Business model innovation : a case study on Van Loveren family cellar
Thesis (MBA)--Stellenbosch University, 2015.
ENGLISH ABSTRACT: The terms business model and business model innovation have only gained prominence over the past two decades, whilst little of the research has been applied in a South African context. The main objective of this thesis was to ascertain the reasons for success of a local business through the research and application of the themes of business models, business model innovation and blue ocean strategy to a local organisation. The subject matter of the thesis was Van Loveren Family Wine Cellar, a family-owned South African wine farm that has seen significant success over the past 15 years in a highly competitive and fragmented local market. To complete this process, it was also necessary to gain an understanding of both the global and local wine industries, and how South Africa has grown within this environment. The format of the thesis is a case study, selected because of its relevance to gaining a rich understanding of the context of the research and the processes enacted, thereby facilitating the main objectives. The case study approach also provides a tool to aid in the education of business strategy students, allowing the principles to be applied to new scenarios. The findings of the study include that there has been a shift in both consumption and production of wine from the traditional Old World to the innovative New World. This shift is being driven by new consumers of wine who are less concerned with the mystique and legacy of Old World wine, instead demanding wines that fit their lifestyles through easy drinking taste profiles with an ease of selection. This phenomenon is present in South Africa, where growth in the market is seen at lower price points. New consumers who are selecting wines that compete with existing alcohol alternatives as gateway products are driving this demand. Van Loveren launched their Four Cousins Rosé in 2000, with exponential growth experienced between 2004 and 2008, driving the product to be one of South Africa’s best-selling brands. The findings of the study were that the Van Loveren Family Cellar had positioned itself, through business model innovation, to capture the growth in new wine drinkers. Van Loveren had built a business model that provided a framework within which strategy can take on competitors. Core to their success were the long-term relationships with key buyers and the collaborative partnerships that allowed Van Loveren to utilise external capabilities as part of their own business. The success was also based on the leap of faith to enter the market in a sweeter taste profile, through the development of a brand that resonated with consumers, and in packaging that provided an attractive price point. The combination of these decisions allowed Van Loveren to capture uncontested market and grow exponentially.