Absolute Vodka: Defending A1.0-Executive Summary V&S Group, a Swedish Company Owned by the Government Created V&S Spirits to Produce Market and Sell Absolut Vodka Which Is the Company’S Strongest Brand (Created in

5040 Words Aug 21st, 2010 21 Pages
Absolute Vodka: Defending a1.0-Executive Summary V&S group, a Swedish company owned by the government created V&S Spirits to produce market and sell Absolut Vodka which is the company’s strongest brand (created in 1979). To maximise the brand’s market share and strengthen its competitive position, the company established a jointed venture called Future Brands LLC to distribute its products more effectively strictly in the USA, which is Absolut’s strongest market. Although the brand is the second largest premium vodka, its market share is threatened by the constant growth of the market leader Smirnoff. Therefore, V&S Spirits need to take further measures to ensure its brand’s image and market share is protected and advanced. V&S’s …show more content…
As mentioned in the report, total sales starting from 2002 until 2006 have increased steadily. Moreover, the CEO of V&S announced that the year 2006 marks the first period of time in which sales all over the world exceeded sales in the USA, which indicates that since the establishment of Future Brands, sales in the USA have represented the majority of Absolut vodka's sales (more than 50%) until 2006. While the establishment of Future Brands LLC in the USA represented a major milestone for V&S Spirits and contributed strongly to the organization’s current position, it is crucial to point out that the step can be viewed as a significant shift in its distribution policy in the country. As stated by Koch (2001), if maximisation of market share appears to depend on the development of own distribution and after sales network, the company may prefer a majority/owned subsidiary to be the entry mode into a certain foreign country. Although Future Brands LLC is not mainly owned by V&S who only own 50%, the author’s statement offers significant indications related to the case. Further, it reveals that the establishment of a wholly owned or a partially owned subsidiary (JV) for distribution can have significant implications on the market share of a company’s products rather than direct or indirect exporting. In that context, the advantages of V&S Spirit’s having a JV in the USA were further investigated while examining relevant literature. Further, the

Related Documents