Within this report I will assess and evaluate the current International Marketing opportunities of French wine company, Zie Beverages, and in particular will focus on the importation of wine into the United States. I wilIl look to ascertain both the opportunities and risks that the US market may offer to Zie and will look to address each point to achieve an optimal outcome and an effective marketing policy for the company.
Patterns, trade policies or agreements in place between France and the United States or any other selected country. In 2011 the United States become the worlds largest consumer of wine, totalling a staggering 13. % of global consumption. Further to this fact, individual wine consumption in the US has more than doubled over the past 40 years per The Wine Institute’. The US currently imports approximately 33% of all wine consumed in the country, of this approximately 14. 86% is French originated.
According to the US Department of Agriculture – Foreign Agriculture Service, the importation of French wines has increased 3. 12% from 2012-2014 to this level. Through France’s membership in the European Union, it has recently undertaken negotiation of a Transatlantic Trade and Investment Partnership (T-TIP), aimed at increasing economic ties and trade with EU ember states. • The potential impact of patterns, policies and agreements on the business and marketing opportunities.
The Trade above noted trade statistics identify a clear and increasing pattern of both US wine consumption, but also more specifically the consumer’s reliance and trust of French wine products. Whilst the US continues an upward trend of wine consumption this represents a significant marketing opportunity for Zie given that whilst the overall market continues to grow, so does the specific concentration on the product they produce. Zie will be able to on the back of this data be confident of the markets hirst for French wines and their capacity to grow in the sector.
This is furthered yet by the ongoing T-TIP negotiations in that a potential trade partnership would significantly reduce the cost and restriction on the multi-lateral importation and exportation of goods between the countries. This should in turn reduce the cost of conducting business in the USa for French wine producers, presenting an easier market entrance and increase potential for growth and development. • Identify why the United States is a better suited market place for Zie Beverages.
Given that the USA has recently increased its position to the orlds largest consumer of wine, it represents the largest available foreign marketplace in which Zie can move into. Whilst this no doubt will also bring increased competition, it also gives significant opportunity as the consumer becomes more educated and has displayed a clear preference and education around wine origination and the superior product offered by French wineries. This is evidenced by the increasing import share that French wines command.
This view can also be supported by the Wine Institutes’ figures that whilst French wines may represent approximately 14% of the import volume o the country, they also represent approximately 30% of the total imported value. Given a value to volume ratio of over 2:1 this clearly underlines an ongoing US demand for a product the consumer considers to be of a high quality and that can charge the premium price tag that comes with such a reputation.
• PEST factor, legal, cultural and e-commerce factors for business in the United States. Impact of these factors on business. Impact of these factors on international marketing opportunities. Political – Transatlantic Trade and Investment Partnership (T-TIP) Economical – If the value of the US dollar is to ncrease, it will result in an overall cost of imports which one would anticipate an increase product demand and import figures. Vise versa if there is a decease in the US dollar the cost of imports will rise decreasing product demand.
Social- As evidenced by Consumer Wine Trends: Americans Drinking More, ‘Better Wines’ 21/01/2013 by Erin Guenther (below), there is a clearly definable increase in younger generations preference to drink wine. Across all major wine consuming occasions younger generations were consistently more likely to consume wine. This identifies a clear shift and popularisation of wine consumption hrough time, which is likely to result in an increased demand for production and importation in the future.
Occasion Millenials Gen XBaby Boomers 67 + Cocktail Party87 88 79 79 End-of-Day drink at home 82 82 79 72 Casual weekday restaurant dinner 82 82 75 74 Bar or Lounge 75 71 58 39 Buisness entertaining 76 71 55 39 Takeout 58 56 40 25 Ball game or concert 48 35 21 14 Technological-Given that the social has displayed a clear trend of younger generations favouring wine, they are more likely to be technology focused. The younger generations will have expectations for the most current technologies and can be arketed to more directly through social media.
Difficulty or ease of entering and trading in the market and outline whether they operate under free trade or protectionist arangements. As indicated previously 30% of US wine is imported, therefore we can assume they operate under policy leaning toward a free trade arrangement. The US market does like to promote from within, but as globalisation increases along with immigration there is a desired market for product from “home” as well as increasing curiosity for culinary advances. Identify international market trend and needs about wines in the United States and its relevancy to business.
With the growth of internet and media technologies, information regarding foreign products is more attainable leading to a growth in specific markets. With this comes the growing trend of French wines being deemed ‘premium’ in the US. Zie beverages will be able to market their wine in the premium sector in the US, where this would not be possible for them in France. The political, financial stability and corruption risks in the United States. If an elected representative is voted into parliament who is pro protectionist, all imports will be at risk as they will place free trade barriers on imports and lace focus on local products. If prices on imports increase due to barriers there will be a drastic decrease in sales.
• The legal and regulatory requirements and trade barriers in the United States. The importer must obtain a permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB). The Federal Alcohol Administration Act (FFA) sets forth standards for regulating, labeling and advertising of alcohol. – The importer must comply with the states ABC (Alcohol Beverage Control Board) requirements. – Importers should also be aware that other agency requirements may be involved; The food and drug Administration (FDA), The department of Agriculture Animal and Plant Health Inspection Services. • How are the associated risks, regulatory requirements and trade barriers are acceptable?
The US government simply wants to protect the integrity of goods and products being imported, ultimately to protect the end consumer. • The impact of risk factors in light of international business cycles and economic conditions. In light of the political conditions faced, business conditions are likely to change significantly along with economic conditions, this is likely to pose significant risks to the business xpansion into the USA, given the current protectionist style rhetoric displayed by the new administration.
Economic conditions are likely to change in that the US will likely see an increase in the duties applied to imported goods, whilst domestically produced wines will likely be sold under favourable conditions. It is therefore important that Zie undertakes the expansion in line with current market attitudes that French produced wines are superior to local produce, are sought after as a luxury item and can ultimately sustain the price tag that increased tariffs and taxation are likely to cause.
