Market orientation strategy for South African wineries

Lochner, Anelda (2002-12)

Thesis (MBA)--Stellenbosch University, 2002.

Thesis

ENGLISH ABSTRACT: The South African wine industry has rich traditions, human and knowledge resources and ideal climatic conditions for producing wines. South Africa's wines ought to be a strong contestant on the overseas market; however, this is not the case. To complicate the matter further, the market is changing even while the South African wine industry is attempting to understand the global scenario. Wine producers are faced with numerous challenges: overproduction, a changing consumer demand, increased competition between the old and new wine countries and an increased effect of marketing and branding - all of which have an influence on the strategy that should be followed. This research project investigates selected South African wineries in order to determine if their strategies, management systems and processes are geared towards creating a globally market-oriented and competitive company. The document will focus on the wineries' strategies and will continue to compare the strategy to that suggested by Winetech's Vision 2020. The methodology followed was to do a literature study of the current status of the South African wine industry, which included looking at strategy, marketing and general information regarding the wine industry. Top management members of five wineries were interviewed by means of a questionnaire. The Winetech Vision 2020 document was used as a guideline in structuring the questionnaire. The questions focused on the wineries' wine strategy and the methods or processes the wineries are following to achieve their strategy. The study found that globaJisation has seen the power of buyers increasing to the point where it is forcing suppliers to change the way they do business - that is to become market-oriented. External forces have forced the wine industry to take a stringent look at itself and how it conducts business; as how it can, in fact, deliver consistent quality brands cost-effectively. Globalisation forced the industry to see that, though it may have many strengths such as good human capital, terroir, technology, good winemaking practices, established brands and innovative products, there are some weaknesses, namely inconsistent quality of product and service, lack Designing a market orien8iion for South African Wineries of marketing and business expertise and a lack of finance, which can potentially harm or threaten its business in the global arena. South Africa will have to make some adaptations to satisfy the market demand. This will require, among other things, changing vineyards to include more premium varietals and red wines and being innovative regarding new products and new markets. Besides focusing on the domestic market, the industry will have clearly to understand the segment it is serving to be able to deliver exactly what it demands. The industry has seen some positive changes and is definitely starting to move towards producing what the market demands, which, combined with the favourable exchange rate, is one of the reasons why exports are increasing. On the other hand, there still seems to be a lack of quality regarding distribution and logistics, marketing, finance, government support, human capital and a strong South African brand. Recommendations are made as to how quality can be sustained on all levels of the value chain. This means that strong strategic change management is required to offer consistent quality of product and service - the underlying factors in the creation of a sustainable, globally competitive brand.

AFRIKAANSE OPSOMMING: Die Suid-Afrikaanse wynindustrie het ryk tradisies, menslike bronne en kennisbronne en die ideale klimaat vir die produksie van wyn. Suid-Afrikaanse wyn behoort 'n baie sterk kompeteerder op die internasionale mark te wees en tog is dit nie die geval nie. Die situasie word gekompliseer deur die feit dat die mark besig is om te verander terwyl die Suid-Afrikaanse industrie probeer om die globale scenario te verstaan. Wynprodusente staar vele uitdagings in die gesig naamlik: oorproduksie, 'n verbruikers aanvraag wat verander, verhoogde kompetisie tussen die ou en nuwe wynlande en die verhoogde effek van bemarking en handelsmerke. Hierdie navorsingsprojek ondersoek geselekteerde Suid-Afrikaanse wynverkopers om vas te stel of hulle strategiee, bestuursisteme en prosesse gerat is om 'n firma te vestig wat globaal markgerig en kompeterend is. Die dokument fokus op die wynverkopers se strategie and vergelyk dit met dit wat voorgestel word in die Winetech Visie 2020 dokument. Die metodologie wat gevolg is, was om 'n literatuurstudie te doen oor die huidige stand van die Suid-Afrikaanse wynindustrie - dit sluit in om te kyk na strategie, bemarking en algemene inligting aangaande die bedryf. Daama is daar onderhoude gevoer met die topbestuur van vyf wynverkopers na aanleiding van 'n vraeboog wat gestruktureer is rondom die Winetech Visie 2020 dokument. Die vrae het gefokus op die wynverkopers se strategie en die metodes wat gevolg word om hulle strategie te bereik. Die studie het bevind dat globalisering die mag van verkopers so sterk gemaak het dat dit verskaffers forseer om te kyk na die manier waarop hulle besigheid doen - om markgerig te raak. Eksterne kragte het die wynindustrie forseer om nousluitend te kyk na hoe hulle besigheid doen; na hoe hulle handelsmerke met konstante kwaliteit koste effektief kan lewer. Globalisering het die industrie forseer om te sien dat, hoewel dit baie sterk punte, 5005 menslike kapitaal, terroil; tegnologie, goeie wynmaakprosesse, gevestigde handelsmerke en innoverende produkte, het, daar oak bale swakhede is. Dit sluit in onkonsekwente kwaliteit in beide die produk en diens, De.o;fgning a market orientation for South African Wineries 'n tekort aan finansiele ondersteuning en bemarkings- en besigheidskundigheid. Hierdie swakhede bedreig tans hulle besigheid in die internasional mark. Suid-Afrika sal 'n paar aanpassings moet maak am die mark se aanvraag te bevredig. Dit sluit in am wingerde te verander am meer premium varieteite en raoi wyne in te sluit en innoverend te wees rakende produkte en markte. Behalwe dat hulle sal moet fokus op die binnelandse mark, sal die industrie ook moet leer am die segmente wat hulle bedien deeglik te verstaan am sodoende te kan lewer wat die segmente vra. Die industrie het al positiewe verandering ondergaan sedert 1997 en is besig am te begin produseer wat die mark vra. Laasgenoemde, in kombinasie met die gunstige wisselkoers, is die rede waaram uitvoere aan die toeneem is. Aan die ander kant is daar steeds 'n tekort aan kwaliteit rakende verspreiding, logistieke, bemarking, finansies, regeringsondersteuning en 'n sterk Suid-Afrikaanse handelsmerk. Die aanbevelings wat gemaak is, dui aan hoe kwaliteit op aile vlakke van die waardeketting volgehou kan word . . Dit dui oak aan dat sterk strategiese bestuur nodig is om konstante kwaliteit te verseker in die praduk en diens - die

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