on the image of Zandberg domestically.

18


2.12 Conclusion 7-S framework

S

Strengths

Weakness

Strategy

- Willing to complete the wine range. - Selling wine to consumers and businesses.

Structure

- Clear structure, everyone knows who its superior is.

- Searching for a clear position in the wine market. - Not a market focussed organization. - The structure of Zandberg. - The Marketing manager has too many functions. - Using standard systems for procedures. - Systems just basics, e.g. no client database or automated invoicing system

Systems

Style

- Informal atmosphere between all colleagues.

Staff

Skills

Shared Values

- Quality and the price of the product.

Company started building and improving a brand already -

- The Russian management style. - not a real emphasis on educating staff within Zandberg - Missing a complete wine range. - Missing a distribution system and sales system. - Missing a clear vision. - No team spirit and the departments hardly cooperate.

According to the above analysis, Zandberg has some weaknesses. The weakest factor is that the management has not a modern point of view in terms of doing business and the vision of the future. This will have consequences for the future when Zandberg want to be a market orientated organisation. It will be hard for the management to adapt itself on the market and to focus on the demands of the clients. Mr Ridley, is currently responsible for the marketing department. It would be impossible for one person to focus on both the domestic and international market. Furthermore, the framework of Mckinsey reveals that Zandberg has to invest more in systems. Currently, Zandberg has no client systems, stock systems etc. By expanding the sales to new markets it will be very important to have updated information about how much wine Zandberg can offer to the client from stock, and knowing who your clients are in order to focus on CRM (customer relationship management) in the future.

19


2.13 Growth stage of Zandberg Furthermore, a look will be taken at the stage of growth, where Zandberg is in at the moment. This will be done using the five stages of growth by Churchill & Lewis. The American authors have done research to the growth of companies. Both have also researched which factors have an influence on the growth of companies. Churchill & Lewis diverse the following growth stages; from a starting company till a big and full-grown company: • • • • •

Establishment of a company; Survive and a tender growth of a company; Success; Expansion; Optimal relations.

Even though Zandberg has been founded in 1699, the growth stage of the company is and can still be described as phase two: survival. This is because the company only began to operate efficiently and market-orientated a few years ago. The company is selling its products and gains a small profit, but is still struggling to become a success. A small setback (like a bad harvest or a failed wine) can cause big problems for the company The priority for a company in the ‘survival’ stage is getting enough turnover to pay debts and to be able to replace necessary equipment. Furthermore, the company should try to increase its turnover and size, so it can grow to the next stage, ‘success’.

20


3. Marketing audit In this marketing audit will the current marketing mix being analysed using the 4 P’s, these consists Product, Place, Promotion and Price.

3.1Product The demands of the South-African market vary, depending on the segment of the market. In the lower-end segments, price is the most important thing, mid-end segments are looking for a good quality against an affordable price, and where as the high segments are only looking for an excellent quality. As Zandberg tries to focus on the mid- to high-end segments, an excellent quality for an affordable price is the product it needs to deliver. Analyzing the products of a wine estate is different from analyzing the average product. Because wine is an agricultural product, there is only one moment of production for each product; no vintage will be the same. It is never sure if next another vintage will have the same quality or taste. Currently, Zandberg has its products divided into three tiers. The tiers Zandberg offers are: Premium tier: Quality This is the wines with the highest quality. This tier target people with knowledge of and a high involvement in wines. The goal is to develop complex wines with a sophisticated taste. Zandberg emphasizes this with the label. The label is Currently, the only wine in this top tier is Cabernet Sauvignon. This is the product where Zandberg is specialized in, mainly because of the terroir the vineyards are situated on. Because the area Zandberg is situated on lies in a valley close to the Pacific Ocean, winds cause the vineyard to cool down in the afternoon, creating better quality grapes, making the wine of better quality. This actually creates a competitive advantage for Zandberg, compared to other wine estates. The Cabernet Sauvignon is the core competence of Zandberg. Design of the bottle The design of the Premium tier is designed to have a clear logo, it could be typefied and radiate as a exlusive bottle. The bottle has a traditional cork, at the front of the bottle the awards are printed in order to give the bottle more exclusivity. However, the 2006 has won no awards and has only a clear label. At the back of the bottle you will find a sticker with the code of the bottle which is important for the department of Agrilulture in South Africa. The premium tier wine has a alcahol percentage of 14, 5% with a volume of 750 ML per bottle. According to a consumer survey of 100 consumers, the bottle is well designed and have a exlusive character.

21


The top tier currently consists of the following wines: Cabernet Sauvignon 2005 The current top wine of Zandberg is the premium Cabernet Sauvignon 2005. It is of excellent quality, being proven by the two awards it won at international wine festivals (gold at Concours Mondialles de Bruxelles and silver at the Michelangelo awards). John Platter, known as the expert on South-African wines, awarded this wine with three stars (out of a possible five). Cabernet Sauvignon 2006 The Cabernet Sauvignon 2006 has been bottled in the beginning of 2009, but still has to age for a few months, before it is ready for selling. Even though John Platter has awarded this wine with 3.5 stars, consumers and wine connoisseurs agree that the quality of this wine does not reach the quality of the Cabernet Sauvignon 2005. The Cabernet Sauvignon will be ready to sell in early 2010. Production capacity Zandberg has a production capacity of 30 000 litres (40 000 bottles) of Cabernet Sauvignon per year. However, a big disadvantage of producing Cabernet Sauvignon is the production costs. The wine has to be aged in wood for two years, this cost a lot. For the upcoming 2007vintage, the production costs will be around R 18 per bottle. Versatile tier: The versatile tier has only recently become available for sale. This tier is developed to be fashionable and to be versatile in food-pairing. Because Zandberg used to make only traditional red wines, the products in this versatile range are either variations on these red wines, or produced with grapes bought from external vineyards. Zandberg tries to differentiate itself by producing these versatile wines. Dry Rosé 2009: The Dry Rosé 2009 is the first Dry Rosé Zandberg has produced. Where most rosé’s are being produced in France, this Rosé is produced from Cabernet Franc (produced at external vineyards), giving it a distinguished taste compared to the Rosé’s of competitors. The Rosé was developed for the export market, with a taste closer to what the European consumer prefers. As the Dry Rosé has just been released, no real market position has been gained yet, so the performance of the dry rosé cannot be analyzed.

22


Production capacity Zandberg produces 20 000 litres (26 600 bottles) of Dry Rosé per year. Because the Cabernet Franc is produced at external vineyards, the production costs are a bit more expensive than what they would have been when produced at Zandberg itself. Production costs for the Dry Rosé are R 14 per bottle. White Merlot 2009: Zandberg’s White Merlot 2009 was the first White Merlot ever produced in South-Africa. It is produced by altering the way normal (red) Merlot is produced. This process gives the White Merlot a unique taste, incomparable with any other wine. Unique selling point At the moment, the uniqueness of the wine is its USP, causing this first vintage to nearly have sold out in two months. The new vintage will be available around June 2010. Until other wineries start making White Merlot as well, the uniqueness will stay the USP. However, when other wineries start making white merlot as well, Zandberg will need a clear strategy and market position for this product. Production capacity Zandberg produced 3000 litres of White Merlot during the 2009-vintage and is planning to expand production to 20 000 litres (26 600 bottles) of White Merlot before 2012. Merlot is produced at Zandberg and this wine does not need aging. However, the special process used to make white merlot makes production a bit more expensive. Production costs for the White Merlot were R 18 per bottle for the 2009-vintage. Because the production will be increased, production costs for the 2010-vintage will be lower, and are expected to be around R 12 per bottle. Design of the bottle The design of the Versatile tier is designed for modern and young urban people, it could be typefied and radiate as a fancy and modern bottle. The bottle has a modern screw cap, with a red top for the Rosé and a fancy silver top for the white Merlot. At the back of the bottle you will find a sticker with the code of the bottle which is important for the department of Agrilulture in South Africa. The dry Rosé, has a alcahol percentage of 14% with a volume of 750 ML per bottle, the white Merlot has a alcohol percentage of 13% with a volume of 750 ML. According to a consumer survey of 100 consumers, the bottle is well designed and especially the young urban people likes the design of the bottle. Low tier: The lower tier currently exists of wines of lower quality. Generally, these wines turned out to be worse than expected (due to bad harvest or processes during aging), or were experiments which did not have a satisfying result. Zandberg tries to sell these wines for cheap prices. Currently, there is only one wine in the lower tier. This wine is:

23


Cabernet Sauvignon 2005 – African Faces In 2005, Zandberg produced two Cabernet Sauvignons. One is the Cabernet Sauvignon which won two awards and is currently the flagship wine of the company. The other (African Faces), was not aged as long and turned out to be of inferior quality. Design Furthermore, this is the only wine left with the old branding. This branding had pictures of a certain theme on it for every range, the Cabernet Sauvignon 2005 carried pictures of African Faces. Currently, Zandberg tries to offload this wine against bargain prices, and the company is not planning on producing an equivalent to the Cabernet Sauvignon 2005 – African Faces. Type assortment With these three tiers, Zandberg has a deep range, but not a very wide range. If the Cabernet Sauvignon – African Faces sells out, the range will drop down to two tiers, with only the premium Cabernet Sauvignons and the Dry Rosé remaining (with the White Merlot being available again from June 2010). Even though Zandberg finally has multiple wines to offer, the range is still a weakness. There are only three varieties available, while the market (especially distributors) is demanding for wineries with a lot of varieties, making it easier for distributors to sell a wide range with only a small amount of suppliers. Service The most important service Zandberg provides is a tasting centre. This is both a service and a promotion tool. The tasting centre gives consumers the opportunity to try the different wines Zandberg produces and, in the meantime, to learn more about the product. At the moment, the tasting centre is basic. People can taste wine and buy the wine they like, but there is no additional experience created. The consumers can pay by cash, pin transactions, credit card or other electronic transactions. When someone has paid for the wine it is not possible to refund the money. However when the quality is bad there will be given new bottles, it depends on the circumstances. Other wineries create this additional experience with e.g. vineyard tours or food-and-wine tastings. The tasting centre can be used to create a bond with the consumer, but Zandberg currently is not using the full potential of the tasting centre. Another part of the service is delivery. Zandberg takes care of delivery, depending on the size of the order, where the order has to go and who places the order. Bigger orders and orders outside the Cape-region are outsourced to a specialized transport company. Smaller orders within the Cape-region for loyal customers can be delivered by the staff of Zandberg. However, most of the time, small orders are being fetched by the customer instead of being delivered. Product life cycle To know if there is a lot of potential growth for the different products, a look at the product life cycle will be taken. Instead of the actual products, the product life cycle of the product group in the domestic and international market will be analyzed.

24


Premium Cabernet Sauvignon Internationally, the Premium Cabernet Sauvignon is in the introduction and growth stage. This means, Zandberg is trying to build the brand abroad and is searching to a useful strategy, to gain more profit from international markets. In the domestic market, premium Cabernet Sauvignon has reached the maturity-stage. This means that there is only a small growth, and that there are not a lot of potential ‘new’ customers. This makes it hard to increase distribution and sales for a small company like Zandberg, because they will have to ‘steal’ market share from direct competitors to realize this. Dry Rosé Internationally, the Dry Rosé is in the introduction stage. The wine is especially developed for the export market. This means, due well research of the needs of the consumers, Zandberg knows that people in Europe prefer Dry Rosé above sweet Rosé. Europe has a lot of potential buyers who prefer South African wines, thus of a few wineries are producing Dry Rosé. Domestically, Dry Rosé is in between the ‘introduction’ and the ‘growth’ stages. There are quite a few wineries producing Dry Rosé. However, as South-African people prefer sweet Rosé, the popularity in South-Africa is not large. The market for Dry Rosé is more a nichemarket and Zandberg developed the Dry Rosé more for export markets. If more South-African people get to accept Dry Rosé, a larger part of the potential consumers will be reached and Dry Rosé will be able to fully enter the growth stage. White Merlot White Merlot is a product in the ‘introduction’ stage, internationally as well as the Dry Rosé. Both are being bottled recently and has to build an image; internationally and domestically. Zandberg was the first company in South-Africa to produce this particular wine and it was only introduced in the last few months. There are only few consumers who know White Merlot and the distribution is very limited. However, as the first vintage was sold out really fast, this product shows great potential for future growth. Conclusion product strategy: According to an intervieuw with Mr de Bruijn of de Bruijn Wijnkopers, producing 40.000 bottles of Cabernet Sauvignon, 26.600 bottles of Cabernet Franc and 26.600 bottles of white Merlot would not be enough to serve the entire Dutch market. Therefore, Mr de Bruijn advised to focus on one target group and expand after a few years. Currently, Zandberg is negotiating with big South African restaurant chains (Primi Piatti 56 restaurants in South Africa and Odega, 32 restaurants in South Africa) to place the Cabernet Sauvignon 2005 and 2006 on the wine list of these restaurants. The new vintage of Cabernet Sauvignon 2007 will be sold to the owner of Zandberg, who has a golf estate in Russia. The wine will be served in the restaurant of the golfclub. The Cabernet Sauvignon 2007 will also being used to win wine awards. This means that the Cabernet Sauvignon will not be available for the Dutch Market.

25


3.2Place Strategy Location Zandberg Zandberg is founded in 1699 and since then it has a rich history. Zandberg is situated in a beautiful terroir nearby the Helderberg Mountain. Zandberg is also situated in the Stellenbosch wine area, which people know all over the world. The place where Zandberg is situated is strength for Zandberg. Zandberg has a central location nearby highways to the nearest cities and is easy accessible to the main highway to Cape Town. On the R44, which is the main road between SomersetWest and Stellenbosch, there are has signs of Zandberg. People can easily reach Zandberg from the nearest highways.

Distribution According to interviews with big clients (distributor in Johannusberg and a german community) and small clients (wine tourists), it is important that the wines are being delivered on time. Furthermore, wine is a fragile product; therefore it is important that the wine cases are not broken when it arrives at the client. Zandberg does not have a clear view on which market segments they are selling wine and to which consumers Zandberg sell its wine. Zandberg is currently trying to enter the market domestic and internationally, this is hard because Zandberg does not have a market position. Zandberg is trying to sell its wine to everyone who wants to buy it, but not with a clear strategy. When we take a look in the future, Zandberg aims to have a selective type of distribution. Zandberg want to choose on which particular businesses to sell the wine e.g. upper-class restaurants and luxury hotels in order to build initially a brand image. Currently, Zandberg distributed the wines according to an direct short channel. Zandberg produces the wines and sell it directly to the consumers or through a distributor, which is shown in the following graph:

Direct Channel Producer (Zandberg) Bottling factory

Warehouse

Clients

26


Zandberg tries to outsource the distribution of the wines to specialist companies which carry wineries in a portfolio and act as their domestic agents. Zandberg also wants to focus on trustfully distributors domestically and internationally for cooperation with Zandberg. These agents and distributors will sell the wine throughout there own distribution channels. So far, Zandberg distribute its wine to a distributor in Johannesburg (BWC boucheron wines), who sell the wine throughout there own distribution channels in the area of Johannesburg. Internationally, zandberg cooperate with an Canadian distributor, this is in an developing stage. Orders Zandberg has two warehouses. The difference between the warehouses is that there is a small one and a big warehouse where the most wines are stocked. When clients want to order something from the smallest warehouse, clients have to place the order 24 hours before they want to receive the wine. When clients order wines from the biggest warehouse, Zandberg will pick the requested order from the warehouse and send it immediately to the customer. The warehouses are not located on the estate; Zandberg has to pay rent to the owners of the warehouses. The reason why Zandberg does not have a own warehouse is because of legal reasons. A lot of tax has to be paid when Zandberg stores its own wine.

27


3.3 Promotion Strategy .

The demands of the international clients concerning promotion are mainly samples and product information about the wine. Promotion strategy So far Zandberg does not have a clear promotion strategy, last years Zanderg didn’t spend much effort in promotion for wine department. The goal of the promotion activities is to build a brand and, eventually, gain more revenue. These goals are not expressed in specific amounts of revenue or in years, this means that there are no SMART formulated promotion goals. Furthermore, there is no specific promotion budget. When the wine departments want to promote something they are more concerned about the costs then the effect of the activities. Currently Zandberg has only one person in charge for the wine department, his responsibilities are the Logistics, marketing, sales, and administration. With the focus on the future, Zandberg has realized that marketing is an important aspect and that they want to focus more on marketing. Because of that the wine marketing manager further educates himself by participate in marketing and sales courses. Advertising Domestically, Zandberg mainly advertise in wine related magazines. Zandberg mainly advertise in those magazines to gain brand awareness, gain more attention of wine tourists to eventually gain more revenue. Currently, Zandberg advertise in regional guides and other tourist related material. Internationally, Zandberg has only advertised in wine related magazines. Domestic advertisement: Wine magazine, 45.000 copies a year (depending on season) Bespoke, approximate 50.000 copies Stellenbosch wine route, 300.000 copies International Golf en wein, lufthansa 100.000 copies Zandberg realised that advertise and promote the wines internationally does not work. This because the wine industry is not a normal industry where you can advertise, especially doing business with international business people. According to Nick Ridley, Ted Business and Nedoweb it is important to know people abroad (networking) and build a brand before you can work on your advertisement activities. Zandberg is in a certain stage that they are building a complete wine range and only exporting wines with small amounts. Tasting centre A powerful promotion platform for Zandberg is the tasting centre. It offers Zandberg brand awareness, brand loyalty, image of the wine and increases direct sales and distribution. The tourists who are staying on the estate and people who are having dinner or lunch at the restaurant are most of all foreigners and business people. The tourists and business people sometime visit the tasting centre to gain more product information and buy wine after an expended wine tasting. The wines of Zandberg are being sold through the restaurant, so people can enjoy the wine during dinner or lunch.

28


The tasting centre has a lot of opportunities; unfortunately the tasting centre does not attract people of the restaurant and the guests of the accommodation because of the location and the appearance. The wine is not integrated in the accommodations; there are no packages which include the wine, for example: staying at Zandberg with breakfast and two bottles of wine for a pick nick or during dinner. The guests have no wine experience or whatsoever of the Zandberg wines during there stay at Zandberg. Overall promotion: Zandberg is a member of WOSA (wines of South Africa), it is a governmental organisation that develops and promotes South African wine trade on an international level. Every wine estate is a member of WOSA. It helps especially the bigger estates such as Spier to expand their sales market internationally. WOSA provide useful information for new potential markets. Zandberg is a small wine estate. WOSA does not add value for Zandberg, because they are not specialized in providing information for small wineries. WOSA is a knowledge resources for wineries in South Africa. Zandberg is also a member of the Stellenbosch Wine Route and is thereby benefiting of the regional branding opportunities. Local and international consumers add value and quality to this wine route and often make purchasing decisions on the image and quality of the wine estate and wine. The wine route adds value to Zandberg because Zandberg is situated on all the wine route maps and its terroir. Zandberg depends on the Stellenbosch wine route because; wine tourists visit Zandberg often en wants to taste the wine. The Stellenbosch wine route also markets its members and is a portal used by overseas consumers coming to South Africa to visit cellar doors. An CRM-system, customer relationship management is a system which could be used to see who the customers of Zandberg are and what the communication is with the client, it is an opportunity to apply the marketing on this system. Unfortunately, Zandberg is not able to communicate on a regular basis, because Zandberg has not the right systems to communicate with the costumers. Zandberg is currently busy with cooperation with an online wine cellar door from the UK, sawinesonline.co.uk. This will help with building a brand in Europe and works as an indirect promotion activity. Furthermore, Zandberg does not use extra promotion sources such as flyers, sending news letters to clients etc. Website The website of Zandberg gives only information about the core businesses; it is not up to date and does not provide the latest tools which ca be applied on the marketing activities. The website is divided in the departments of Zandberg such as a page which provide basic information for the accommodation, wines, restaurant and weddings. To have a website which provide the latest developments of the company is essential these days and is the basic of promotion. Zandberg will put more effort and money in developing a new website focussing on the wines within the original website. Currently, Zandberg has not many visitors and page views between November and January 2009. The student received the information from Nedoweb, who is responsible for the website of Zandberg. Furthermore, in the graph you can see that when updating the website, there are more visitors then normal.

29


3.4 Pricing strategy Zandberg’s prices are market orientated and based on research but are subject to increase with the accreditation of awards which seem to be prevalently in their favour. The pricing will initially be slightly lower to encourage brand awareness and gain market entry but still high enough to represent, appropriately, the quality of the wines. Another factor influencing price positioning would be export criteria and related markets. The pricing would further be affected differently by the target markets relevant to the two tiers. Price Concerning price, the market demands a fair price for the quality. Traders require room for margin as well. Zandberg keeps these things in mind when determining prices. All aspects taken in consideration for the price are: • • • •

Cost Price, Market price of comparable products, Positioning of the product, Future positioning of the product.

The price has to be more than the cost price, and is based on the (future) positioning of the products. E.g., if the product is positioned for the higher ends of the market, a price compared to or higher than comparable products will be used. Zandberg will only drop the prices for their products in extreme cases, when that particular product is not being sold at all. This happened with the Cabernet Sauvignon 2005 African Faces. This resulted in the wine being sold against cost price, earning back the expenses made with producing the product. The cost price is build up as you can see in the following diagram:

Costprice Cabernet Sauvignon 2005, ZAR 20.7 (€ 2,18)

Cabernet Sauvignon 2006, ZAR 16.8 (€ 1,77)

Dry Rosé, ZAR 14.7 (€ 1,55)

White Merlot, ZAR 21 (€ 2,22 )

Bottle: ZAR 5,20 € 0,55 Printing Label: ZAR 2,60 € 0,27 Bottling factory: ZAR 2, 85€ 0,30 Wine maker: ZAR 3,50 € 0,37 Salary wine manager: ZAR 3,55 € 0,38 Viticultulist: ZAR 3 € 0,32 Bottle: ZAR 4 € 0,42 Printing Labels: ZAR 2.60 € 0,27 Bottling factory: ZAR 2,85 € 0,30 Wine maker: ZAR 2,25 € 0,23 Salary wine manager: ZAR 2,90 € 0,30 Viticultulist: ZAR 2,20 € 0,22 Bottle: ZAR 3 € 0,32 Printing Labels: ZAR 2, 60 € 0,27 Bottling factory: ZAR 2,85 € 0,30 Wine maker: ZAR 1, 15 € 0,12 Salary wine manager: ZAR 2,90 € 0,30 Viticultulist: ZAR 2,20 € 0,22 Bottle:ZAR 5,50 € 0,58 Printing Labels: ZAR 2,60 € 0,27 Bottling factory: ZAR 2,85 € 0,30 Wine maker: ZAR 3,50 € 0,37

30


Salary wine manager: ZAR 3,55 € 0,38 Viticultulist: ZAR 3 € 0,32 By determining the price this way, Zandberg makes sure that their pricing is competitive, causing the wine to sell for a price accepted by consumers, traders and high enough for Zandberg to make a profit. Prices for the different products are: Prices domestic market Cabernet Sauvignon 2005 Cabernet Sauvignon 2006 Dry Rosé White Merlot Cab 2005 African Faces

Trade Price R 46 R 40 R 35 R 50 R 15

Profit margin 45% 42% 42% 42% -

Consumer Price (cellar-door) R 63 R 50 R 35

These prices are competitive and ensure Zandberg a good profit margin. Only the Cabernet Sauvignon 2005 African Faces does not create profit. However, dropping the price is the only way to get this wine sold, gaining some of the costs made back.

3.5 Conclusion marketing mix:

Marketing mix Product

Strengths • •

•

Price

• • •

Place

• •

Quality of the wine. Intention to innovation and building a wine range. Tasting centre Competitive prices Profit margin Market orientated price strategy .Terroir of the vineyards Location of Zandberg

Weakness • •

•

•

•

Promotion

• •

Being a member of WOSA. Being an member of the Stellenbosch wine route

• • •

•

Wine range. .After sales service

-

Not an clear distribution strategy .Distribution. The promotion activities. Website. Using no extra promotion sources Promotion strategy

3.6 Value Chain: To know how Zandberg will gain competitive advantage in the market the student will use the value chain of Porter. In this analyses the activities of Zandberg will be analysed create the most value for the client. Zandberg could create a competitive advantage through implement these strategically important activities on a cheaper way ore use it better then its competitors.

31


To get a better perception, the following primary and supporting activities will be analysed. Zandberg is typified as a wine producer and supplier and is an “element” in the value chain, which create value for the clients. In figure 2.1 you will find the value chain of an South African winery in general, the value chain of Zandberg will be worked out further below. After this analyse you will find a conclusion concerning the value chain. Fig. 2.1 Value chain South African winery

Primary activities: Entering Logistic: Zandberg is a wine producer and a wine supplier, in terms of entering logistics, zandberg mainly need other types of grapes to make wine, supporting attributes to complete the product. Zandberg buy other grapes from wineries which Zandberg select on the quality and the price of the grapes. For the Rosé, zandberg bought Cabernet Franc (type of grape which can be typified as the father of the Cabernet Sauvignon). Zanberg adds value on this process in terms of production, through use a commodity and add special ingredients which result in the core product of Zandberg. When the wine is bottled and is finished, Zandberg needs a bottle, screw cap or cork and a labe for finishing the product. The attributes are specifically selected to combine them which result in a final product. Zandberg adds value to this process to cooperate with trustful wineries and other companies which supplies the attributes. Because of this Zandberg tries to make sure the process is optimized and could guarantee the quality of the product. Operations Because Zandberg is mainly a wine producer and supplier, the company hardly changes its core product such as the ingredients and quality. Zandberg is in a developing stage in terms of completing the wine range. In the following years Zandberg will develop more types of wines to complete the wine range. The wine range will be the core business of Zandberg. In

32


certain ways Zandberg adds something to the product, for instance the packaging of the cases and the labels. Currently, this is organized by external companies (Nedoweb). In this stage, it is cheaper then invest in own product facilities. A disadvantage is that other companies are responsible for making the wine, bottling the wine and developing the labels for new types of wines. Outbound Logistics After bottling the wines, Zandberg stocks the wines in two warehouses near the estate. according to Mr Ridley and the wine maker of Signal hill (a famous South African winery) It is not necessary to have a certain temperature in the warehouse, because the wine needs a room temperature. When the client orders the wine, the order will picked immediately at the warehouse and would be delivered within a few ours. Orders with a larger amount of bottles will be delivered at a certain data, as agreed with the customer. Zandberg adds value on the product to deliver the wine quick to the customer. Marketing and sales The department of marketing and sales consists of only one person. He has the responsibility of the Logistic, marketing, sales and administration. Therefore, the wine marketing and sales manager has no time to inform the customers about the new products, special offers of wines, product developments etc. The customers do not receive new information about the products ore other developments of Zandberg. At this stage the marketing and sales department adds no value for the customer. Besides that the marketing and sales department adds no value to the customer, through customers could place an order fast and easily. According to own experience of the student, the most customers are tourists, business people and is helped quickly, the customers are being helped and could place and order fast, according to the experience of the student. These will safe time and therefore money, which effect in extra value. Service The service of Zandberg consist most of all in the previous processes. For instance the fast delivery time, production of the wine and that customers are able to place and receive there orders quickly. To guarantee the quality of the wines are always the most important aspect of the process. Zandberg does not provide any after sales services so far, such as dealing with customer clients. Zandberg does not add any value at this point.

33


Supporting activities: Infrastructure Zandberg has a clear infrastructure. The communication within the organisation of Zandberg is organised at a certain way that everyone knows what there responsibilities and tasks are. Because of this all the activities are going fast and efficient. The employees could focus more on the needs of the customers and what they want. Management Zandberg has two departments, a wine department and an accommodation department. Both have a manager in charge that is responsible for the department. From interviews with employees and experience from the student the managers has to many tasks. The effect of this is that they could not focus on their core tasks. The managers and the management have not the same vision about the future. The management is only thinking on making revenue and is not concerned about building a brand, image of the company etc. The marketing and sales manager has finished a wine and marketing programme at the University of Stellenbosch business school to gain more knowledge about what consumers want and need in the future. He is trying to apply his knowledge in the strategy of Zandberg. Unfortunately, it is hard for a manager of Zandberg to convince the MT, because they are not concerned about a new way business thinking. This change-over cost a lot of time and money. For instance the activities of Mr. Ridley what he is setting up currently e.g. the new wine website and the new business style of Zandberg. On a long term this will result in an organisation which adapts what (potential) customers want and need and therefore create more value for this customer. Technology When looking at the technology side, Zandberg is far behind. Zandberg do not have any client, stock ore administration systems. All these information is saved in maps and adds no value to the value chain process. Because of this, the employees do not have a clear view about the customers according to conversations with employees. Zandberg could adapt on the customers needs and what they want to implement the data of the customers, stocks etc. in systems and could eventually add more value for the customer. Furthermore, Zandberg add no value for customers in terms of ordering. Zandberg has not a web shop or innovative website what will add more value for customers to order wine. Acquisition When looking at the entering logistics side, Zandberg create especially value through the knowledge of the wine and the wine market. Zandberg has hired two external viticulturists (wine consultants) in charge who advice Zandberg about the vineyard. As well of these knowledge Zandberg create a wine range with good quality, never the less the wine range is to small according to the viticulturists and Mr. Ridley. One of the viticulturist travels often to other wine producing countries to spot wine trends and developments. When Zandberg use this benefit, it adds more value and Zandberg can compete with competitors; to create a wine range totally based on the trends and developments from consumers all over the world.

34


Conclusion Value Chain According to opinions of customers appears that the core business of Zandberg is to deliver wines of a good quality with a good competitive price. The price is mainly reached by looking in the wine market and how the wine is positioned. On top of that Zandberg adds value on the production of the wines from a commodity to wine. Furthermore, Zandberg creates value for the customers concerning acquisition and the outbound logistics. In the outbound logistics is created value by the way of delivery. This is fast and the client appreciate is when the wines are being delivered quickly, according to interviews with customers. When looking at the acquisition side, Zandberg create value by the knowledge of wines and the wine and the wine market. Through the knowledge, Zandberg is able to offer a quality wine range and expand the wine range to offer more wine types. According to a survey of 100 customers, people needs a wide wine range with innovative products which Zandberg cannot provide at this stage.

35


3.7 Sales analysis Zandberg is a small company, with the marketing/sales department of the wine division still in a developmental stage. Nick Ridley is, besides his other tasks, responsible for the sales department as well. Because he has a lot of tasks up his sleeve, there is not a lot of time to acquire new customers or follow-up on leads or prospects. Most of the sales are done through existing customers.

Sales process Acquisition Most of the acquisitioning and networking of Zandberg towards trade companies happens at the wine shows Jo’Burg Wine Show (in Johannesburg), Winex (in Johannesburg as well) and at small local wine shows. Furthermore, cold-calling was used in the past by Mr. Nick Ridley to try to approach new trade companies as well, but because of the small success rate, coldcalling is not used to approach new companies anymore. Mr. Nick Ridley believes the small success rate is due to the small range and lack of brand-awareness. Therefore, he does not plan to start cold-calling until a range has been build and brand-building has started. Sales Most sales of Zandberg are made by existing clients approaching Zandberg. They either ran out of stock or want more wine for private use. Mr. Nick Ridley arranges the sale and makes sure the wine either gets distributed to the client, or that the client comes to Zandberg to pick up the. However, apart from wine shows or tastings, Zandberg is never selling actively. This could be a reason why some wines (e.g. the Cabernet Sauvignon 2005 African Faces) did not sell quickly. At wine shows and wine tastings, Nick Ridley does sell actively and achieves well in doing so. After this, he tries to stay in touch with his customers, but he does not always succeed in this because there is not a system to record the customers.

Reward system there is a reward system in place at Zandberg. Over every sale he makes, Mr. Nick Ridley gets 10% commission; this is part of his overall wage structure. This reward system motivates Mr. Nick Ridley to try and make his sales as big as possible. This is an positive way to sell more wine and in order to gain more commission.

Customer analysis Distributor Zandberg has two distributors. The most important one is BWC Boucheron Wines, based in Jo’Burg. This is the biggest buyer of Zandberg’s premium wines. Boucheron Wines distributes its wines to connoisseurs and on-trade companies in the Jo’Burg/Gauteng-area. Furthermore, Zandberg has a distributor in the Durban/KwaZulu-Natal area. However, this distributor does not sell large quantities of Zandberg wine. German community in the Cape Area There is a large community of retired German millionaires who are living in Cape Town/Somerset West. One of them (mr. Hoizer) is the former owner of Zandberg. He has made other people in this community aware of Zandberg’s products. Many of them have become loyal customers to Zandberg, making it one of the biggest segments.

36


Export Zandberg currently has small export markets to Canada, Germany and Russia. These customers do not offer often, but when they offer it is large quantities of wine, making it a big segment. Other clients Most other sales come from people visiting the tasting centre and buying a few bottles of wine, most of them are wine tourists from South Africa or overseas. Furthermore other clients are people who already know Zandberg and come directly to the cellar-door to buy wine. Sales analysis conclusion Zandberg does not have an efficient sales system, they are no figures concerning customers available. Customers are approaching Zandberg to buy wine; the company is barely selling actively itself. Acquisition is not done often, what is a weakness. This results in a small group of loyal clients, mainly consisting of the Jo’burg distributor (Boucheron Wines) and the German community living in the cape area. However, acquisition was done in the past but often failed, because Zandberg has no range and no known brand. However, a strong part about the sales system is the reward system. This motivates Nick Ridley to gain more sales which result in bigger commissions.

37


4.Financial audit The management of Zandberg is not willing to release any figures. Therefore, it is not possible for the student to make a financial audit.

Conclusion internal analysis According to the internal analysis, Zandberg has the strength of the quality of wines, well educated employees and the terroir of the vineyards. The weakness of Zandberg is that there is no vision for the future and the management has no knowledge about making and wine marketing. The nine strategic windows revealed that Zandberg has the ability to export and has to focus on a niche market. Zandberg does not produce enough wine in order to guarentee a certain volume for the Netherlands. Zandberg has to invest in new systems to build an stock system and build a client database. Due exporting Zandberg has to face some barriers and risks; political, general and commercial risks. However, Zandberg is an scenic winery, surrounded by the beautifull winelandscape and has potential to grow in the future.

38


External analysis

1. Market definition and market analysis 1.1 Introduction This chapter will function as a summary of the market definition and market analyses as shown in the external analyses. The Market definition will be clarified be using the Kotlerscopes. 1.2 Market definitions To know in which direction the Export Plan has to be written is it important to know what the current position of Zandberg is on the market and what the position will be in the future. This prospective positioning, which will be realised in the period 2009-2012, would be the guide for the rest of the assignment. A way to get a clear view about the future positioning the student used the Kotler Scopes. Written below you will see the composed Kotler survey:

Scope Geographical

Market Segment

Current Selling wine in domestic markets and some international markets: Canada, Belgium and Germany. Domestic Wine clubs Domestic Liquor stores On-trade markets (restaurants etc.) • • •

Future Zandberg will focus more internationally and have a strong share in the domestic markets. International Retail Food and beverage sector Wine shops Domestic and International On-trade markets (restaurants, clubs etc.) Domestic and International Off-Trade markets (retail) Online web shop, online wine cellar Still function as export product but in combination with more types of wines In the future Zandberg will still producing and supplying its own wine. Zandberg will focus more on sales in the future and will function more as a exporter. Wine-Industry • •

• •

•

•

Products & Applications

The wine function now as a export product.

Vertical

Producer, supplier, furthermore there will sell some small amount of wine-bottles to visitors of the wine estate.

Industry

Wine-industry

39


The market definition for the Netherlands will be clarified by using the three dimensional business definition graph (abell). This is a definition graph of the domain where the market is analyzed using three dimensions, customer’s functions, customer groups and the alternative technologies which could used to satisfy the client needs. The customer groups consist of potential customer groups for Zandberg by entering the Dutch Market. The following Desk research and field research sources are being used to know what the Dutch market and potential customer’s need and desire: • • •

•

Trends and developments Dutch wine market, Rabobank TED Business, wine consumers in the Netherlands Interview with de Bruijn Wijnkopers, biggest independent wine trader in the Netherlands Annete Badenhorst, manager Benelux WOSA

Abell-graph The Netherlands Customer Functions Innovative wine label design Packaging Delivery liability Wine range

Customer groups

Price-quality relationship Price policy Product policy Logistics Promotion

1

2

3

4 customer groups: 1 The Netherlands 2 Wine Clubs 3 Slijterijen 4 Hotels

5 Restaurants

40


2. Market environment Zandberg: This chapter will give more information about the environment of Zandberg. According to the market environment analysis the student has a clear view of the international wine market which enables to identify the opportunities and threats. 2.1 General structure of the international wine market The international wine market consists of a number of overlapping and sub-markets. The wine market is more vertically differentiated, this means that the wine market is complex and has more steps before it reaches the consumer compared with other agricultural products. The segments with higher prices are fragmented and show considerable product differentiation. The segment with lowest prices and lowest qualities is more homogenous and does not focus on particular quality criteria. The wine segment is related to demand for consumer’s consumption as well as for business uses. 2.2 Potential in the Global wine market: For the past years, the wine industry has been performing very well until the financial crisis hit many parts of the world. In the year 2002 alone, the global wine market’s retail turnover was 101.5 milliard euros1. As far as international wine production concerned, in the period since 1994, world wine production has remained in the range of 25 to 28 milliard litres. However, this decline was halted in 2008, when world wine production increased marginally by 0.3% to 27 billion litres. The 90s was characterised by a relatively unstable consumption level. Later it increased and decreasing up until the year 2000. Remarkable was the 3.2% increase in 2003, when the consumption level reached 23 589 million litres. In 2005 wine consumption reached a peak at 23,767 million litres. 2 2.3 South-African wine export: The Cape winegrowing area is situated in the narrow viticulture zone. They mainly have a Mediterranean climate and the mountains and valleys form the ideal habitat for the wine grape. Long, sun-drenched summers and mild, wet winters contribute to the ideal conditions for viticulture at the Cape. The South African wine industry has gone from strength to strength, with exports growing by 335% between 1995 and 2008 3. In figure 2.1 you will find a review of the wine export in litres. Fig. 2.1 Total South African wine export in m illion litres.

These days, more than 4000 farmers cultivate some 101.957 hectares of land under vines. 1

Source: WOSA Source: Austrade 3 Source: Wosa 2

41


This could be a threat for Zandberg because they have to compete with a large number of competitors. Approximate 256.908 people are employed in the South African wine industry .The number of wineries declines as shown below in Figure 2.2. Fig 2.2 Growth in Wineries in South Africa

Number of primary wine producers Number of wine cellars which crush grapes Co-operatives Producing wholesalers

1991 4786

2002 4346

2005 4360

2006 4183

2007 3999

212

427

581

572

560

70 6

66 11

65 21

65 17

59 20

According to WOSA (wines of South Africa), red wine exports grew by 19.1%, to account for 59% of all natural wines exported. Over the last years South Africa produces more wine as shown in Figure 2.3 below. Fig 2.3 Wine produced in South Africa in million Gross Litres.

Wine Rebate Juice Distilling wine

2003

2004

2005

2006

2007

712.7 50.5 70.7 122.2

696.6 85.4 87.8 145.8

628.5 82.9 64.6 129.2

709.7 82.1 73.2 147.9

730.4 101.5 65.2 146.4

2008 (est.) 787.2 88.2 68.8 156.9

All wines for export must be granted an export licence. Samples of each batch of wine destined for foreign countries are sent to the Wine & Spirit Board in Stellenbosch. They will be put through detailed tasting tests and chemical analysis in the laboratories before licences are granted. An official seal is given to each bottle by the Wine & Spirit Board, which verifies that the claims made on the label regarding origin, vintage and grape variety are true. The most wineries in the Western Cape export its products, mostly to Europe as shown below in Figure 2.4 Fig 2.4 Packaged and Bulk Natural wine exports from South Africa in litres per country for the period August-July

42


3. DESTEP- analysis the Netherlands The DESTEP analysis gives insight in different factors of the Dutch wine market which can be divided in macro environment factors and micro environment. This chapter will focus on the Macro-environment, which consists: The DESTEP analysis and the Porter’s Five Forces model. The DESTEP-analysis will be used also to spot opportunities and treats. Using the DESTEP-analysis you will see an overview of the external environment and its developments. DESTEP stands for: demographically, economic, social/cultural, technological, ecological and political. 3.1 Demographical aspects: The Netherlands is the 27th most densely populated country in the world, according to CBS. The 16 million Dutch men and women are concentrated on an area of 41, 52 km². This means that the country has a population density of 397 per km², which is high. As a result of these demographic characteristics the Dutch government has had to plan to use its land strictly. The emigration rate is high, because of that the population growth will decrease and the aging of the population will increase. The most citizens’ lives and work in the western part of the Netherlands approximate 7.5 million people 4. The aging could be seeing as positive point for Zandberg; older people prefer quality wine, according to the trends and figures of the Rabobank. Furthermore, there is more attention to a healthy lifestyle in the Netherlands and the Dutch consumers are more be aware of the ‘experience and emotion’ of consuming either than just consume. Developments in ethnics: The amount of ethnics will rise more in the future. There are living 1.8 million not western and 1.4 million western ethnics in the Netherlands. The expectation for 2050 will be that 3 million not western and 2 million western ethnics will live in the Netherlands. According to research of the CBS, the number of the Dutch native citizins will decline of 13, 2 million from now to 12,4 million in 2050. In 2050 will 29% of the Dutch population be an ethnic, compared with 20% now. Education level: According to the OECD Health data, in the Netherlands are living relatively the highest educated people in Europe with 21 % (consist of people who reached this degree between an age of 25 and 64). With the highest educational level, HBO ore WO, which similar to an university degree. For instance, In Portugal and Austria are living less people with a higher education degree; only 7% of the population has a university degree5. According to several studies, for instance the study of OECD “education of a glance, 2007”, reveals that higher educated people prefer drinking wine during a social evening or dinner above beer and other light alcohol spirits. Eating and buying habits: Diverging eating and buying habits is also the effect of the demographic developments. There are older people and smaller housekeeping’s and there are more ethnics. The diverging trend will lead to an increasing ask to luxury and products witch is easy to prepare. Furthermore, there is more attention to a healthy lifestyle in the Netherlands and the Dutch consumers are more be aware of the ‘experience and emotion’ of consuming either than just consume.

4 5

Source: CBS Source: ISCED (International Standard Classification of Education) systeem.] 43


Demographic developments in the future: According to recent researches from e.g. TNO, CBS and the ministry of health in the Netherlands expect that there are following some demographic developments in the future. First, the population will grow less compared with last years. Furthermore, the population will be consisting of people with an older age, as an affect of the baby booming after the World War 2. On the other hand, the people with an older age will retire within a few years. This means that the labour force will decline and there is more business areas available then expected. The Dutch government has to adapt there plans more, concerning developing business areas then before according to the demographic changes. Furthermore, in the future, the Dutch cities will be developed in “black cities” according to research of the Erasmus University of Rotterdam. This means that within a few years the total Dutch population will consist of migrants and their children. The number of ethnics will be less outside the cities, compared with the main cities in The Netherlands. Another demographic development factor is the larger number of people that will retire which will be determined for the future. This means that more and more young Dutch inhabitants have to take care about the older people, the insurance premium concerning and taxes will increase in the future. 3.2 Economic aspects The Netherlands has the image of a wealthy country with a lot of potential for foreign investors. The economical structure of The Netherlands is characterised as open, outwardlooking and thinking out of the box. The Dutch economy has a strong international focus, as the Netherlands is one of the European Union's most dynamic centers of trade and industry. Owing largely to its favorable location by the North Sea, it plays a key role as a main port and distribution centre for companies operating worldwide. Amsterdam's Schiphol Airport is one of the largest airports in Europe. For these reasons the Netherlands is often called, the Gateway to Europe. Economical recession: On the other hand the economical recession hit the Netherlands hard. The economical growth declined in The Netherlands with 0, 9% in the 4th quarter of 2008. According to CBS, the economy will decline with 3, 50 % in 2009 and with another 0, 25 % in 2010. The effect of the recession is that the amount of investments declined compared with a year ago6.The GDP was 0, 6% lower at the 4th quarter of 2008 compared to 20077. The Dutch inflation has reached a peak of 3% in August 2008 and declined to 1, 9% in February. The Netherlands has an open economy with a lot of distribution activities 8, therefore is the Netherlands more susceptible for a collapsed world trade compared with other EU countries. Purchasing power: In figure 3.1 you will see a graph which shows the purchasing power of consumers in the Netherlands. Remarkable to see, is that the figures fluctuate much between 2004 and 2009. Before the economical recession starts the consumers has a large percentage of purchasing power. The cause that the purchasing power is rising after 2008, is surprisingly enough of the credit crunch, according to the ministry of finance in the Netherlands. Especially the oil price is beneficial for the purchasing power. People with a supplementary pension will not have an advantage. Because of the credit crunch there will probably no inflation correction on the pensions.

6

Source: Rabobank Source: DNB 8 Source: CPB 7

44


Fig. 3.1 Purchasing power of consumers in the Netherlands purchasing power developments Periodes % 2004/2005 -0,3 2005/2006 3 2006/2007 3,1 2007/2008 0,3 2008/2009 1,3 CBS, 7-12-2009

Spending power: When we are looking to how much people spend in the food and beverage business, there are some remarkable facts. You can divide two consumption groups in the Netherlands. The first group is spending 40 euros in average per visits of companies in the catering industry. This group consist relative much people who are retired, but also the consumers with an age category between the 25 and 35 years old. The second group is spending approximately 15 euros. This group consists of senior people and lower educated people. This is important to know concerning on which consumer groups Zandberg want to focus. About 90 % of the Dutch people having dinner occasionally in restaurants, bars etc. compared with 80% of people which are retired. The spending power of consumers increased with 2,5 % in the second quarter of 2009, according to the CBS. Exchange rate:: Another important economical aspect too look at is the exchange rate between the Euro and the South African Rand. In figure 3.2 below shows historical exchange rates between the South African Rand (ZAR) and the Euro (EUR) between 6/11/2009 and 12/4/2009 fig. 3.2 development between the Euro and South African Rand.

Volatile exchange rates require more and more attention in the international wine industry, in particular when they have an impact on competitiveness. South Africa benefited from a weakening currency in 2002 which at that time allowed it to be very competitive in the Netherlands. Since then, the surge in the Rand presented an increasing challenge for exporters. The Rand exchange rate compared with the EUR is extremely volatile as you can

45


see in fig. 3.2. According to exchange rates and fast changing economic conditions should stimulate the South African wine industry to diversify risks, exporting to a range of countries with different exchange rates. Economic developments in the future: according to the ministry of finance in the Netherlands, the globalisation, automation and the individualism of the Dutch economy is being developed in an “new economy”’,. The economy is typified by the attendance of the service sector and increasing of the knowledge in terms of the production processes. These structure changes do not exclude the volatility of the business outlook in the future. On the other hand, bigger tendencies on the business market, as a cause of individualism in the Netherlands will have an effect of bigger tendencies on the labour market. Recessions, in combination with a long term process of low productive labour, this is a risk for migrant groups and low educated people. Moreover, the inhabitants who are getting older, the housekeeping families who have fewer children in the future and increasing of doubleincome couples will lead of an increase of the commercial and personal services. 3.3 social and environmental aspects It is easy to do business with Dutch people; they are open-minded and thinking internationally9. The most people are speaking English and could even speak more languages. A well known Dutch social aspect is that Dutch people are always stressed; time is money in the Netherlands. Within approximate 30 years there are living one million more citizens in the Netherlands. The population will rise from 16, 5 million people to 17, 5 million people, after that the population will decline. Because of the increasing number of people that are working there are more people are spending money on dinners at restaurants. This is a positive trend because people are consuming more wine during a dinner, according to a wine consuming research of the EVD. The effect is that the revenue of restaurants etc will increase about a couple of years. According a presented study of the Rabobank, EFMI Business School and the FoodService Institute of the Netherlands the revenue will be more then 30 milliard euros in 2020 compared with the revenue of 19 milliard in 2007. 10 A new trend in the Netherlands concerning socialism is mondialism; the boundaries are beginning to fade away, thanks to the virtual world. The Dutch society becomes more impersonal. But the humanity wants recognizability, because what is recognizable is safe 11. The importance oh the own environment increased, provincial products, from recipes till the restaurant design offers that recognizability The consumers require safe and certified products and needs information about e.g. nutritional value, methods of preparation and origin of which wine suits the best with what kind of recipes . There is an increasing interest for health, durability and the environment. There are changes in the combination of health and convenience with a wine assortment. 12

9 10

11 12

Source: SCP Source: FSIN

Source: Rabobank Source: HBD and the Rabobank

46


3.4 Technical aspects IT-business: Dutch companies use IT more these days. Unfortunately the Dutch companies do not make m ake use of al the potential. The most companies use and have only a website on the internet. However when you compared it with South-Africa the IT is more developed 13 as shown in Figure 3.4 below. Fig 3.4 ICT penetration rates per 100 inhabitants, 2007

E-commerce: Through to the trend t rend using E-commerce people could buy more products online. Ecommerce is a collect term for al the t he ways that through computer networks people could trade with each other. E-commerce is stimulated through the essential of increase the scale, cost reduction and convenience. convenience. Technical Developments: Developments: Furthermore, when we are looking at the wine business on particular the technical part, there are some developments over the last few years. Consumers have taken a greater g reater interest in where their food and drink comes from. Allied to this, ethical issues such as sustainability, carbon footprints, packaging waste and fair trade have risen r isen to the forefront f orefront of public consciousness. According to WOSA, the new trend will be organic wine about a couple of years. Of all alcoholic beverages, wine can claim to be the most natural. It isn’t manufactured, in the sense that grapes contain within themselves all that is needed to make wine without any additions. In Europe there is a growing ‘natural wine’ movement, which is a loose coalition of artisanal producers aiming to work without any additions of other ingredients during the winemaking process. Alternative packaging and producing wine: The need to innovate, in order to create a point of difference plus environmental concerns concerns are driving the growth in alternative packaging. According According to WOSA, W OSA, e.g. screw caps have been accepted in some wine markets, such as in Europe. Alternative packaging packaging is one of the hot topics in the wine trade at the t he moment, but it’s not exactly a new development. Glass bottles themselves are a relatively recent innovation in the 7,000 year history of wine. Wine was mostly transported in bulk, and sold from barrels.

13

Source: TU Delft

47


In recent years, moves have been made to replace glass, which while being cheap and excellent at protecting wine from the ingress of oxygen. The negative point is that glass is heavy and has a tendency to break. As well as the cost and difficulty of transporting glass bottles. The wine sector is always looking for ways to innovate. Furthermore, developing developing more consumer friendly styles of wine, wineries also see packaging as another way to give their wines an edge in a crowded marketplace. According to the data monitor industry report; wine packaging of the University of Stellenbosch business school, environmental issues are now a factor in decisions made by both retailers and consumers and the alternatives to glass promise to reduce the carbon footprint of wine significantly. Bag-in-box: Putting wine in a plastic bag with a tap, suits those consumers who drink modestly or infrequently. As a glass of wine is drawn from a wine box the internal bag collapses collapses so that no air enters to fill the gap left by the vacated wine. The bag-in-box is also an economical way to ship wine. This because a pallet of bag-in-box wine holds 80% more wine and is less than two thirds the t he weight of the equivalent equivalent volume of glass-bottled g lass-bottled wine, with reducing the carbon footprint. Boxes are also interesting to retailers because they are easy to merchandise. PET: The latest development in packaging, is the appearance of 75cl PET bottles on supermarket shelves. PET is a plastic bottle, which has been used before, mostly with 25cl bottles from the south of France. But this current move to PET is significant, because it is the first time that wine in standard sized 75cl bottles has been presented in plastic on supermarket shelves. Positive, to mention is that the PET bottles are light for the consumer to carry two bottles home for dinner from supermarkets. The most important benefit is that the bottle is environmentally. environmentally. Shipping lighter, bottles reduces their carbon footprint f ootprint through savings in the transport chain.

48


3.5 Ecological aspects: In the business life, the ecological rules become stricter in the Netherlands, also the environment and safety become more important. Zandberg has to face f ace strict rules regarding hygiene, as example the HACCP rules. The ISO standard was introduces in the Netherlands in 2005. The ISO standard has a lot of requirements on a management system for the food safety focused on the chains in the food chain. This standard is focused f ocused on the food business and the retail market. The ISO 22000 could be used as a international standard and could be used as a basic for the HACCP certificate14 Environmental issues: For years the wine industry in the Netherlands has the topic, CSR (corporate social responsibility) responsibility) as the highest priority in the environmental policy of the Dutch government. This, because of attention of the Dutch politics and media about doing business on a environmental way. According to “Productschap Dranken Nederland”, in the wine business it is all about enhance clean business processes. processes. Although, most of all issues about return bottles for the deposit and empty wine bottles who is lying as rubbish on the street (mostly big Dutch cities). According to VROM (ministry of e.g. environment) the attention for bigger corporate social problems such as the CO2 issues increased significantly by the Dutch citizens as well as the media and Dutch government. Concluding, last years, Dutch citizens, the Media as well as the government is more focused at the CSR emphasises. Some famous people has a mission to interest more people about the CSR issues e.g. ex-president candidate Al Gore.

Furthermore, according to the International Federation of Organic Agricultural Movements (IFOAM) wineries al over the world is last years more aware of CSR and have a significant effect on the external environment. Thus, in which it operates and can change that environment through its activities. The trend in the wine business is producing wine on an organic way. These days and in the future you will find more logo’s on wine bottles concerning recycling etc.

14

Source: Ecological rules department the Netherlands, Nen

49


3.6 Political and juridical aspects: Juridical aspects: The Netherlands has been a constitutional monarchy with a parliamentary system since 1848, when the constitution was substantially revised. The constitution defines the powers vested in the monarch and other government institutions. This arrangement contrasts with other West European monarchies, which exclude the monarch from government. While having no political responsibility and therefore, not being accountable to Parliament, the monarch plays an important role in the formation of new governments. The current head of state is Her Majesty Queen Beatrix, who acceded to the throne in 1980. The government is located in The Hague, where most foreign embassies are also located. The area between the four main cities: Amsterdam, Rotterdam, The Hague, and Utrecht is referred to as the Randstad, one of Europe’s most populated regions. South Africa is the Netherlands’s most important trading partner on the African continent and the Netherlands ranks in the top ten of the list of South Africa's most important trading partners. The South African-Netherlands Chamber of Commerce was established in 1992, and is one of the leading chambers in the country. Below you will find the most important juridical aspects for Zandberg. Wine import rules: In the Netherlands are approximate 10,000 people who are working in the wine sector 15. Furthermore, there are approximate 800 companies which are import wine professionally. When we are looking to import rules and requirements, Zandberg has to pay attention on certain aspects. According to the Dutch customs, a winery and the importing company have to report the wine both at the Dutch chamber of commerce, productschap wijn in the Netherlands and the customs office. Zandberg has to pay additional taxes such as excisetax, packaging taxes and for every pallet Zandberg has to pay a certain amount of tax for removing of the glass, foil, cardboard of the cases and the wooden pallet. According to the Customs of the Netherlands, Import duty is only applied on goods imported from a country outside the European Union16. The following tariffs are valid in 2009 as shown in figure 3.5. Fig. 3.5 import tariffs The Netherlands 2009

Zandberg has to pay a contribution to the productschap wijn and the importing company has to be registered at the Chamber of Commerce. The importing company has to pay an extra import tax because the wines will be imported outside of Europe. According to the South African embassy, South African wineries are allowed to export 42 million litres of wine to the EU in total without paying import duties, this is an example why South African wines are cheaper to import compared with other wine producing countries.

15 16

Source: CBS Source: Customs The Netherlands 50


Product requirements: As a member state of the EU the Netherlands is committed to obey all the EG-regulations concerning product safety and the protection of the environment en the consumers. Products which have a CE-mark, could enter the Dutch markets with any problems. When there are no regulations for special types of the products, the national requirements will count. The Dutch law is focused on product recycling, it is important that the products could be recycled. 17 Zandberg has also to pay attention of the labels of the bottles. In the Netherlands it is required to have a sticker on the bottle which consist “bevat sulfieten” in Dutch of the day the wine is bottled. Ad valorem: The Netherlands is a member of the EU, When Zandberg want to export the wine products to the Netherlands they have to pay import duties. The amount of this duty is depended on the weight and the quantity of the products. Overall, the Netherlands has an average ad valorem with less than 5%. (This is a tax which is calculated above the value of a product) Import Quotas and Licences: As a member of the EU, the Netherlands has an attractive tariff for most non-agricultural items. Imports from the agricultural sector can have very high and sometimes prohibitive tariffs, whilst some products, including meat and cheese, are subject to quota arrangements between the EU and South Africa.

4. Dutch wine market 4.1 Dutch wine market size and potential: The Dutch wine market generated total revenues of 4.2 milliard euros in 2008. The Dutch market is still growing, from 14, 50 litres per head consumption in 1990 to 21, 60 litres per head in 2008. The performance of the market is forecast to accelerate fast as shown in figure 4.1 below18. With a forecasted grow of 1.1% for the five-year period 2008-2013, which is expected to post a market value of 4.4 milliard euros by the end of 2013. When you compare this with the French and German markets they will grow with 0.9% and 0.2%. Fig 4.1 Netherlands wine market value forecast in m illion dollars, 2008-2013

17 18

Source: EVD, import duties Source: Data monitor industry report, wine in the Netherlands, University of Stellenbosch business school

51


Holland is a take home market. Some 85 percent of the wines are sold in the off-trade (retail industry), 15 percent through the on-trade (restaurants, bars etc). About 70 percent of the off-trade volume is sold through the multiple grocers, coops and independents, the remaining 25 percent through specialist’s bottle shops. Most of the wine imported into the Netherlands came from France, which is 40%. The followed in the row is: • • • •

South Africa, 17.9%; Spain and Germany, both approximately 10%; Italy,7.8%; New World wines made up around 32%.

4.2 Wine market segmentation: When you make a segmentation of the Dutch wine market, you will find different types of wine. In figure 4.2 which is shown below you will find the wine market segmentation of the Dutch market. Remarkable is that Still wine sales proved the most lucrative for the Dutch wine market, generating 80.7% of the total revenues. In comparison, sales of fortified wine generated 13.1% of the market's value. Fig. 4.2 Netherlands Wine Market Segmentation, % share, by Value, 2008

4.3 Imports from other countries: By far the largest share, which is still growing of New World wines, came from South Africa. The popularity of South African wines can be attributed to the historic ties with the Netherlands, which is also reflected in the Dutch names of many of the South African wines. When we are looking to the Dutch imports of wine from several countries, there are some remarkable developments before the economical recession. Unfortunately there are no figures published about wine imports in The Netherlands during the credit crunch, currently companies are researching these figures. In stead of that, the import figures of last years is analysed below. According to the CBS, last years appear more South African wines on the Dutch market. In 1996, The South African wines are on the 7 th place on the priority list of the most important wine import countries. Compared with eight years ago South Africa is climbed to the second place after France. With this development, South Africa increased its market position compared with the well known wine producing countries as Spain, Germany, France and Italy. As shown in figure 4.2 The Netherlands is still importing the most amount of wine from France.

52


Fig 4.2 Share of importing wines in The Netherlands, most important countries (1996-2204)

Almost 147 million litres of wine was imported from France in 2005. The share of French wine in the Netherlands is declined significantly. In 2004 the share of French wine was for the first time less then 40 percent, compared with 46 percent in 1996. Remarkable to see is that other European wine producing countries has approximately the same import share between 1996 and 2004.

4.4 The Netherlands compared with South Africa To know how Zandberg should do business with The Netherlands it is important to compare the Netherlands with South-Africa. With the Geert Hofstede’s Cultural dimensions as shown in Figure 3.3 gives Zandberg insights into other cultures so that Zandberg can be more effective when interacting with people in The Netherlands. Fig 3.3 five Dimension model of Geert Hofstede.

19

19

Source: Geert-hofstede.com

53


PDI: Power Distance Index Score: the Netherlands 38 Score: South Africa 49 The Power of Distance is smaller in The Netherlands compared with South-Africa. This means that people in a high position are treated more equal. There is more space for discussion with higher placed people. This will make things easier for Zandberg such as approaching the people in higher positions, who most of the times form, the DMU. IDV: Individualism (IDV) Score: South-Africa 65 Score: the Netherlands 80 The Dutch people are more individual thinking compared with South-African people; this is a big difference between both countries. The Dutch people are more focused on themselves then care about other people. For Zandberg it is important to know if they has to focus on families, groups etc during promotion campaigns. MAS: Masculinity Score: South-Africa 63 Score: the Netherlands 14 The Netherlands is a very feminine country; South-Africa is more masculine. The people in the Netherlands have other interests than South-African people. Zandberg has to pay attention to this fact, by putting more value to a good cooperation and creating a good relationship with their partners in The Netherlands. UAI: Uncertainty avoidance Score: South-Africa: 49 Score: the Netherlands: 53

There is not a big difference between South-Africa and the Netherlands regarding to uncertainty avoidance. South African and Dutch people like it to take some risks to a certain point, but if a risk is too large, they stop with making a deal.

5. Wine Consumer Analysis the Netherlands: This chapter will focus on the wine consumers in the Netherlands. Wine is considered as a ‘complicated’ drink that requires insider knowledge to buy. The huge range of different brands and the lack of clear information on the labels add to this perception. At the same time interest is growing and more people would like to learn more and may consider attending wine tastings. 5.1 Wine consumption the Netherlands: After years of strong growth the wine consumption in the Netherlands is still stable, with 21, 6 litres per capita. 20 With a low level of population growth estimated to be 0.6% between 2005 and 2006, growth in wine consumption can only be achieved by expanding the circle of wine drinkers in the Netherlands.The consumption of wine increased 10.57% between 2003 and 2007 in the Netherlands. At the end of 2007 the volumes of consumed wine reached 41,684 million in 9-litre cases. This is similar to 500,208 million bottles. The wine consumption should grow 4.5% between 2008 and 2012. This means that the volumes of consumed wine reach 43,836 million cases or 526 million bottles by the end of the period. 21 20 21

Source: GFK Source: Vine expo

54


The number of Dutch who drink wines on special occasions increased from 3.3 million in 1978 to 9.2 million in 2000 22. Furthermore, wine is evolving from its perception as an upper class beverage to a popular drink in general. Wine Forecasters, such as Nielsen Co. expect that Dutch consumption will rise another 5 percent, with an increasing demand for a higher quality product after the economical recession is ended. As shown below in figure 6.1 the consumption of Rosé is increasing last years. This is positive because Zandberg developed a Rosé for the new range recently. The Dutch wine consumers still prefer Red wine above red wine. White wine consumed more during the summer and with fish dishes. Fig 5.1 Wine consumption in the Netherlands divided by type of wine.

5.2 Identification wine consumer the Netherlands Although France still dominates the off-trade in the Netherlands, historical links from both the Old to New World have favoured the acceptance of South African wines in the Netherlands. The languages of The Netherlands and South Africa are almost similar. The Dutch people like the South African language on wine bottles. They like it because it is funny and the consumers like the authentic part of the wine fields, according to the trends and figures of the Rabobank. 5.3 Preference in Wine As shown in figure 6.2 below the Dutch wine consumers prefer to drink quality wine above cheaper table wine, according “productschap wijn” in research to consumer needs . The wine consumers discovered Rosé; it has grown significantly in the past few years to reach 11% of the market share. Rosé become increasingly popular with both men and women, mostly the upper class. The Rosé is especially consumed during spring and the summer months. Fig 6.2 preference of wine consumption in th e Netherlands

22

Source CBS

55


According to trends and figures research of the Rabobank, wines are consumed primarily at home in the Netherlands. An increasing number of Dutch consumers drink wine during dinner. Most of Dutch drinkers prefer soft, less tannin and not too sweet wines. Wines are also consumed in place of beer and spirits, reducing sales of those items. The Dutch wine consumers are the ones who seek for value for price, therefore a balance between quality and price is important. Dutch wine consumers are not loyal with brands. This means that brand image is important. People are very attracted by some kinds of short, entertaining stories about the origin of the wine, according to the trends and figures of the Rabobank. According to bedrijfschap and Horeca, dutch wine drinkers are conservative. In the last couple of years, wine consumers start exploring more the world of wine. They become more interested in new world wine, and they know ore about the types of wines. People now also spend more money for well known wines. New world wines are accepted in the Netherlands and even considered to be trendy to drink wine. According to Foodstep, in 2008 66% of the cunsumers who are older then 50 years has based the choice of buying wine on the producing country. This was 55% in the age category between 35 and 49, bewteen 25 and 34 it was 44% and between 16 and 24 it was 35%. This shows that the trend of choosing an wine consciously will persevere. In 2008, two of the three bottles which is sold was coming from Europe. The French wines are still being sold the most, followed by wines of SouthAfrica, Germany, Spain, Chili, Australia and Italy. The volume share of Argentina and Germany increased the most in 2007. 5.3 Trends en developments Dutch wine-consumers23: •

24

Health and wellness influences demand .

Sales of alcoholic drinks were highly influenced by a health trend in the Netherlands. They became more interested informing healthier eating and drinking habits. The Dutch government adds more public campaigns around alcohol abuse prevention. The goal of the campaigns is to reduce the reach and effects of alcohol related diseases and accidents in The Netherlands. Campaigns such as “Bob jij, Bob ik”, you can compare this with the designated driver. This campaign was widespread through the Netherlands and reminds Dutch people of the negative influence of drinking alcoholic drinks and driving. Sectors such as wine taking highly benefited from this trend, showing positive sales growth in 2008. •

More stable situation less impacted by lower consumer confidence.

Alcoholic drinks recorded a more stable volume and value performance in comparison to previous years where steep falls in volume impacted the market. In 2008, value performance was influenced by a rise in prices that did not have a major impact on demand. Dutch alcoholic drinks are generally cheaper than other European countries, despite the heavy tax the alcoholic drinks look like expensive. •

Smaller wine bottels

The wine consumers spend more money on drinking wine at home; according to trend watchers is this because of the Economical recession. The wine consumer spend in average 12 eurocents more pro bottle. The smaller wine bottles become a trend especially by the youth, senior citizens with a little income. •

23 24

Health

Source: Rabobank, trends and figures Source: minvws, ministry of health in the Netherlands 56


The continued link between moderate wine consumption and lower risk of heart disease, cancer and stroke remains a major reason for wine’s popularity in an ever more healthconscious society. •

Tickle my senses

The Dutch consumers are searching to more experience in consuming products. The consumer’s ad more value on the quality, packaging of a product.

Conclusion wine consumer analysis the Netherlands: It is obvious that Dutch wine consumers accepted wine in their culture. It is no longer an upper class product but a normal drink and assumed to be a trendy drink. The Dutch consumers are more interested in health last years; Zandberg could do something with health in their promotion campaigns. The Dutch consumers are not brand loyal; the important aspect for them is the price and quality. The Dutch consumers prefer to drink red wines in the autumn, winter and prefer white wine and rosé in the summer, spring. This is positive for Zandberg, they could sell al the types what they produce in the Netherlands.

57


6. Wine markets the Netherlands: 6.1 Foodservice business Due exporting the white Merlot and the Rosé to the Netherlands, Zandberg has to take a look at the Dutch foodbusiness. This because, wine is being consumed mostly during dinner, lunch or a social drink with family and friends. The Dutch consumers are spending in total € 18.9 billion in 2008 by eating and drinking out of home. The foodservice market (eating and drinking out of home) has gained an record turnover of €18.9 billion in 200825, which is an increasing of 6.2% compared with 2007. The total market size in the Netherlands is € 54 billion euro’s, which is an increase of 4.3% compared with the last five years. The total foodservice market could be divided by 5 channels. The retail business gained a turnover of € 23.8 billion (food), The specialist stores gained an turnover of € 11,7 billion euro’s, the food&beverage channel gained an turnover of € 13.5 billion euro’s, the catering channel gained an turnover of € 3.4 billion euro’s and the food turnover in Pompshops gained an revenue of € 2 billion euro’s. In figure 6.1 is shown the trends and developments in the foodervice sector from 2007 till 2015. This is researched by Spronson food&beverage consultancy. Remarkable, to see is that convenvience, culinary and care will be the spearheads for the next years. 26 Fig 6.1 trends of consumers till 2015 (8 c’s)

Zandberg cannot produce huge volumes of wines to provide the classic Dutch wine market; liquor stores, wholesalers and supermarkets. According to the rapport “climbing the price ladder” a report about South African wines in the Netherlands, researched by Cees van Casteren for WOSA the Dutch wine market is saturated, especially in supermarkets.Therefore, these markets will not be an potential market for Zandberg and not be worked out, as agreed with Zandberg. According to the internal analysis, Zandberg has sold all the Cabernet Sauvignon 2005 and 2006 in order to sell this wines in restaurant chains (odega and primi piatti) in the domestic market. This means that Zandberg could enter the Netherlands only by selling the white Merlot and the Dry Rosé.

25 26

Source: Misset horeca Source: Spronson food&beverage consultancy 58


According to the nine strategic windows in the internal analysis, Zandberg has to focus on entering an niche market in the Netherlands. Therefore, the student has analysed Dutch niche markets in the on trade who offers wine and has potential for the next years. The on trade could be divided in 3 segemts: Hotelbusiness (hotels, bed & breakfast etc.) •

•

Restaurantbusines (restaurants)

•

Drinkbusiness (bar’s, club’s enz.)

The student has chosen for the drinkbusiness because it consist the niche markets, the hotels and restaurants business is to big for a small winery like Zandberg.

6.2 Drinkbusiness: The Drinkbusiness has on 1 January 2009 17.638 companies diveded in 8 companietypes(niche markets)27; Beach campanies (lounge bars), kiosk, beverage in recreation companies, beverage in sportaccomodation, meeting centres and party catering. 2009 was a hard year for the drink business. The drinkbusiness gained an turnover of 3.4 billion euo’s (inclusive tax) in 2008. the entire on trade size is 14.3 billion euro’s (inclusive tax)28.

According to figures of Bedrijfschap and catering the number of companies declined by 1.6 %29. The last ten years is the number of companies declined from 18.899 in 2000 till 17.638 companies in 2009, which is an decrease of 7.9%. However the restaurant business is increased with 12.5%, fastservice business with 3.2% and the partycatering business with 165.3%. The number of companies in the hotelbusiness is decreade wwith 1.3%. The number of rooms is increased of 87.562 to 102.287, (16.8 %) in 2009.

27

Source: Bedrijfschap voor horeca Source: Horeca Nederland 29 Source: figures of Foodstep 28

59


6.3 Beach companies (pavilion) According to bedrijfschap and horeca there are 365 beach companies in the Netherlands. An beach company means: an company which is situated on the beach, who offers food&beverage in combination with a terrace. These are companies who are situated on the coastline and on recreation lakes. In figure 6.2 you will find the development in companies of the last ten years. Fig 6.2 development in companies between 1999 and 2008

The above graph means that the number of beach companies is increased with 7%. Remarkable to see is the huge decreasing in 2001, this was not because of the weather. The total food&beverage market increased with 1,4%. Season of beach companies The most beach companies (85%) are not allowed to open the company the whole year, this because of the protection of the beach during the winter season which is declared by the government of water (Rijkswaterstaat)30. In general the season for beach companies are longer every years. Last years the companies where 10 to 12 weeks open, now the season is from march till october ( 28 weeks)

30

Source: Rijkswaterstaat 60


Exploitation of beach companies According to Horeca Nederland, the exploitation of an beach company is depended on the season and the weather conditions. During an summer with a lot of rain, it is hard to make profit for owners of a beachclub. In general, 30 days of appropiate weather is enough to break even. In a normal season, 50% of the turnover is gained in the months july and august. The total revenue of a beachcompanies is in general € 184 million per year, which is approximate € 500.000 per company. 31 The turnover depend on the size of the company, location and opening hours. The exploitationduration of excisting pavilions is 9,9 years and an average of 10,2 years in the food&beverage market. The average age of an entrepreneur is 45 year. Customers The average what customers are spending during an visist is € 9,30. The reason of the visit is various, a day to the beach, a company drink ore socialise with friends and family. Based on a turnover of € 500.000 there are 54.000 visitors per beachcompany in a year 32. The beach attract a wide public, young people to old people. The customers are selecting the beach company by image, price and quality, design and location. These days you will find two types of beach companies. First, the traditional beach pavilion who is focused on families, retired people etc. These customers are looking for affordable prices and comfort. On the other hand, you will find stylish and design pavilions who are focused on people with an age till 35, well educated people with a lot of money to spend. Trends 33 Greenkey, environmental friendly beach companies; Smartcard, due saving discounts it will be deduct of the bill; Health; yoga workshops and massages. • • •

Future and market potential for Zandberg Due the credit crunch, more people are choosing to spend there holidays in the Netherlands which will be an interesting developments. Furthermore, the city beach pavilions are upcomming near rivers in big cities, like the Maas in Rotterdam. Unfortunately, the student could not do field research in the beach pavilions because they will open the season in March. However, to know if a pavilion is interested in a dry Rosé and an white Merlot the student has phoned 10 beach companies in order to gain more information. According to beach company ‘de gouden bal’in wassenaar, most of the owner’s are buying wine from wholesalers like the Hanos or Makro. When we take a look at the wine list, the traditional pavilion are selling most of all French and Italian wines (traditional wine producing countries). On the other hand, more trendy beach companies are selling wines of traditional wine producing countries in combination with new producing countries (Chili, South Africa, Argentina etc.). However, interesting to see is that trendy beach companies where interested in the white Merlot. This because, it is a new product and especially a wine to consume in the summer. Acording to club Nautique in Zandvoort, the most beach companies are selling Rosé during the summer season, it would be hard to sell the Rosé to beach campanies because of the competition of other types of Rosé. There are 365 beach companies in the Netherlands, we presume that 95% welling wine( 347 companies). In general customers are spending € 9.30 per visit, we presume that customers are spending € 1.20 on wine per visit. In general an beach company has 54. 000 per year. We presume of the 54.000 visitors, 10.000 visitors are ordering wine per beach company.

31

Source: Food service instituut Nederland Source: Spronson Food&beverage consultancy 33 Source: Cijfers en trends Rabobank 32

61


According to fieldresearch and of own experience of the student of working in the F&B business, an company will add a margin of 300% in general above the purchase price. According to Vinoo community for specialists in the wine business, in general an wine importer will ask 25% of the purchase price. This means that Zandberg will have an potential of: 10.000*1.20*347/1.3/1.25= € 2.562.461,54,-

6.3 Cafe (bars) An food and beverage company will be part of the drinkbusiness when 50% of the turnover is gained through selling alcoholic drinks. 2009 was a hard year for the Dutch bar business, this because of the credit crunch. According to figures of Bedrijfschap Horeca en Catering, in 2008 approximate 231 bars stopped the business. This is an negative trendline since 2000. When we take a look at the number of bars, it is decreased from 11.084 in 2000 till 9.678 in 2009 which is an decreasing of 12.7%. Company types The bar business could be divided in two segments; the ‘bruin café’ and the modern ‘not bruin café’ Within these segments there are several other types of segments such as; Irish pub, wine bar, lounge bars, beer café and grandcafé. Every segment has it’s own style, formula, target group and design. This makes it an interesting but complex business. The turnover of an average café was in 2008 € 2580,00 per m2. The average turnover of an Café is € 67.700, 00 per year. Customer In 2008 has more than 55% of all the Dutch people (16-80 year) visit an company which offer drinks. Dutch men are visititing an café more compared with women. In 2008 customers spend in general € 16,30 during a visit. However, in the traditional café it is € 10,10 which covers basicly the drinks. It is a group of people who want fancy and modern drinks, food in a well designed atmosphere. The group of people is mostly not older then 30 years and is well educated and like to travel around the world. These people could also be typified as ‘cosmopolitan ore world citizen’. Trends in Café 34 Wireless internet and technology Focus on experience for the customer Authenticity in bruin café’ Design • • • •

Wine bars and lounge clubs In New Tork and in London there are already wine clubs and lounge bars for years. Recently, this kind of bars are a huge trend in the Netherlands. The company Boelen&Boelen started the first wine bar in Amsterdam in 2000. The lounge bars are typified as an transperant charisma, stylish and luxury design and is focused on a target group of people above the thirty year and has a lot of money to spend (Young Urban Proffesional). The Dutch consumer desires more luxery and comfort these days. Furthermore, the consumtion of wine is increased with 13.3 % and the consumption of beer is decreased with 6%. According to tilllate.com, there are 46 lounge bars in the Netherlands who are serving good quality of wines. According to Pronson food&beverage consultancy, an customer spend €21,- till €35,during a visit.

34

Source: cijfers en trends Rabobank 62


Future and market potential for Zandberg According to Spronson food&beverage consultancy the bar business will increase the next years. However, due the credit crunch and it is prohibit to smoke in bars, customers are moving from small bars to bigger bars with a new concept like the lounge bar. According to Spronson food&beverage consulantcy, bedrijfschap horeca and an intervieuw with Anette Badenhorst of Wosa, the lounge bars will be an trend for the next years and a interesting niche market because of the potential; customers who are spending much money on wine and the small number of lounge bars.The student has done fieldresearch in the lounge bar business (Jinso in Amsterdam, Sushi Lounge Den Bosch and Rose’s in Arnhem and showed samples of Zandberg’s wine. All the lounge bars liked the design of the bottle and where interested in the first South African white Merlot. The student has analysed the wine list, remarkable to see is that the lounge bars are not selling a lot of South African wines. Furthermore, the student has visit the first wine bar in the Netherlands Boelen&Boelen and was surprised of all the types of wine and the quality. Zandberg cannot compete with high class, expensive wines in wine clubs and the competition of all the wines.According to Pronson food&beverage consultancy, an customer spend €21,- till €35,- during a visit. We presume that 40% of the turnover in general per lounge bar (€ 67.700, 00) will be gained by selling wine. According to fieldresearch and own experience in working in restaurants and bars e.g. Planken Wambuis which is situated in Ede, in the food&beverage market an company will add a margin of 300% in general above the purchase price. According to Vinoo community for specialists in the wine business, in general an wine importer will ask 25% of the purchase price. This means that the potential for Zandberg will be: 67.700*0.4*46/1.3/1.25= € 766.572,31,6.4 Golf clubs: According to the popularity of golf and drinking wine in a golf club house in South Africa and due the own experience of playing golf, consume wine in the clubhouse, the student has also decided to research the food&beverage in golf clubs. According to the report GOSTA 2007 of Horwath HTL It is busy these days on the Dutch golf cources. This because playing golf is already a trend for years in the Netherlands. According to research of 44 golfcources in the netherlands there is an increasing tendency of the number of rounds on golf cources. However the prices has been risen of an membership of cof cources. The price for a membership of an 18-holes cource is in general € 800,- this is € 500,- for a 9-holes cource. Between 2001 and 2008 the membership prices have been risen with an average of 20%. According to NGF (Dutch Golf Federation) there are 330.000 gofers diveded by 186 golfclubs. Food&beverage in golfclubs According to NGF, the food&beverage having an increasing share in the turnover of golfclubs. These days, the golfclubs has there own lounge bars, restaurants etc. This is increased significantly compared with 2001 when the restaurants where leased. Because the F&B is upcomming in the golfclubs, it is an instabel market. The turnover increased with 11% between 2006 and 2007. In figure 6.3 you will see that the percentage of F&B is important of the turnover per golfclub. Fig 6.3 turnover per golfclub in 2007

63


According to Horwath HTL consultancy, the turnover of the F&B in golfclubs in general was in 2007 € 550.000 Compared with other F&B companies the costs in the meeting area of an golf club is higher. The reason is that most of the clubs are open 7 days a week, with non profitable opening hours. Because of the popularity of the sport, the profitability of the golfclubs are increasing significantly. The total turnover on a commercial 18-holes cource was € 2.9 million, the turnover of a commercial 9-holes cource is significantly lower € 879.000 per year. Customers The customers could be typified as business people and sporting people. Golf is being used these days as a possibility to network and build business relationships. Furthermore, the biggest share of the 330.000 golfers are people who are retired. This group of people has a lot of free time and these days money to spend. Trends 35 Wireless internet in golfclubs Upcomming restaurants in golfclubs Health; massages at golf clubs • • •

Future and marketpotential for Zandberg The student has played golf and experienced of consuming wine in golfclubs. According to Foodstep and cijfers en trends of the Rabobank, golfers has a certain lifestyle and likes to consume wine which will be interesting for Zandberg. There are 186 golfclubs in the Netherlands, who has a restaurant. According to Horwath HTL consultancy, the turnover of the F&B in golfclubs in general was in 2007 € 550.000 with assuming € 50.000 because of selling wine. According to fieldresearch and own experience in working in restaurants and bars e.g. Planken Wambuis which is situated in Ede, in the food&beverage market an company will add a margin of 300% in general above the purchase price. According to Vinoo community for specialists in the wine business, in general an wine importer will ask 25% of the purchase price. This means that the potential for Zandberg will be: 50.000*186/1.3/1.25= € 7.153.846. Total marketpotential Zandberg in the Netherlands: Beach companies: Lounge bars: Golf clubs: Total:

35

€ 2.562.461,54,€ 766.572,31,€ 7.153.846. + € 10.482.879,85,-

Source: NGF and cijfers en trends Rabobank 64


7. Distribution analysis: In figure 5.1 will represent a simplified view of the distribution chain of South-African wine. Zandberg is a Crape producer and supplier of wine; they are in the bottom part of the figure and reach the consumer through the indirect channel. The figure shows that the wine undergoes some steps before it arrives at the wine consumer, these steps are explained below. •

•

•

•

•

•

•

After the growing process, the grapes will be picked through several workers. The grapes will be transported to the winemaker; he is responsible to make the wine. The winemaker adds alcohol and other ingredients to the grapes and fills the barrels with wine. When the winemaker decides that the quality is good, the wine will be bottled, this often happens when the wine is in barrels for a few years. This process means that the wine will be transported by a truck from the winemaker to the bottle fabric. The bottles will be filled with the wine and the label of zandberg will be added on the bottle. In the last process, the bottle will get a screw cap or a traditional cork. The wine bottles will be packed in cases and on EU pallets in the bottle factory. The pallets will be transported to the wine cellar and is ready for transport. In general the wine is being sold domestic markets or in international markets. When the wine is being sold internationally the wine producer often cooperate with importers, agents etc as shown in figure 5.1 The pallets will be transported by sea freight or air from South Africa to the Netherlands. When the pallets with wine arrive in the Netherlands, The pallets could be transported further to the client by a truck, in cooperation with transporters.

When Zandberg exporting and distribute the wine to the Netherlands, Zandberg has several distribution possibilities such as: joint ventures, piggyback strategy, own company in the country etc. Written below you will see a worked out distribution analysis of the Netherlands. Fig 5.1 distribution of south-African wine

65


7.1 Distribution analysis The Netherlands: The Netherlands is a trading nation with Schiphol airport and the Port of Rotterdam providing major entry points for goods imported into the Europe Union. It is possible to transport wine from South-africa to the Netherlands, according to the Gargo team, international tranporters.36 Wine is mostly transported by air and sea freight. Schiphol airport in Amsterdam is a major European freight hub. Regional airports are located in Rotterdam, Eindhoven and Maastricht. There are numerous options in terms of routes and airlines for South African goods transporting to the Netherlands, but air freight for fresh products may at times be limited depending on the season. Import regulations from abroad: Rotterdam is the world’s largest port, with throughput of 370 million tonnes in 2007. The port area runs from the city itself down the Rhine River delta, to the North Sea coast. An advanced logistics network linking Rotterdam with the rest of Europe supports the port. There is ample sea freight capability between South Africa and the Netherlands. There are a lot of international transporters, which could help with transporting wine. In general the companies will provide freight letters, shipping freight options, distribution conditions, costs further transportation to the client etc. There are some distribution conditions which are important37,; •

•

•

•

Marking and Bar Codes The Netherlands, who promote, implement and support the effective use of EAN UCC (distribution standards) in Dutch supply chains. However, (EAN) Electronic Article Numbering of South Africa will also be able to provide assistance in the first instance. Packing and Labelling Packing and labelling requirements need to be checked before offering product. Packing and labelling should generally be in Dutch. Label requirements can be heavily regulated, especially in the food and beverage and pharmaceutical sectors. Tariffs and Duties The EU Common External Customs Tariff applies, which is based on the International Harmonised System for classifying products. Taxation A value-added tax in Dutch mentioned as BTW of 19 percent is levied on most products. The lower rate of six percent applies to such necessities as food, transportation and medicine. VAT tax on imported goods is based on CIF values plus import duty.

The clients, who are buying the wine, prefer mainly delivery reliability, convenience and the speed in terms of delivery, concerning distribution. In the wine market there are several distribution possibilities, as mentioned before Zandberg uses the indirect long channel. Because of the developments of internet and the country borders are beginning to fade away is it possible to extinguish the wholesaler for the clients. The use of internet makes it easier to make contact with the wine producer (direct channel). Wines are almost similar to nature products, which have to be tested every step on quality, e.g. ISO and HACCP certificates are important. Because of that the wines are most of all be distributed through an agent or importer.

36 37

Source: Cargo Team transporters Source: Holland international distribution council, HIDC 66


The wines will have a wider distribution because of the fading of the branch. This is described in figure 5.2 the wines will be sold at more distribution places in the future, this means that the wines will be sold more intensively. Fig 5.2 Distribution intensity

8. Competitor Analysis: A few hundred years ago people started making wine in South Africa, especially in the Western Cape. Through all those years this is developed in a wine-making culture. In the current market hundreds of wineries are established and trying to be buoyant in this market, especially during the economical recession. South-Africa has a wine industry, with hundreds of wine producers trying to sell their wine on the same market. There are three big players active in the South African wine market, DGB, Foster’s and Distell. They export wine to the Netherlands. Unfortunately, these companies are too big for Zandberg to be their direct competitors. They accompany for 31% of the market share. The rest of the market is filled up by all the other smaller wineries, which exporting to many countries overseas, providing many competitors for Zandberg. In terms of a taking a close look at all these South African wine competitors this analysis will not take a close look of the competitors because of the large scale of wineries. Instead of that, this analysis will have a detailed look at the competitive forces in the market using the five forces of Porter. 8.1 Five Forces analysis The Netherlands: The competitive environment of the Dutch market will be analyzed, using the five forces of Porter. Buyer power Wine is a differentiated product with hundreds of wine brands available on the market which may be intimidating to many Dutch wine consumers due to the lack of consumer orientation. Some beverage producers (such as Bacardi and Diageo) have began to introduce brand management and modern merchandising through injecting bold brands, label designs and marketing campaigns in order to become more identifiable to the Dutch public. Purchasers have a very wide range of wines to choose from with low switching costs. These factors tend to intensify rivalry. The buyer power has an influence on the price of the products. When the buyers have a large power, this is disadvantuous for the wine branch. The buyers of the Zandberg wine contain the retail industry, specialist shops and the on-trade business. The buyer power is described to the situation in the wine sector:

67


•

•

•

•

•

Concentration buyer’s contra the concentration of companies : The number of wine consumers is very high in the Netherlands and scattered in different channels. The number of companies which selling wine is huge, although there are a small number of big retail players which have the biggest market share. This means that the buyer power is relative low, because the buyer has a pretty good dominant position, competitors in the retail industry could be very competitive in terms of offering wine to consumers. Buyers volume : The number of buying volume diverge very pro wine consumer in the Netherlands. The switching costs of the client to another company : This is very high, the retail business buys the type or brand what the wine consumers like, they change easy from supplier. The threat of vertical integration : These days the off-trade has a lot of knowledge of importing wine, the retail chains buying wine all over the world, so there is a certain threat of vertical integration. Price sensitivity : Because the wine business is depended on a good harvest, through nice wetter conditions, the prices could fluctuate. The negotiate power is in these terms limited. Differences in prices would be calculated through suppliers, such as Zandberg to the client, at which the margin is determined.

Supplier Power Wines are produced and developed in a lot of countries. The power of suppliers is depended of several factors. Especially the number of suppliers is important. Old wine producing countries has a lot of wineries and exporting its wine with big amounts. The number of wineries and wine labels increased last years, although some wineries are bankrupt because of the economical recession. Because of this the power of suppliers is limited; the buyers could easily change to other wine suppliers that offer the same type of wine. New Entrants Because a lot of space and knowledge is required to start off as a new wine producer in South Africa, after started a winery it is difficult to export because it is required to have export knowledge. The threat of new entrants is depended of the existing entering barriers. The treats of the new entrants is being criticized on six important entering barriers:

1. Economy of scale: Economy of scales is not a huge barrier for new entrants on the market. When a client buys a bigger amount of wine, in general it is possible to receive more quantity discount when you are buying more wine at once. However, the fixed costs not really high, the purchase on big scale and the costs of stocks are becoming higher.

2. Product differentiation: Brand awareness is important in the wine business and for wine consumers in the Netherlands. The Dutch consumers and retailers buys wine mostly one the quality, price and brand image. Furthermore, brand loyalty is important at selling wine.

3. Starting capital: To set up a subsidiary company in the Netherlands, rent a warehouse or using other export strategies, new entrants needs a lot of starting capital.

4. Changing costs: The barrier of changing costs that clients have to change to other wine suppliers is modest. Unless it happen sometimes that contract is made, it is still easy for a client to change to a competitor. Many clients such as retail chains are doing business with several suppliers.

68


5. Access to distribution channels: This barrier is important: distribution channels where wines are sold are relative saturated. Furthermore, new entrants have not the right knowledge and business relations with purchasing companies. The wines are bought throughout the whole world, by witch business relations are very important.

6. Policy of the government: The Dutch government has strict rules on importing food and beverages. New entrants has to obey the rules of the HACCP, ISO 22000, en de VWA. Wine imported from non-EU countries also require a CAP (Common Agricultural Policy) Import License and must be accompanied by a VI1 document until such wine can be freely circulated. Zandberg has to be aware of the strict rules. Agent or importer will provide information concerning the ISO and HACCP rules. This is not a threat to Zandberg but it is important to be ware of those rules. Substitutes The main substitute in the Netherlands for wine would be other alcoholic beverages, like beer and spirits. These products are quite similar then wine, are being sold through the same distribution points and also use the same facilities to get sold. This means the switching costs involved in switching to a substitute are not very high. However, some selling points (e.g. restaurants) will find it very hard to operate without selling wine, although other selling points (e.g. pubs or certain type of clubs) can operate perfectly without selling wine. From a consumer point of view, the consumption of alcoholic beverages largely depends upon personal taste and upon the mood someone is in. This makes it easy for the consumer to switch from wine to a substitute. Overall, the threat of substitutes in the Netherlands is considered high. Rivalry The competition of the South African wineries which is selling wines in the Netherlands is high. Last years increased the Rivalry because the Dutch consumers discovered the exotic wine producing country South Africa. Because the different wine tenders offering mostly the same products, they have to distinguish themselves from the competitors in terms of distribution, brand identity and packaging etc. Because mostly the same types of wine are offered in retail shops, mostly the competition is on the wine assortment. These days a winery that want to export needs a wide range of wines and different types and packaging to distinguish of the competitors, unfortunately the competitors will follow with the new applications. New wine types have the best possibilities. As example Zandberg introduced the first white merlot to compete with other wineries. The wine prices are mostly determined by the market, the companies could only follow the prices of the competition. High margins of the competitors don’t sell in general. Companies such as retail stores can’t easily compete on the wine price, because the margins have too much pressure. Overall, the rivalry of the South African wineries in the Dutch market can be considered as quite high. Summary Treats of new Entrants: Treats of substitutes: Buyer power: Supplier power: Rivaly: Overall:

Now moderate High moderate moderate/low High Moderate/high

Future moderate High moderate/high Low High________________ moderate/high

69


9. Conclusion external analysis: Considering the external analysis for Zandberg, being the Dutch as potential new sales market, it can mention several aspects which can either cause threats or develop into opportunities for Zandberg. These aspects are important to focus on, because it shows how Zandberg might be influenced by its environment when Zandberg is going to export. In this chapter the conclusion of the Opportunities and Threats is given; it represents the “OT”-part of the SWOT analysis. There will be given a separate conclusion of the three researched countries.

Opportunities: Many high educated/ internationally-minded people. White wine and rosé will be consumed especially in spring and summer. There is more attention to a healthy lifestyle. Internet developments, selling wine online as an additional sales channel. Tickle my senses • • • • •

Threats: Economical recession, consumers don’t spend more money on luxury goods. Competition of other South African wineries in retail shops. Rising figures of substitutes. Consumers are not brand loyal. Dutch consumers prefer price above the quality of wine. • • • • •

8.1 Potential for Zandberg in the Netherlands: The Dutch wine market consists of 4.2 milliard euros in 2008. The Netherlands has a remarkable sales potential for Zandberg as shown below in figure 7.1. Concerning the niche market which is worked out, Zandberg will gain a total market potential of € 10.482.879,85,The forecasted grow will be 1.1% for the five-year period 2008-2013, which is expected to post a market value of 4.4 milliard euros by the end of 2013. When you compare this with the French and German markets they will grow with 0.9% and 0.2%. Fig 7.1 Netherlands wine market value forecast in m illion dollars, 2008-2013

8.2 Overall Conclusion:

The Netherlands will be an interesting country for Zandberg to sell it’s wine. An interesting option for Zandberg is doing business with distributors, wine importers or an agent. South Africa and the Netherlands have strong historical ties, which is important for doing business. During the economical recession the consumers don’t spend much money on expensive wines but prefer cheaper wines which are mostly being bought in supermarkets.

70


SWOT-Analysis and confrontation matrix

1. Swot analyses 1.1 Introduction: In this chapter, the SWOT-analysis and the confrontation matrix is being analysed. The SWOT analysis describes the most important opportunities, threats, strengths and weaknesses which is analysed in the internal- and external analysis. The Opportunities and threats are being combined in the confrontation matrix with the strengths and weaknesses of Zandberg. This will give an perception of the correlation between the internal –and external environment of Zandberg. 1.2 SWOT-Analyses:

Strengths

Opportunities

S1

Delivery

K1

S2

Quality of the wine

K2

White wine and rosé will be consumed especially in spring and summer Tickle my senses

S3

Terroir and location of Zandberg

K3

More attention to an healthy lifestyle

S4

Intention to build a brand an wine range

K4

Increasing use of internet and E-Commerce

S5

Company structure

K5

Increasing high educated people and internationally minded people.

Weaknesses

Threats

Z1

Zandberg does not have any insight in the clients and new aspirant international sales markets.

B1

Credit crunch, consumers don’t spend more money on luxury goods.

Z2

Old style of Leadership of the Russian Management

B2

Competition of other South African wineries in Dutch retail shops.

Z3

Not market orientated

B3

Rising figures of substitutes.

Z4

The current wine range

B4

Consumers are not brand loyal.

Z5

Computer systems which Zandberg are using

B5

Dutch consumers prefer price above the quality of wine.

71


1.3 Confrontation matrix O1

S1

+

S2

+

O2

O3

O4

T1

T2

++ ++

T3

T4

BT5

++

5

+

S3

+

++

++

9

+

S4

++

S5

+

W1

-

W2

-

W3

-

W4

-

++

1

++

+

+

+

+

++

+

-

--

11

+

--

--

-

-

3

--

-10

-

-3

--

--

-

-5

-

W5 Score

O5

-3

-1

2

2

-2 -1

1

-3

0

-1

3

2

Out of the confrontation matrix, which is being analysed above it is made clear which strengths and weaknesses are relevant in the current market developments. Moreover, on which opportunities and threats Zandberg can adapt, with the current internal situation. Especially the most important opportunities are interesting to look and analyse on which opportunities Zandberg could adapt currently. Furthermore, it gives input for the strategical options. According to the confrontation matrix, K1 and K2 has the most opportunities for Zandberg. These opportunities (tickle my senses and more attention to a healthy lifestyle) has a correlation with the changing consumption patron of the current consumers. These opportunities could be combined with deliver a quality wine (S2), and a wine range which will be expand to offer more types of wines (S4) Zandberg aims to expand its wine range and to focus on the needs of the consumers. With an better research in trends and developments, Zandberg could adapt itself on opportunities like K 1,3 and 5 with offering quality wines and innovative packaging, focused on the consumer market. With new systems such as a new developed website, client and a stock system, it is possible for Zandberg to adapt on selling wine online and build a brand in online sales. The biggest threat for Zandberg is the economical recession. As an effect of the credit crunch many wineries are bankrupt and consumers do not spend extra money on luxury goods, like wine. Zandberg is surviving the credit crunch because e.g. its strengths (S2, 3 and 5). Furthermore, there is a lot of competition of South African wineries in Dutch retail shops (T2) it is possible that Zandberg distinguish itself from all the competition by expanding the wine range (S4) and offer originally types of wine with innovative packaging. It appears that the biggest weakness of Zandberg is the insignificant awareness of aspirant international markets and perception of its clients. Because of this, Zandberg does not have adapted itself till now on developments in the market, which is resulted in a larger market position for competitors.

72


2. International Market selection In this chapter a systematic approach to international market selection (IMS) is presented. Research from the Uppsala school on the internationalization process of the firm has suggested several potential determintants of the firm’s choice of foreign markets. These van be classified into two groups: (1) environmental and (2) firm characteristics. The market will be selected by using 4 steps: Steps 1 and 2: Defining criteria In general, the criteria for effective segmentation are as follows: Measurability: the degree to which the size and purchasing power of resulting segemnts can be measured; Accessibility: the degree to which the resulting segments can be effectively reached and served; Substantiability: the degree to which segemnts are sufficiently large and/or profitable; Actionability: the degree to which the organization has sufficient resources to formulate effective marketing programmes and make things happen. •

•

• •

Step 3: Screening of the Country: The Netherlands will be screened ny using the BERI Index (Business Environment Risk Index) This concist an index with criteria and according to the score could be analysed if it is a high risk to enter the Netherlands. Criteria

Weights

3 2.5 2.5

Multiplied with the score (rating) on a scale of 0-4(a) 2 1 2

Political stability Economic growth Currency convertibility Labour Cost Short term credit Long term credit Attidude towards the foreign investor and profits Nationalization Monetary inflation Balance of payments Enforceability of contracts Bureaucratic delays Communications: phone, fax internet acces Local management and partner Professional services and contracts Total Total

Overall BERI Index (b) 6 2.5 5

2 2 2 1.5

2 2 2 2

4 4 4 3

1.5 1.5 1.5 1.5

2 2 2 2

3 3 3 3

1 1

3 4

3 3

1

4

4

0.5

4

2

25

X 4 (max)

= Max. 100 55

a 0= unacceptable; 1= poor; 2= average conditions; 3= above average conditions; 4= superior conditions. (B) > 80 favourable environment for investors, advanced economy. 70-79 not so favourable, but still an andvanced economy. 55-69 an immature economy with investment potential, probably an NIC. 40-54 a high-risk country, probably an LDC. Quality of management has to be

73


superior to realize potential. < 40 very high risk. Would only coomit capital if some extraordinary justification.

The score of The Netherlands was: 55. This means according to the BERI index that the Netherlands has an immature economy (credit crunch) but has investment potential for Zanderg and is therefore suitable as import country for Zandberg. Step 4: segment markets within countries We will take a look at segment the Dutch potential niche market for Zandberg. We will take the following variables: potential Zandberg per company, potential for Zandberg, interest in wine, risk for zandberg, competition and the competition wine list.

Beach companies

Lounge bars

Golf clubs

Potential Zandberg per company € 7.020,44,-

Potential for Zandberg

Interest in wine

€ 2.562.461,54,- + (white Merlot)

€ € 766.572,31,16.664,62,-

++ (white Merlot and potential)

Risk for Zandberg

Competition Number of on the wine companies list

- - (depend on weather conditions)

365

+

46

€ € 38.461,54,- 7.153.846,63,- + (upcoming) (upcoming, instabel market)

-+

: Huge risk for Zandberg, not interested in the wine, huge competition : Slight risk for Zandberg, not really interested in the wine, some competition : No risk for Zandberg, interested in the wine, no huge competition

++

: Open market with huge potential

186

Benefits and disadvantages of entering the beach companies as analysed in external analysis Instabele market; depending on weather consitions; The wines are suited to the public and season; Less market potential for Zandberg compared with other niche market; Uncertain if Zandberg could produce wine for all the 365 companies. • • • •

Benefits and disadvantages of entering lounge bars as analysed in external analysis Niche market with 46 companies is favourable to start with selling wine; The wines are suited to the public and according to field research the lounge bars are interested in South African wines; Less competition on the wine list compared with other niche markets; The expectation is that the turnover of lounge bars will increase the next years. • •

• •

74


Benefits and disadvantages of entering lounge bars as analysed in external analysis Uncertain if Zandberg could produce wine for all the 186 companies; Instabele market, upcomming but still not an serious interesting market for wine; Highest market potential. • • •

2.1 Market expansion strategies by choosing the market expansion strategy will be used the theory of Ogor Anshoff. The growth matrix will gave a clear vieuw of the market expansion possibilities. Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy which could be as followd: Market penetration, Market development, Product development and diversification.

In this case, Zandberg will enter a new market with excisting products. This means that Zandberg will choose for an market development in the Matrix of Anshoff. 2.2 Conclusion International Market selection According to the four steps of the Uppsala school the risk of entering the netherlands and the potential niche markets is being analysed by using variables. Furthermore, the market expansion strategy is been choosen for Zandberg. According to the third step of the Uppsala school the Netherlands has an potential for foreign investores but the economy is immature. Zandberg is being analysed in the internal analysis and the Netherlands is being analysed in the External analyses, and can conclude that both Zandberg and the Netherlands is ready to do business with eachother. Therefore, the decission is to enter the Netherlands. The niche markets is being analysed. Both golfclubs and beachcomapies has a lot of companies in the Netherlands, which will be an risk regarding the production capacity of Zandberg. Both are depending on the weather conditions, therefore it is uncertain if Zandberg could sell enough wine. There are 46 lounge bars in the Netherlands who are interested in the wine of zandberg. Therefore, the choice is to enter the Netherlands by focussing on the niche market Lounge bars and using the market expansion strategy: Market development.

75


Export plan business plan 1. Stratetgy Introduction In this chapter, we take a look to the new strategy of Zandberg, especially with the international focus. This new strategy is formulated in this chapter and will be worked out further in the next chapters.

1.1 Strategicall summary There are different kind of opportunities and threats envolved, out of the internal and external analysis and on the other hand internal strengths and weaknesses. Important opportunities are the changing consumption patron of the current consumers and more consumers are having dinner in e.g. restaurants and bars. The quality of the wine in combination with the price is still important for consumers. The biggest threat for Zandberg as analysed in the external analysis is the credit crunch. As an effect of the credit crunch many wineries are bankrupt and consumers do not spend extra money on luxury goods, like wine. On the one hand, Zandberg is surviving the credit crunch because the Russian management, who invests huge amounts of money in the winery each year. On the other hand Zandberg is surviving the credit crunch, because of it strengths, the quality of the wine and the beautifull terroir. To accomplish the revenue goal of ZAR 3.290.000, Zandberg will have to focus on reliable business partners in the Netherlands who sell the wine to the 46 Lounge bars. Furthermore, it will be important to focus on awareness of the name Zandberg and quality of the wine at consumers in Lounge bars. 1.2 Mission and vision To have a clear fundamental base for the export plan, the mission, vision and main goals will be formulate first. These will be the core base of the export business plan. Mission In the beginning of the internal analysis is the following temporary mission being formulated:

“Zandberg aims to provide quality wines with appropriate packaging and presentation to the domestic and international aspirant wine markets at youthful and mature consumer levels and create sustained consumer brand loyalty relationships with their products at both entry levels.” The way Zandberg currently work does not live up with the mission. The mission is about entering domestic and international aspirant markets at multiple entry levels. Zandberg does not have a complete wine range yet to accomplish the described mission. However, the mission does not have to be revised for the next three years. Because the mission is what Zandberg aims to be in international markets.

76


In the next three years the wine range will be expand and will cooperate with international businesspartners to eventually build the image of the estate internationally by consumers who consume Zandberg wine. Vision Zandberg has currently no clear vision about the future. Within Zandberg are multiple visions (management and employees) about the future. Therefore, the following vision is been formulated for Zandberg, for the next three years. “Zandberg aims to increase business partners in both international and domestic markets and increase brand loyalty and image, for 2013. Zanberg will realise this to be an market orientated company and by offering a complete and qualitive wine range with innovative packaging” The emphasis in this vision is to focus on what consumers want and desire. Furthermore, to offer quality wines which adapt on the consumers who has more knowledge of wines and prefer to drink quality wines.

1.3 Target group in the Netherlands Zandberg will serve wine in lounge bars with innovative receipts and packaging. By serving for example, the dry Rosé with crushed ice and fresh fruit, as a cocktail. According to tilllate.com, there are 46 upper-class lounge bars in the Netherlands. Zandberg will focus on the Young Urban Professional; in Dutch it’s called “yuppen” who are lounging on the best lounge bars all over the Netherlands. The DMU is the business partner of Zandberg in the Netherlands who has the function as importer or agent. The business partner of Zandberg will decide which types of wine he will buy and with what amount of volume. On the other hand, the decission maker of buying the wine will be e.g purchasing manager, sommelier and management of a restaurant or hotel. Market potential for Zandberg is € 766.572,31,-. In 2008 has more than 55% of all the Dutch people (16-80 year) visit an company which offer drinks. Dutch men are visititing an café more compared with women. 1.4 Positioning The positioning of Zandberg will be focused on what the consumer want and desire. The main value will be integrity (consumer trust) delivered through complete transparency and authenticity. These values will be delivered through an online web portal in the form of short films, info – mails and a dedicated blog. Furthermore, an important aspect in the positioning is the experience of wine. Zandberg will give the wine consumer more experience by offering wine seminars, wine tastings in Lounge bars and online wine tastings at the website of Zandberg (this will be worked out in the chapter promotion). By offering these experiences, Zanberg will gain more image awareness in the Netherlands. On the other hand, the positioning has to focus on the advantages for importers or agent to cooperate with Zandberg. These factors combined will lead to the following positioning: Zandberg is a supplier and producer of quality wines in South Africa combined with the strengts; the terroir and the authenticity of the winery. Zandberg will adapt itself on what customer’s desire and demand by offering a quality product and give the customer more wine experience. Zandberg could be typified as an organization that has a international market orientated focus. Furthermore, offering a qualities wine range and a fast delivery period is important in the positioning.

77


This positioning could be typified as an informational positioning. Zandberg emphasise the product features which will be delivered to the customer and the value what is attached to this. On this way Zandberg is trying to convert the (small) difference with the competitors in a competition advantage. The Premium wines of Zandberg will be positioned as authentic; with a real winery and real winemakers, real vineyards and history, sense of place etc. No other New World wine producer like South Africa has such traditional and unique estates. Many of them were established around 300 years ago and today welcome large numbers of tourists and local visitors for an authentic lifestyle experience that is in line with consumers’ expectations regarding super premium wines. Especially the on-trade and multiple specialist categories should focus more on promoting the estates. When we take a look at the communication; the wine estates in general and Zandberg should therefore be brought more to forefront of the communication of the South African wine industry, as authentic places which offer a unique life style, both in South Africa, as well as in the export markets. Zandberg will positionate both wines as an fancy wine in the Lounge bars. This means that the dry Rose could be served as an coctail and the bottle of the first South African white Merloy could be introduced with fancy packaging.

1.5 Competititor Analysis: In order to know on what kind of way Zandberg could gain competition advantage, the student has done field researxh in 5 trendy Lounge Bars in the Netherlands, with all different style of design and target group. According to research of the Lounge bars, a bottle of wine will be purchased of an wholesaler of importer between the 6 and 9 euro’s. The Lounge bars are asking in average 4 euro’s per glass of wine and there are served 5 to 6 glasses of wine from one bottle. The student has visit Bloomingdale in Bloemendaal, expensive F&B, Lounge music, offering breakfast, lunch, dinner and is well known in the Netherlands. Remarkable, on the wine list is that Bloomingdale are offering very expensive champagnes (€85 - €475) but affordable prices for a bottle wine (€19.50 - €27.50) The wines are from Italy, France, Australia and Chili. There is no South African wine on the wine list, which is an potential for Zandberg. The second Lounge Bar is the Escape in Amsterdam, it is an affordable Lounge bar where people can order Lunch and dinner. It has affordable prices, Lounge music and is well designed. When we take a look at the wine list, the average of a glass of wine is €3,50 and an average of € 20,- per bottle. Remarkable to see is that the Escape is not serving any South African wines. The white and red wines are all from France. This is an interesting potential for Zandberg. The third Lounge bar is Jinso in Amsterdam, it is an Lounge bar which is slighty more expensive compared with the Escape. Jinso offers lunch and dinner with lounge music in the eavening and is well designed. Compared with Bloomingdale and the Escape, this Lounge bar is serving two white wines from South Africa (Nederburg and Culenburg) who are bigger wine estates compared with Zandberg. Jinso, serves also two South African red wines of wine estate Nederburg and Culenburg. The average price of a glass of wine is € 4,- and a bottle of wine € 25,-. The fourth Lounge what the student has visited is Rose’s in Arnhem. It is an trendy and cosy lounge bar with excellent combination of price and quality. The lounge bar offers also lunch and dinner. The music is relaxed with an excellent atmosphere. When we take a look at the wine list: The white wines are mostly from France, Australia and Chili and the red wines from Spain, Argentina and France. Rose’s sells only on South African red Pinotage wine. The prices are compatible with the other lounge bars; € 20,- for a bottle and € 3,50,- per glass.

78


The fifth and last lounge bar what the student has visited is the Sushi Lounge in Den Bosch. The student has chosen to visit also a sushi lounge bar, because the white Merlot is really suited by eating spicy japanese food, according to wine tourists in the wine tasting centre of Zandberg and Mr. Ridley who is educated as a chef. The sushi lounge is well desined and has a relexed and typicall Japanese atmosphere. Customers are mostly having dinner with a few drinks. When we take a look at the wine list, the wines are more expensive compared with Jinso and the Escape with an average price per bottle of € 30,- and € 4,5,- per glass. The wines are from all kind of wine producing countries. The sushi lounge has one white Chardonnay, Amandalia, Robertson and one red Pinotage from the fairvieuw estate in Paarl. Concluding: there is enough potential for South African wines in lounge bars. Especially with the Dry Rose and the first South African white Merlot, what no other lounge bar has on the wine list. Compared with the competitors, Zandberg could introduce the wine for easy € 4,per glass and € 20,- per bottle. According to conversations with sommeliers in the lounge bars which the student has visited, the wines of Zandberg is well designed and is interesting. Furthermore, lounge bars hardly selling an South African Rose. 1.6 Goal Within the next three years, Zandberg will increase the revenue by exporting the wines to the Netherlands. On this way, Zandberg aims to gain revenue of ZAR 3.290.000 (€ 346.315,79) in the Netherlands in 2012. When calculating the Euro’s and South African Rand, the student uses the following exchange rate for this business export plan: 1 Euro= ZAR 10.53 This is an increase with 365 percent at the end of 2012. This means, an increase of the revenue of approximate ZAR 797.000 (€ 83.894,74) per year. The goal is based on the domestic sales goal, which is ZAR 3.290.000 (€ 346.315,79). According to the management of Zandberg, Mr Ridley and the external analysis it is expected that Zandberg will gain the same revenue in the Netherlands as the domestic market. However, the Netherlands is a new market with more sales potential but with more risk; therefore Zandberg will take the above goal as a target for 2012.This increase will be realised by doing business with reliable business partners (importer) in the Netherlands. The importer(s) will order huge volumes and sell it to their distribution network, this consist 46 lounge bars. Due appointments with big international wine companies and organisations in the wine industry , such as the Baarsma wine group, de Bruijn wijnkopers, wijnkristal and WOSA and talked about the possibilities of entering the Dutch market, they all agreed that Zandberg has a lot of potentials in the Dutch Market. The student (accountmanager) has already appointments with specialised South African wine importers such as Wijnkoperij Bart who is interested in cooperation with Zandberg. During a period of five months, the student build an international network with importers all over the world and will visit fairs (ProWein in Dusseldorf, Germany) to network in the wine industry. This means, that the accountmanager will gain the clients by using his network in the wine industry.

79


1.7 Revenue goal The revenue will be increased in the Netherlands. Therefore, the following revenue goal is been formulated from 2010 till 2012. Year

Revenue in ZAR, € ZAR 900.000 (€ 94.736,84) ZAR 1.950.000 (€ 205.263,16) ZAR 3.290.000 (€ 346.315,79)

2010 2011 2012

Increase in ZAR,€ ZAR 900.000 (€ 94.736,84) ZAR 1.050.000 (€ 110.526,32) ZAR 1.340.000 (€ 141.052,63)

increase %

116

148

Currently, Zandberg does not selling wine in the Netherlands. Because, Zandberg want to operate actively in the Netherlands and aims a good market position in the future, will gained a large revenue increase, with in 148% in 2012. When we take a look at the goal in terms of bottles, pallets we will presume the following goal. We assume that the three types of wine have the following sale share in the Netherlands to accomplish the goal of ZAR 3.290.000 (€ 346.315,79) White Merlot 55%; it is a fancy wine and the first South African white Merlot, what the young urban proffesionals like, according to the external analysis. Dry Rosé 45%; it is a type of wine what most of all is consumed during spring and summer, according to the external analysis. •

•

Dry Rosé

Revenue goal for 2012

Production Bottles goal 2012 capacity per year

45% of ZAR 3.290.000

20 000 litres (26.600 bottles)

ZAR 1.480.500/ 35 (salesprice per bottle)= 42.300 bottles

20 000 litres (26 600 bottles)

ZAR 1.809.500/50(salesprice per bottle)= 36.190 bottles

40.000 litres =53.200 bottles per year

78.490 bottles in 2012/3= 26.164 bottles per year.

ZAR 1.480.500 (€ 140.600)

White Merlot

55% of ZAR 3.290.000 ZAR 1.809.500 (€ 171.843)

Total

ZAR 3.290.000

Cases goal(6 bottles per case) 42.300/ 6= 7.050 cases

EU Pallets goal (140 cases per pallet)

36.190 / 6 (6 bottles per case)= 6.031 cases 12.148 cases

6.031 /140= 43pallets

7.050/140= 50 pallets

93 pallets

When we take a look at the production capacity, Zandberg produces 40.000 litres of wine per year, which is engough to provide the Dutch market till 2012. zandberg will guarentee 27.000 bottles of wine per year for the Dutch market, as agreed with the management of Zandberg. According to a factsheet of shortsea.nl, there will fit 14 EU pallets in a 20 ft container. This means that zandberg has to sell 93/14= 6(.5 a half container will be transported by groupage)containers of wine before 2012 (2 containers per year).

80


1.8 Market entry strategy There are multiple options for entering the Dutch wine market. In this paragraph we will take a look what the best option is for Zandberg and the target group. The objective of Zandberg is to establish Zandberg as a market orientated winery and to build awareness of the estate Zandberg internationally of consumers who drinks the wine of Zandberg. To achieve this goal, Zandberg plans to continue with looking to market opportunities both domestically and internationally. Furthermore, building on an appropriate wine range which is based on the demands of the consumers and selectively pursue other opportunities, to leverage the name Zandberg through offering a quality wine, giving consumers an wine experience which is based on authenticity and the development of new distribution channels. In this chapter, Zandberg policy towards entry strategies in the new market is described in terms of market entry starting point, market entry strategy and growth strategies. Market entry starting point In the selection of international sales channels companies are taking a look of three starting points of Franklin Root. By using these starting points it make clear differentiation of the way companies are orientated on foreign markets. The three starting points are: naïve starting point, pragmatically starting point and strategically starting point. Zandberg is a relative small South African winery; it will be a huge financial, brand image, and logistic risk to do business in another country, especially on the other side of the world. This means that Zandberg should operate in the Netherlands with taking minimal risks. Therefore, the starting point of Zandberg by operating in the Netherlands should be a pragmatically starting point. With this starting point we will take a look at the market entry strategy for Zandberg. Market entry strategies According to the external analysis, most South African wine exporters in general initially choose to work through agents, distributors or wine importers. In the longer term, however, wineries considered other options, such as taking more direct control of the market, more direct selling or promotion, or seeking alliances or agreements. Zandberg has no experience in selling wine in new markets such as the Netherlands and does not have the financial possibilities to set up a international unit. Furthermore, South African wineries hardly cooperate with each other. The wine and marketing manager has to focus on producing and supplying quality wines and has no time and financial sources to travel a lot between South Africa and the Netherlands. During an appointment with Mr de Bruijn of de Bruijn Wiijnkopers ( wine importer in the Netherlands), the student discussed what the best option is to enter the Dutch wine market. According to Mr. de Bruijn the best option is to cooperate with a specialised Dutch importer of South African wines. Such importers has years of experience in importing wine and has all the contacts in the wine market e.g. The gastronomy and hotel sector what the target group is. This means, that Zandberg need to cooperate with an importer and using an indirect entry strategy. This means, Zandberg has a reliable Dutch business partner who sell the wine to their own distribution channels. Concerning juridical information such as contracts, see the juridical chapter. Furthermore, the student will function as a account manager from the 1th of February of 2010.

81


1.9 Strategy Typology Treacy and Wiersema have developed, according to their own business experiences a strategy typology. This typology is used to look and concentrate on what the value is for the customer (of Zandberg), on the base of the process concerning the rendering service and the interaction between (seller) Zandberg and the customer. The authors developed the following three alternatives for companies to compete in the market. • • •

Operational excellence; Product Leadership; Customer intimacy.

Every of these options ask for a specific organization configuration. However, every of the three strategies emphasize a certain dimension of (relation) value; Zandberg has to score on all the dimensions to survive. The three dimensions of value are: relational benefits, product benefits and costs. The best strategy typology for Zandberg should be Customer intimacy, in order to add value for the customer; this because Zandberg aims to be a market orientated company. In the next years, Zandberg should convert the organization structure from a transactional focused organization to a relation focused organization. This could be achieved by cultivating business relationships. In this kind of organization structure, the decisions will be made closer and focused to the client. As a result of adapting the products to the demands of the clients of Zandberg, the clients will be loyal and willing to pay for the products. This strategy should be utilized by entering the Dutch market and developing new wines.

82


2. Marketing: Introduction This marketing programme will be developed on the base of the chosen positioning. Furthermore, there will be developed an marketing programme for the lounge bars. This involves on the one hand the formulation of the marketing goals and the realization of the marketing mix will be consistent with the positioning. On the other hand, the realization of the marketing programme will make use of, and adapting of the difference in purchasing behaviour and therefore reaction of the clients of the marketing efforts. By adapting of these aspects in the marketing programme, the clients will be reached more effective and is the change that the clients the positioning recognizes will be bigger. This marketing programme is focused to design a set of marketing activities which add value for the customer on a way which is consistent with the positioning of Zandberg in the Netherlands. The following marketing programme consist the 4 p’s, also known as the Product, Price, Promotion and Place. However, these P’s are made in a seller’s perspective. We also take a look of the buyer’s perspective, because of Zandberg should focus on the buyer. The 4 C’s of the buyer perspective consist: Product Price Place Promotion

Core Benefit (customer value) Cost for the customer Convenience Communication

83


2.1 Product: The product part of the marketing mix is the most important part of the organisation; this because it is concerned on what kind of way the product is adapted on what the clients of Zandberg want. Product goal According the external analysis the (potential) clients of Zandberg want to choose from different types of wine with a good quality, moreover the consumers are more concerned about health and are not brand loyal. Furthermore, the consumers expect more in terms of packaging and innovative wines. These aspects will be taking in account of the new product policy. Zandberg should focus in the next years on producing quality wines and complete the wine range with innovative wines which is focused on the demands of the wine market. Furthermore, the existing wine range will be investigate closer, the 2005 African faces should be sold quickly with a low price. In figure 2.2 you will find an overview for expanding the wine range for the next three years. Fig 2.2 Overview wine range in 2012.

In figure 2.2 is shown the entire wine range for 2012. The other wines which is added to the wine range is researched the demands of the total wine market. Moreover, Zandberg aims to expand the entire wine range for the future. This product policy and export plan is focused on the premium and versatile wines for the gastronomy and hotel restaurants. For this future product policy is formulated a product goal for the Dutch market, which is: The product goal of Zandberg is to expand the versatile range with a Sauvignon Blanc before 2012 and producing quality wines which is focused on the demands of the Dutch wine market. In terms of the core benefit for the buyer which will be achieved with this goal is: “a complete, innovative wine range with a high wine quality”. Product strategy: The future product strategy for the Dutch market will be worked out according to the following aspects: innovation, typical usage by end users, unique competitive advantages, Product characteristics.

84


Innovation Zandberg will search actively the next three years to trends and developments in the Dutch wine market. With this on the hand Zandberg gain competitive advantage and the products will lead to a higher margin. The expansion of the wine range will be executed through a trading- up strategy. This means, that Zandberg will try to stretch out the product line above the original price range, in order to bring the wine range to a higher level. The new premium and versatile range would adapt itself on the new trends and developments in the Dutch wine market. Currently there will be searched to innovative additions in terms of packaging, labels, wine tasting which adapt on health and the quality of wine. To research the new trends and developments in the Netherlands (in the future other markets) , having contact with the Dutch business partner and arrange the international distribution it would be necessary for Zandberg to hire a international account manager who has experience in the international wine business. According to the internal analysis, the wine marketing department is too small when they want to operate in more international markets. This international account manager has to research the trends and developments of the international wine market. Therefore, he or she has to visit wine fairs both domestically and internationally. The international account manager could adapt faster on the demands of the consumers and eventually Zandberg will change in a market orientated organization. Zandberg cannot afford to hire new employees who are well educated, instead of that Zandberg could cooperate with student associations like Khaya, in order to get wel educated students who could search to new trends and developments in the market. This will cost nothing for Zandberg, the student cannot receive money because of getting an Visa. Besides researching the market, the international account manager has to focus on the competition in the market in order to distinguish from all the competition. Furthermore, the strategy typology is customer intimacy; the most important task for the international account manager is to focus on the business relation with the Dutch importer and conscious discuss and focus on operating the Dutch Lounge bars. To be innovative in the Dutch Market, the whole organisation has to be involved by this process. A suggestion is that the viticulturist, wine maker and the management of Zandberg could hand in innovative suggestions at the international account manager. A suggestion is that when an idea is being approved by the international account manager and is also launched the employee will be awarded with for example an extra bonus. The competition will create a certain internal competition, involvement of employees. Furthermore, a suggestion is to plan meetings between the management international account manager, viticulturist and the wine marketing manager to discuss about the trends and developments in the wine business and innovation. The viticulturist travels a lot to other wine producing countries and with these meetings you create more involvement. Another suggestion is that the Russian management will visit more wine fairs with the wine department in which is focussed on international wine relations like the yearly wine fair Jo’burg wine show in Johannesburg. Another suggestion is to make use of crowdsourching. With this, customers could give some input of development of new wines and innovate aspects for selling the wine. Quality Offering quality will remain an important strength and focus point for Zandberg. By producing and developing the wine, the emphasis will remain the quality. Currently, Zandberg is buying other types of wines from wineries with a good combination of price and quality. The winemaker is the 7th generation of winemaker who is always focused on the quality of wine and therefore works with the best ingredients and tools. However, by focussing more on the quality and the exclusivity of the and concerning less about the price, as it is now, the quality of the wine range will increase significantly.

85


To test the quality of the wines, a suggestion is to take some samples at random in order to test the wines at stock and take some samples before the wines will be send to the customer. When the wines enter the Dutch border the wines has to meet certain product certificates like the ISO certificate. More information about foreign intellectual property protection, see the International law chapter. Packaging An important factor of the product is packaging. Currently, Zandberg is only selling bulk packaging and bottles during wine tastings. Within the next years, Zandberg will focus more on designing consumer packaging for international markets. Zandberg will design the packaging itself and research what kind of packaging the customers want. However, the consumer packaging will be done by the clients overseas. Recently, packaging of the wines, like the cases is currently been done by another company. Product strategy Lounge bars According to the external analysis wine consumers want more wine varieties and innovation. Furthermore, drinking wine is these days normal in the Dutch culture and not anymore for elite groups. Therefore, it is a possibility to launch the dry Rosé in upper-class and trendy bars as a cocktail and giving wine a more subconscious experience. Zandberg has only to deliver the dry Rosé and the bar has to buy the other ingredients. After sales activities As analysed in the internal analysis there is currently no after sales service. Furthermore, there is no information concerning after sales on receipts, invoices ore whatsoever. This has to change within the following years. According to both internal and external analysis it is normal that someone is paying for the wines and that’s it. A suggestion is to place information on receipts and invoices in order to give clients information about the following aspects • • •

Who is responsible, when the bottles are broken What will happen if the customer do not like the wine What will happen if the quality is bad of some bottles

If a customer wants something specific, Zandberg will try to give the the customer what they need. As example, when someone wants to open a new shop or a restaurant and needs specific demands of the wines and the packaging, Zandberg will try to fulfil in there demands. If a small client has a certain specific request and it would not be very profitable, Zandberg will not realise this request. People who want to order small amounts of wine could order by the webshop within the next three years, more information about the webshop you will f ind in the distribution chapter.

86


2.2 Promotion The promotion activities will be further worked out in the following communication plan. The communication plan for Zandberg, will be written for the mid-long term which is 20092012 just like the marketing plan. First, the most important market developments will be typified, further the communication goals, strategy, choice of communication mix, budget and the communication mix will be worked out. Important market developments • •

• •

Demographic developments: increasing of older People/ education level of people Changing consumption patron: increasing ask of healthier food and food varieties and ‘tickle my senses’. People are more eating outside in restaurants People having more interest in sustainability.

Communication target group Zandberg will focus the communication on one target group in the Netherlands, which is been identified in the first chapter of the export business plan. These are the potential Dutch customers of the wines of Zandberg. The communication target group consist the lounge bars. As suggested in the product plan, Zandberg will serve the dry Rosé as a cocktail. According to tilllate.com, there are 46 upperclass lounge bars in the Netherlands. Zandberg will focus on the Young Urban Professional; in Dutch it’s called “yuppen” who are lounging on the best lounge bars all over the Netherlands. It is a group of people who want fancy and modern drinks, food in a well designed atmosphere. According to the external analysis, it is a group who is well educate,have a large social network and spend a lot of money on luxery goods. You will find yuppen in the best restaurants and bars in the big Dutch cities. The lounge bars are upcoming and mostly situated in the Randstad where the most people are living and working.

Communication goals: The communication goals which will be measured in terms of knowledge, attitude and behaviour will be measured in different ways: •

•

•

Knowledge; is concerned about the image of Zandberg. This will be measured with a yearly online survey on the existing customers. The cost of the survey is limited. Attitude; is concerned about the new image of Zandberg; innovative packaging and quality wines. This will be measured by compare the revenue of the products in the Netherlands which is branded different with the excising products. Furthermore, it will be measured with a yearly online survey on the customers. Behaviour; it is concerned on the purchase of the products and will be measured in the administration, survey of all the purchases.

Lounge bar: Knowledge: Within one year 70% of the lounge bars need to be familiar with Zandberg, after three years it will be 90%. Attitude: Within three years 75% of the lounge bars will conclude that the quality of the dry Rosé for serving in the cocktails be mentioned as “good”. Behaviour: Within three years 25% of the revenue needs to come from the lounge bars.

87


Marketing communication strategy Zandberg will focus the communication strategy on the clients who consist the young urban professional. The Dutch importer will contact the target group throughout own distribution network. However, the student who will function as an account manager and will persuade the clients with giving information about launching the dry Rosé as cocktail, innovation, authenticity and promotion activities in the lounge bar. According to the external analysis the market is currently want these aspects and therefore the client will be persuaded. The strategy is mainly focused on image awareness. Furthermore, Zandberg will giving the target group extra value by launching a cocktail of a South African winery with real authenticity and giving wine tastings to give the customers extra experience. According to Ted Business and an interview with Annette Badenhorst from WOSA, people are looking for real authentic products. Therefore, by offering a real authentic wine with fresh ingredients, people will experience the “real’’ cocktail instead of instant fake cocktails with no fresh ingredients. General statement which match with the goals and strategy: Zandberg is the specialist in quality wines. The organisation is market orientated and adapt on the demands of the market. The quality, innovation, and customer focused will be the characteristics of Zandberg Core statement: “Due meeting of your demands you are guaranteed of a qualitywine with a appropriate packaging which has a well known image” Breakdown structure of the marketing communication mix: Website: The website of Zandberg has to match with the new policy. The changed mission and vision will be the focus points and has to featured at the website. The new website will be used to give everyone in the Netherlands who are interested in wine the posibbility to experience of what a winery is doing. Currently, there is not much information about the wines and it is not really attractive. A suggestion is to give the wine consumer more feeling and experience with the wine, in order to gain extra value and distinguish from competitors. Many people all over the world have not seen a vineyard before in there lives. As mentioned before, people want to see a “’real” products and a “real” person who is selling the wine, according to Ted business. Zandberg will provide online wine educational short films produced in an authentic relaxed sense explaining the general processes involved and how the nature of the product is affected by “arcane” terms such as terroir. These short films will not be stuffy or carry an air of condescension but fun and demystifying: explained in laymen’s terms. A “vine line” will be created: A time line that chronicles the yearly life cycle of the vineyards. At “bud break” for instance the viewer can log on and watch 5 min “glimpse” into what this stage of the vineyard entails, only the main most interesting points discussed to ensure the consumer’s attention will be focused on. The consumer will be able to become one with the process all they way from the vine into the bottle in a fun informative manner. Recipes paired with available wines concerned will be prepared, not in studios but in the the beautiful winelands themselves: in the very vineyards where the varietals such as pinnotage or cabernet sauvignon are grown. These recipes will be simplified and accessible for everyone, with ingredients commonly available. This interactive educational approach to wine will without a doubt encourage satisfaction of the wines for the consumers as Zandberg offers a connection to the •

•

•

•

88


experience that the product represents. The short film based on the product offers a certain familiarization with brand without even tasting it, and the online wine tastings even more so. With the help of new technologies, people could subconsciously be part of the wine world. A possibility is to build a wine website inside the normal website, when people click at the home page, click on wine and everyone will see the wine website. In figure 2.4 is shown the suggestion of the wine website: Fig 2.4 overview wine website Zandberg

Explanation new wine website: In figure 2.4 is shown the homepage of the wine website. On the top of the website is the Zandberg Vineline situated. It is a certain timeline where people could follow the journey from a grape through the vineyard all the way into the bottle by clicking on the seasonable dots. When people are clicking on the dots, people will see a movie shot and explanation by the viticulturist ore the wine marketing manager. On the left, is shown different corners, which give people information about e.g. the winemaker, viticulture with the help of movie shots People will find a blog in the middle of the website, with updated information about the Zandberg wines. On the right, people could sign up for Zandberg’s Edu-mails. It consist educational mails, movie’s etc. in order to give people information about all the developments of the Zandberg wine. The new technology which is been used often these days on website is Twitter and Facebook. When people are clicking on twitter, it gives recent information of all the developments of Zandberg. Zandberg has also an own Facebook group, people could join the group and discuss with each other about wines, networking etc. •

•

•

•

•

An important addition could be a webshop, which will promote clear on the website. The webshop could be designed by Zandberg or Zandberg could cooperate with a webshop in the Netherlands who is selling online South African wines. More information about the website, see the distribution chapter. When entering the Dutch market, the website should be translated in Dutch and having a www.zandberg.nl name instead of www.zandberg.co.za in order to reach more people and for the brand awareness in the Netherlands. 89


The website would be used for every target group. Zandberg has a contract with Nedoweb, a South African company who designs websites.

Costs of the website The costs of the website is basd on implementing a Blog, build in a Video player and a flash time line into the new wine website of Zandberg. These costs are quoted by Nedoweb, an South African webdesign company who build the new website for Zandberg.

90


Wine tastings Zandberg will offer extra value for the wine consumers in the lounge bars. Zandberg offers tourists wine tastings in the tasting centre at the estate for years. Tourists come from all over the world to gain more knowledge and experience the South African wines. South Africa has not a wine culture yet and has not developed a palette (taste). Therefore, image awareness is very important in South Africa because people choose wine from the image of a wine and winery. According to the external analysis, this is a difference, compared with other wine producing countries that developed a palette, such as the Dutch wine consumers. By giving wine tasting with elementals which is shown in figure 2.5 it will give an extra value in terms of having more feeling with the wine and for a wine tasting, especially to Dutch consumers who are interested in gaining wine knowledge. Fig. 2.5 wine tasting elementals

91


The elementals are developed to give a consumer more feeling and taste experience. The first South African white Merlot will be introduced in the Netherlands by giving this wine elemental tasting. As shown in figure 2.5. The white Merlot will be tasted with on the pallet; tangy delicious apple fuit is well balanced with crisp acidity to make a delicately fruity and refreshing wine. In order to designing the elementals, Zandberg cooperated with Nedoweb a South African website designing company. Nedoweb quoted the following prices for designing the elemental boards.

Furthermore, this wine fresh plums with hints of white pepper on the nose. An suggestion that the wine tasting will be given in lounge bars on selected dates by the account manager. According to the sommelier.nl, the rates for specialized wine tasting company e.g. ‘De sommelier’ is € 150, - per hour. Zandberg is a small winery and cannot afford to spend much money specialised people who can give the wine tasting. Therefore, the account manager will give the wine tastings. This is cheaper and the account manager (the student) has a half year experience in giving wine tastings. The idea is when the first 50 people have bought a Zandberg wine during; they will be invited on a wine tasting seminar at the bar. After this session, consumers could book a wine tastings and there are more options for the consumers like team building, clubs, big groups who will do a wine tasting. This has a advantage for the restaurant, who has more people in the restaurants and for Zandberg it will increase the image awareness. 2010 Fifa World Cup From 11th June till the 11th of July the 2010 Fifa world cup is in South-Africa. For Zandberg it is a huge opportunity to adapt on this soccer event with in combination with the South African experience. To organize a contest and wine tickets for a match of the Netherlands and staying in Cape-Town would be to expensive for a small winery like Zandberg. Therefore a cheaper and more effective suggestion is to cooperate with a Dutch company who supplies a product such as nuts. During an meeting with Mr de Jonge of Delinuts, the student discussed about opportunities to make a combination of nuts and wines. Mr de Jonge has a lot of contacts in the food and beverage world. The idea is to sell the combination of ‘orange’ nuts in the sales channels of Delinuts which are; the off trade, industry, consumers and the food and beverage industry. Zandberg will offer the wines to Delinuts, which will cost no extra money.

92


Fairs Relevant fairs will be visited with as a goal to network for the accountmanager with people in the business and gain more image awareness. The fairs will specially be selected for operating on the Dutch markets. The first fairs will be important to communicate and exchange business cards with as much potential business partners as possible to arrange appointments. Written below you will find suggested fairs for the 2009 and 2010 year: • • • •

Foodweek, jaarbeurs Utrecht, 11 th of November 2009; ProWein, international wine fair for Europe, 21-23 March in Düsseldorf, Germany; Horecava, 11-14th January 2010, Rai Amsterdam; Easyfairs, 16-17th December 2010, Autotron Rosmalen.

Annual Client survey The accountmanager will do an annual client survey. These new survey meet with the new working method of Zandberg to be more client focused. Furthermore, by using the client survey, the communication goals could be measured up and be evaluated. The costs of a online survey is low and the results are easy to process the data. A suggestion is that the most positive results will be viewed at the website of Zandberg. Advertising For a small winery like Zandberg it is hard to invest in advertising campaigns, because it will cost thousand’s of euro’s and it is not sure that it will provide a lot of brand awareness. Therefore, a suggestion is to focus on free publicity. Zandberg has interesting subjects for free publicity such as; the first South African white Merlot, serving the wine as a cocktail and the authenticity of Zandberg wine estate. Newsletter There will bes end once a month a newsletter/action diagram (Zandberg wine news) to all the customers. By sending these newsletters to the customers, the clients will be updated of the developments of the Zandberg wines, developments in the wine market. Furthermore, it is a possibility of giving information about offers and new wines. The core communication will be mentioned in the newsletter. According to the internal analysis, Zandberg currently has no insight of the customers. A suggestion is to save all the wine consumer details during the wine tasting and other clients in order to make a client system. Samples Samples are the most important promotion activity in the wine business. Samples, which consist one bottle of wine of all the different types of the wine range, will be used to show the product to potential clients and to taste the quality of the wine. The decision of taking the wines is based on the quality of the wine, Image, design of the label and the price of the wine. Therefore, Zandberg has to invest in sending samples to the account manager in the Netherlands. The idea is to take the samples to all the appointments of potential importers in order to give the client more information about the Product. Zandberg will pay for the samples as an investment for entering the Dutch market, as agreed with the management of Zandberg.

93


Communication budget The communication method what is been used is the task method ‘’taakstellende methode” this means that the estimated costs will be used as the base for the budget. The following costs are per year(sources costs see the financial chapter): Marketing-communication tools in ZAR and Euro’s Website

Design Maintenance Elemental tasting boards Design Production Survey Annual costs Fairs Entrance fees Samples Costprice Shipment Total

2010

2011

2012

ZAR 5.700 € 600 ZAR 2.000 € 210,53

ZAR 2.000 € 210,53

ZAR 2000 €210,53

ZAR 684 € 72 ZAR 300 € 31,58

ZAR 100 € 10,52

ZAR 100 € 10,52

ZAR 4500 € 473,68

ZAR 4500 €473,68

ZAR 4500 € 473,68

ZAR 2.238 € 235,58 ZAR 7.890 € 830,53 ZAR111.988 € 11.788,21

ZAR 2.300 € 242,11 ZAR 8.000 € 842,11 ZAR 420.250 € 44.236,84

ZAR 2.300 € 242,11 ZAR 8.000 € 842,11 ZAR808.380 € 85.092,63

2.3 Price plan: When we take a look at the price factor, there is not much margin in the wine business. Wineries are forced to follow the market price, otherwise it will be hard to sell the wine or the margins are to low. Furthermore, Zandberg’s prices will be market orientated by entering the The Netherlands and based on research but are subject to increase with the accreditation of awards which seem to be prevalently in their favour. By entering the Dutch market, Zandberg will utilize the same prices as the South African prices as shown in figure 2.6 Furthermore as analysed in the external analysis importers are asking 25% margin in general and the lounge bars are putting 300%. Figure 2.6 will give an idea of what the importer and the lounge bar could for the wine in order to see what the price for the consumer is. The prices below are compatible with the competior prices in lounge bars as researched in the competitor chapter. This means that Zandberg has a competitive price strategy by entering the Netherlands. Fig 2.6 Zandberg wine prices 2009

Trade Price for importer Dry Rosé

R 35 € 3,70

White Merlot

R 50 € 5,25

Importer(25% Lounge margin) bar (300% margin) R 43.75 R 131.25 € 4.63 € 13,90 R 62.50 R 187.50 € 6.56 € 19

Consumer price per bottle R 135 €15 R 190 € 20

94


Dutch Traders require room for margin as well. The margin is based on looking what the competitors is selling the wine. Zandberg keeps these things in mind when determining prices. All aspects taken in consideration for the price are: Cost Price, Market price of comparable products, Positioning of the product, Future positioning of the product. • • • •

Price for the Dutch market By utilizing the prices as shown in figure 2.7 Zandberg will gain a profit margin in average of 43% above the costprice. Furthermore, the prices will be competitive, market orientated and both, the buyer and Zandberg will gain a good profit margin. 38According to the tax collectors office, Zandberg does not have to pay excise tax, due Zandberg suffice the following three conditions: transporting the goods directly by import, having a transport order and transport the goods to a excise goods area. Zandberg will utilize the following prices which are shown in figure 2.7 by selling pallets for the Dutch markets from 2010 till 2012. The inflation could be an influence factor on the prices in order to reduce the price or the price will rise. Fig 2.7 Zandberg pricelist for the Dutch market 2010 till 2012 Zandberg Wine Pricelist FOB:

Prices EUR

Zandberg White Merlot 2009 Zandberg Dry Rose 2009

1 pallet 2 pallets 3 pallets 4 pallets 5 pallets € 4,50 € 4,41 € 4,32 € 4,23 € 4,14 € 4,05 per bottle, FOB € 3,15 € 3,09 € 3,02 € 2,96 € 2,90 € 2,84 per bottle, FOB

International payment To have payment conditions and to cover the risk by entering the Dutch market, Zandberg should use a Letter of Credit and a bill of exchange. With these papers Zandberg will make use of the secure ness of the bank of Zandberg and the buyer. Both banks will ensure of spreading the risk of the products. Because the distance is huge between the Netherlands and South Africa and the risk of sending the products on a containers ship it is important to ensure of receiving the money. This will be achieved by using a Letter of Credit and a bill of exchange. Furthermore, to ensure the guarantee Zandberg should make use of advanced payment conditions, 50% of the invoice has to be paid in front and 50% has to be paid after receiving the goods. According to Wosa, These conditions are is often used in the wine business. Exchange rate Because Zandberg deals with international trade, we will take a look at the fluctuations of the exchange rate, as example during the World Cup. According to Simon Ridley, CFO Standard Bank Group the South African Rand will remain strong untill during the World Cup, after the world cup it is expected to weaken. Concerning export, Zandberg has two choices: either to stick to the price it would receive in Rands meaning the prices in Europe will drop. The second choice is to keep the prices as they were in Euro’s, meaning Zandberg will get a higher price in ZAR for the wine, increasing its profit margin. A suggestion is to keep the price as they were in Euro’s in order to increase the margin. The choosen price reflects the chosen strategy and positioning. Furthermore, the prices are competitive and Zandberg

38

Dutch tax collectors office and EVD 95


expext that the clients still will buy the wine, otherwise Zandberg can adapt the price to the competition. Discount policy Currently, Zandberg utilize no clear discount policy. Discounts are discussed with the customer, according to the volume of the order. When taking a look at the new situation, Zandberg need a clear discount policy. Due, entering the Dutch market there will be send large shipments to the Dutch importer. There will be negotiated about huge amounts of volume. According to the Trade prices in figure 2.7 Zandberg will give a discount of 2 percent per pallet with a maximum of 10 percent, which will be revised every year. This discount policy is progressive and based on to tempt the importer to buy more pallets per order. Zandberg can afford only small discounts and therefore it will start with 2 percent.

2.4 Distribution plan: In this plan we will take a look at the distribution aspect. The distribution will create a physic connection between Zandberg and the consumer who eventually will consume the wine. When Zandberg organize the distribution well, it could eventually lead to a competitor advantage. In the following chapter we will take a look at which decisions Zandberg has to take in terms of channel management The clients of Zandberg want concerning distribution especially the value of convenience of ordering the products and the delivery time of the products. On the other hand, the consumer desires more a value of availability. For the new distribution policy is the following distribution goal being formulated: The distribution goal of Zandberg by entering the Dutch market is to realise a high distribution intensity to the lounge bars.

Distribution strategy Due using the push strategy, Zandberg will try to ‘push’ the products through the channel. Zandberg will try to gain a image and quality preference, when Zandberg achieve this, there will be created a certain ask for the products. Zandberg could use trading margins, discounts and effort of the account manager. Furthermore, the above distribution goal is achievable due recruit intensive new clients in the Netherlands. The products of Zandberg could be typified as convenience goods and will be distributed intensively. Achieving the goal In order to make this goal operational, Zandberg will deliver the target groups intensive. Zandberg will deliver the wines through the indirect distribution channel as mentioned in the market entry strategy. The importer of Zandberg wines will distribute the wines further. The wine importer could sale the wine first to a wholesaler or directs to the target group, the importer is responsible for taking this decision. The new distribution structure is shown in figure 2.8. Organizing this huge shipments will cost internal no extra problems. Mr. Ridley has experience in arranging all the export documents and organize the transport of the wines to the harbour.

96


Fig. 2.8 distribution Zandberg ‘supply chain’

Indirect Channel Producer (Zandberg) Bottling factory

Warehouse

Dutch Importer

(Wholesaler) decission of importer On trade, Lounge bars and Liquor stores

Incoterms In terms of time line, it will cost a day to load the wines into a truck and transport it to the harbour in Cape Town. According to CapeGrape, an South African transportation company it cost ZAR 2.750 (€ 289 ) to transport the wines from the warehouse to the harbour, inclusing insurrance. The wines will be transported by sea freight in a 20 or 40 ft container. According to the external analysis, this is the best option for Zandberg. However, the samples will be transported by air freight. It will take tree to four weeks to transport the container by sea freight from Cape Town to the dutch harbour in Rotterdam. The container will be picked up by a truck and transported to the delivery address. Both parties have not to fear In terms of perishable, wine could be preserve for years.Zandberg will deliver the wines from the warehouse to the harbour in Cape-Town. Therefore, it is important to take a look at in these standard definitions. Incoterms make international trade easier and help traders in different countries to understand one another. These standard trade definitions that are most commonly used in international contracts are protected by ICC copyright. The incoterms consist of 13 different standards, 6 of the incoterms are focussed on sea freight. In terms of choosing an incoterm, Zandberg will utilize the incoterm FOB. ‘Free on Board’ means that the seller delivers the goods pass the ship’s rail at the named port of shipment. This means that the Dutch importer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term require that the clear the goods in Rotterdam, costs are for the buyer. Furthermore, this term can be used only for sea or inland waterway transport. According to the international chamber of commerce, the wine business use FOB in general. Furthermore, Zandberg has already send some shipment before and uses FOB.

97


Distribution goals per target group

Lounge bars There are 46 lounge bars in the Netherlands who serves cocktails to consumers who prefer innovative and new drinks and is willing to pay for it “yuppen”. An suggestion is to approach the first year big and well known lounge bars such as Bloomingdale, Bitterzoet and Escape in order to accomplish the distribution goal. In the diagram below is the distribution goal formulated. To serve the Dry Rosé as a cocktail, it will be a unique product and according to Bernadette Badenhorst of Wosa, there are huge potentials to sell the Rosé as a cocktail in lounge bars. Furthermore, the white Merlot will be introduced by giving wine tastings of the white Merlot.Therefore we assume that 70% of the lounge bars will serve the cocktail at the end of 2012. Zandberg can not afford to promote the new product on a wide scale. The account manager has to approach all the lounge bars itself. Because it would be hard to approach every chain and lounge bar, the goal for 2010 is that 10 of the 46 bars will sell the dry Rosé. This will be sligtly increased every year, this because the account manager will build his network and have more expierence of contacting new clients.

Lounge bars

Lounge bars

Distribution goal 32 lounge bars 2010 10

2011 22

2012 32

3 Sales plan In this plan we will take a look at the sales part of the export business plan. This plan consists the sales targets, who the client groups are and the sales process. Sales targets As mentioned before Zandberg aims to gain revenue of ZAR 3.290.000 (€ 346.315,79) in the Netherlands in 2012. This is an increase with 365 percent at the end of 2012 This means, an increase of the revenue of approximate ZAR 797.000 (€ 83.894,74) per year. According to the external analysis, Zandberg has an marketpotential of € 766.572,31,- ( ZAR 8.072.006,42) in the lounge bars. To achieve this goal the account manager and the importer has to acquire new clients actively. The following targets are formulated per target group in order to achieve the revenue goal:

Target group Lounge bars

2010 ZAR 900.000 € 94.736,84

2011 ZAR 1.950.000 € 205.263,16

2012 ZAR 3.290.000 € 346.315,79

98


The above figures is based on the total goal, divided by the target group and per year. We will take a look what Zandberg has to sell per lounge bar per year to achieve the sales target:

Target group

2010

2011

2012

Lounge bar

ZAR 900.000/10 lounge bars= ZAR 90.000 € 8.547

ZAR 1.950.000/ 22 lounge bars= ZAR 88.636,36 € 8.417

3.290.000/ 32 lounge bars= ZAR 102.812,50 € 9.763,77

Client groups The goals concerning acquire the wines to the sales channels are formulated in the distribution chapter. Currently, the clients are not divided by an ABC-analysis. A suggestion is to divide the customers in A, B, C groups in order to work more focused and more efficienthis process has to go step by step. In the diagram below you will find the goals for the A, B, and C division. Zandberg will start with dividing the client groups at the beginning of 2010, this because in 2009 Zandberg will get the first clients in the Netherlands.

Time Juli 2010 December 2010 Juli 2011

Goal Dividing the clients in big and small groups. Specify to four client groups Specify to five client groups

A suggestion is to segment the groups according to the following criteria: • • • •

Turnover sales Margin The amount of new ‘innovative’ products what the clients buys.

Sales process Zandberg will use personal sales and the importer who will try to sell the wines to the Dutch target group and eventually to the wine consumers. Account manager The account manager needs to focus first on finding a reliable business partner in the Netherlands. In cooperation with the importer, the account manager will start with acquire of lounge bars. In terms of time line, the account manager will be acquiring clients for 30 hours a week. The other hours of the week will be filled with giving wine tasting in lounge bars and communicating between Zandberg and the importer. The account manager will be responsible for all the communication and arrangements between Zandberg and the importer. When Zandberg introduces new innovative products, the account manager will inform all the Dutch clients and discuss the developments at Zandberg. The acount manager has agreed with the management of Zandberg, that he is appointed as Chesterfield Group Holdings T/A Zandberg’ offcial agent in the territory of the Netherlands and may negotiate in alimited capacity on zandberg’s behalf in the matter of wine business in the above aforementioned territory for the time period of 1 year existing from 01/02/2010 until 01/02/2011. This contract will be revised every year.

99


In terms of salary, the account manager will receive a salary of 10 percent of commission of the wine what will be sold to the Netherlands, as agreed with the management of Zandberg. Cooperation with importer The importer will be responsible of selling the wines to its own sales channels. Zandberg will look for an importer who has a lot of connections in the market and having experience in importing wines for years. The student(acount manager) has build an international network during five months, the acount manager will approach the following specialised South African importers for a cooperation: •

L’ Exeption Cordier

L'Exception Lenselink is founded in May 1997. L'Exception Lenselink importing, selling and distribute quality wines from al the important wine producing countries from new producing countries and old producing countries. Innovation and tradition are the spearheads of the company. L'Exception Lenselink want to build an reliable business relationship with business partners and organise therefore business trips to wine producing countries. Fourcroy •

Fourcroy is founded in 1980 and is specialised in importing wine from all over the world. The company is situated in Bussum and operating in the on trade, bars etc. The spearheads of the company is quality and cooperating with NYK, an specialised wine distributor to maintain the quality during transport. The importer is interested in wineries who can offer an wide range of wine in different price categories. Kwast Wijnkopers •

Kwast Wijnkopers B.V is founded in 1978 by J.J.C Kwast. The goal of the company is to offer quality wines for an affordable price. For years the company was focused on traditional wine producing countries but is focused also on new producing countries these days. The importer sells the wine towards winetraders and F&B market. These days, Kwast Wijnkopers are one of the biggest and important importers of the Netherlands. Wijnkoperij Bart •

Henk Bart is leading a traditional, flexible wine import company together with a team of 40 enthusiastic people. They bring quality and character directly from the producer to the Dutch hotels, catering , F&B industry and the corporate market. Most of the wines are imported on a exclusive basis. At almost all levels in the Dutch Hotel and catering industry you will find the wines of Wijnimport J. Bart. The range of wines has been selected in such a way that the cosy cafeteria 'at the corner' can find a suitable house wine and the exclusive star restaurant can present a well balanced wine list. Wijnimporter Bart cover all of The Netherlands. The main office is the Fort Benoorden Purmerend situated in Zuidoostbeemster. This is an old military fort. The premises in Amsterdam at The Food Center is being managed and supplied by the main office.

100


4 International law and customs Introduction In this chapter we will take a look at the process of sending the wines from South Africa to the Netherlands. As analysed in the external analysis Zandberg has basically to obey the rules of the EU. Export procedure Zandberg has to deal with a certain export procedure for exporting the products to the Netherlands, according to the 13 steps of WOSA. 1. Register as an exporter at (Sars, Wine online,DTI and SAWIS) Zandberg is already registered at the above organisations, However Zandberg need to look at the contracts for updating every year. 2. Receive first export enquiry this will be sending, the prices, wine portfolio etc to the potential client who is interested in the wines of Zandberg. 3. Sending Samples and if required merchandising. In general in the wine industry, the buyer wants to taste the wine and take a look at the label. Zandberg will send 15 boxes a year to the account manager for samples. 4. Sending quotation (proforma invoice) Zandberg need to send a quotation with the listing the products, prices, quantities etc. 5. Negotiate the terms and receive purchase order The buyer will negotiate about the terms and the last price conditions with Zandberg and the order is placed. 6. Notify the suppliers and shippers In this stage Zandberg need to inform the transporters and the shippers to arrange the logistics. 7. Get an export certificate of the Department of Agriculture Zandberg need an export certificate of the Department of Agriculture, this is required by the law and the customs by exporting the wines. 8. Pack container, move to the harbour In this stage, Zandberg need to pack the wines from the warehouse and transport it to the harbour. An suggestion is to use a freight forwarder, to handle the documentation, booking of space and land movements. Once the consignment is packed and sealed, the declaration of loading must be completed and submitted to the department of Agriculture. 9. Submit exchange control documents to the bank For exports to the value R 50.000 or more, Zandberg need to submit an Exchange Declaration is and a commercial invoice to the bank of Zandberg for attestation. 10. Customs and excise clearance Zandberg need to complete and fill in The customs and Excise documentation, Customs Bill of Entry. When the freight forwarder has delivered the goods to the carrier and obtained a transport document as proof of receipt, he can arrange for customs clearance. 11. Transport by Sea the wines of Zandberg will be transported by Sea, in general this will take 16 to 20 days for it arrive in the Harbour of the Netherlands. Once the ship is sailed, the shipping line or forwarding agent must be send a shipping instruction, upon which the shipping line will issue a bill of lading or waybill.

101


12. Offload container, move to buyer’s premises The land arrangements of the buyer’s side are usually his own responsibility. In this Case Zandberg Uses Free On Board. This means that Zandberg is responsible for deliver the goods to the ship and the buyer will be responsible for the rest. He will have to clear the consignment through the Dutch Customs. The documents described in the various sections will have been forwarded to the buyer while the wines where in transit. 13. Payments The buyer will pay the invoice after receiving the goods. Zandberg ask in terms of payments conditions 50% in front and 50% after receiving the goods.

Duties/Taxes Zandberg has to pay import duty.It is only applied on goods imported from a country outside the European Union (EU). The following tariffs are indicative only at the time of this report and any rates should be confirmed with Dutch Customs authorities. Furthermore, there are no quotas .Every wine merchant needs to be registered with the Product Board Wine.

Insurance In terms of insurance of the wines during transportation, Zandberg will cooperate with a FENEX shipping agent in agreement with the buyer. This is a specialist in the logistic aspects of sending goods all over the world. In this case, the incoterm is FOB. This means, that the buyers will be responsible for all the insurance of the wines. On the other hand, a suggestion is to have transport insurance. Wineries, mostly using a revenue policy what covers most of the shipments. Transporting wines will have some risks: • • • •

The value will be less, This could through damage of the pallets, robbery; Costs that are made to prevent direct damage; Costs that are made to keep the ship, freight and shipment (averijgrosse); strike and war risk and pirates, along the coast of Africa

Furthermore, Zandberg need to have an insurrance due transporting the wines from the warehouse to the harbour in Cape-Town. According to CapeGrape, an South African transport organization; the cost of transporting the goods and the insurrance is ZAR 27.500

102


5 Financial plan In this chapter we will take a look at the financial aspects of entering the Netherlands. The following financial plan is build up by making a profit and loss account for the new market. It is still uncertain if Zandberg will succeed in making deals with importers, therefore the following profit and loss account is based on a worst, normal and best case scenario. However, the student has not access to financial data of Zandberg, this means that the student cannot provide any further detailed financial plans. Written below you will find a worked out profit and loss account in terms of worst, normal and best case scenario, all the figures will be further clarified. Furthermore, this financial plan will be written for the next three years because the business plan is focused on the mid long term. Figure 2.9 Worst case scenario in ZAR and Euros

2010

2011

2012

Income Gastronomy and hotel/restaurants Lounge Bars Liquor Stores Webshop Total Income

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

Expenditures Production costs

0

0

0

0 ZAR 120.000 €12.631

0 ZAR 130.000 €13.684

0 ZAR 140.000 € 14.736

0

0

0

ZAR 5.700 € 600 ZAR 2000 € 210

ZAR 2000 € 210

ZAR 2000 € 210

ZAR 684 € 72 ZAR 300 € 31

ZAR 100 € 11

ZAR100 € 11

Salary Sales staff

Basic salary marketing manager Listing fees Marketing-communication tools Website

Design

Maintenance Elemental tasting boards

Design

Production Survey

103


Annual costs Fairs Entrance fees Samples

ZAR 4500 € 473

ZAR 4500 € 473

ZAR 4500 € 473

Shipment

ZAR 2238 € 236 ZAR 7890 €831

total

-ZAR 143312 ZAR - ZAR146900 156900 €15.085 €15.463 €16.515

Costprice

ZAR 2300 €242 ZAR 8000 842

ZAR 2300 €242 ZAR 8000 842

Figure 2.10 normal case scenario in ZAR

Normal case scenario in ZAR Income

Lounge Bars

Total Income

2010

2011

2012

ZAR ZAR 540.000 1.170.000 € 56.842,10 € 123.157,89 ZAR ZAR 540.000 1.170.000 € 56.842,10 € 123.157,89

ZAR 1.974.000 € 207.789,47 ZAR 1.974.000 € 207.789,47


ZAR 334800 €35242

ZAR 725400 €76357

ZAR 1223880 €128829

Salary

Sales staff

Basic salary marketing manager

Listing fees

ZAR 54000 €5684 ZAR 120000 €12631 ZAR 25500 €2684

ZAR ZAR 117000 197400 €12316 € 20778 ZAR ZAR 130000 140000 €135842 €14736 ZAR 41250 €4342

ZAR 61200 €6442

Marketing-communication tools Website

104


Design Maintenance Elemental tasting boards Design Production Survey Annual costs Fairs Entrance fees Samples Costprice Shipment

total

Result

ZAR 5700 €600 ZAR 2000 ZAR 2000 €210 €210 ZAR 684 €72 ZAR 300 ZAR100 €32 € 11

ZAR 2000 €210

ZAR100 € 11

ZAR 4500 ZAR 4500 ZAR 4500 €474 €474 € 474

ZAR 2238 €235 ZAR 7890 €830 ZAR 111988 €11788 ZAR 428.012 €45.054.10

ZAR 2300 € 242 ZAR 8000 €842 ZAR 420250 €44236 ZAR 749.750 €78921,89

ZAR 2300 € 242 ZAR 8000 €842 ZAR 808380 €85092 ZAR 1.165.620 €122.697,47

105


Figure 2.10 Best case scenario in ZAR

Best case scenario in ZAR Income

2010

2011

2012

Lounge Bars

ZAR ZAR ZAR 900.000 1.950.000 3.290.000 € 94.736,84 € 205.263,16 € 346.315,79

Total Income

ZAR ZAR ZAR 900.000 1.950.000 3.290.000 € 94.736,84 € 205.263,16 € 346.315,79


ZAR 558000 €58736

ZAR 1209000 €127263

ZAR 2039800 €214715

ZAR 90000 €947 ZAR 120000 €12631

ZAR 195000 20526 ZAR 130000 €13684

ZAR 329000 €34631 ZAR 140000 €14736

ZAR 42500 €4473

ZAR 68750 €7236

ZAR 102000 €10736

ZAR 5700 €600 ZAR 2000 €210

ZAR 2000 €210

ZAR 2000 €210

ZAR 100 €11

ZAR 100 €11

ZAR 4500 €473

ZAR 4500 €473

Salary

Sales staff

Basic salary marketing manager

Listing fees Marketing-communication tools Website Design Maintenance Elemental tasting boards Design

ZAR 684 €72 ZAR 300 €32

Production Survey Annual costs Fairs

ZAR 4500 €473

106


Entrance fees Samples Costprice Shipment

Total

Result

ZAR 2238 €236 ZAR 7890 €831

ZAR 2300 €236 ZAR 8000 €842

ZAR 282188 €29704

ZAR 798350 €84036

ZAR 2300 236 ZAR 8000 €842

ZAR 1451900 €152831 ZAR ZAR ZAR 1.838.100 617.812 1.151.650 € €65.032,84 €121.200,16 193.484,79

107


Income: The income of Zandberg by entering the Netherlands is based on the sales goals as described in the sales plan. Target group Lounge bars

2010 ZAR 900.000 € 94.736,84

2011 ZAR 1.950.000 € 205.263,16

2012 ZAR 3.290.000 € 346.315,79

The income in the profit and loss account is based on a best, normal and worst case scenario. Best case scenario: This scenario is based on the goals in the marketing and sales plan; these are high formulated and could only be reached in a best case scenario. Normal case: This scenario is based on 60% of the best case scenario what will be achieved, this because it is a more realistic goal. Worst case: This scenario is based on no sales in the Netherlands; the account manager will not achieve in finding a Dutch business partner and selling any wines.

Expenditures: Production costs Currently, Zandberg has a gross profit margin of 43%. Because a lot of the wine will be sold in bulk, expected is that it will turn out to be 38% for export. The production costs contain the total revenue made in export, minus the 38% profit margin. Sales staff: The sales staff what will be the account manager will earn 10% of every order what is sold to the Netherlands. This is agreed with the management of Zandberg. Basic income marketing manager The sales from export also cover half of the salary of Mr Ridley, the marketing manager. His estimated salary is ZAR 20,000, making his total salary ZAR 240,000. Half of this is ZAR 120,000. To take possible raises in account, this amount will raise by ZAR 10,000 each year. Listing fees: Zandberg’s target group will be Lounge bars. According to appointments with big franchises, Primi Piatti and Adego ask a listing fee to put your wine on the menu. Usually, this is about 5% of the total sales through the franchise. This is why the listing fees have been stated at 5% of total sales in the catering industry.

108


Marketing-communication tools: Website design: 39 Design is charged once, in 2010. This is half of all the design costs, as the domestic sales will also cover half of the costs of the website. Maintenance:40 Zandberg also pays a fee for website maintenance. This is ZAR 4000 per year, export covers half of these costs, making the costs for website maintenance 2000. Elemental boards: 41 Design is charged once, in 2010. This is half of all the design costs, as the domestic sales will also cover half of the costs of the elemental boards. For breakdown structure of the costs, see the promotional chapter. Production elemental boards: 42 The boards have to be produced physically as well. Six boards will have to be made in 2010, costing ZAR 50 per board. Costs in 2010 are ZAR 300. Expected is that boards have to be remade every now and then, ZAR 100 per year is quoted for that. Fairs: The account manager will visit four fairs during the year. Costs for these fairs are: - ProWein: - Horecava: - Foodweek: - Easyfairs:

Due to cooperation with WOSA: free Due to contacts in Dutch catering industry: free ZAR 600 (two entry tickets) Free fair

Annual survey: In cooperation with NetQ (www.netq.nl) Zandberg will do a annual survey at the Dutch clients, the costs according to the website of Netq will be ZAR 4500 Newsletter: Purchase software: Special software is needed to make the newsletters. At the website www.sendblaster.nl you can download free software to make your own newsletter. Samples: As agreed with Zandberg, the estimated samples what the account manager need to send to the Netherlands will 15 cases a year (90 bottles) these bottles will be used to show the wine at appointments with potential clients. Costs are:

•

30 bottles Dry Rosé. Trade price = ZAR 35 Cost price = ZAR 20,30

39

Nedoweb e-marketing and website design company in South Africa (www.nedoweb.com) Nedoweb will utilize the maintenance 41 Nedoweb will design the elemental boards, and quoted the costs 42 Nedoweb will design and produce the elemental boards, and quoted the costs 40

109


30 x ZAR 20,30 = 609 •

30 bottles White Merlot. Trade price = ZAR 50, Cost price = ZAR 29 30 x ZAR 29 = 870

Total costs: ZAR 2238

The amount of bottles for the following years is unknown, this is estimated on ZAR 2300. •

•

According to CapeGrape the following costs will be for sending 60 bottles 60 Bottles: ZAR 5280 Total costs for sending = ZAR 7890

110


6 Risk Management In this chapter we will take a look at all the risks of utilizes this plan. In addition to the normal risks of business, conducting business in another country adds additional risks. This plan covers the following risks; country risks, commercial risks and Market risks Country Risk The risk of political instability and/or government interference for this plan is minimal, this because both South Africa and the Netherlands has currently a stabile government. Zandberg will be doing business with the Netherlands, who is a member of the EU. Therefore, Zandberg has to obey the EU rules in terms of international trade. Currently, both the Netherlands and South Africa is in a economical recession. In terms of economic conditions, there will be moderate risk. As mentioned in the external analysis, wine is a luxury good. The risk will be that the wine sales will decline more when the economical recession is not over within the next year. Commercial risk It will be risky if the wine consumers will not like the cocktail Rose what will be served in the Lounge bars. This will lead to less sales in Lounge Bars and when this do not work it will have consequences for the image Zandberg. It is also important to recognize that the Dutch culture demand the highest quality and safety of foreign imports. It is the responsibility of Zandberg to ensure the quality of the wines. The spearhead of Zandberg is quality; the goods have to be transported by sea freight and the wines could be at sea for three weeks. Therefore, the risk of transporting the goods could have an effect on the quality and further on default, refusal to accept the goods and insolvency. If the quality of the product is affected at any stage of production or shipment the contractual agreements with Dutch clients could be jeopardized. Currency risk Zandberg has to deal with international currencies, the Euro and the South African Rand. The risk is that both the currencies could rise or decline, which has an effect on the price of the wine. This will be a moderate risk, as mentioned in the price plan chapter the currencies will change after and during the Fifa world Cup.

111

Export Business Plan Zandberg the Netherlands Final

Recommend Documents