Case Study On The Bordeaux Wine Distribution System

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1. How does the Bordeaux wine distribution system work?
The Bordeaux wine distribution system makes it impossible for consumers to purchase a bottle directly from the chateau. Around 400 merchants from the town of Bordeaux or as known as negociants are responsible for the distribution of the wine; these merchants were selected based on their previous relationship with the chateaux and their success in promoting the brand. Their main goal is to manage a market for the chateaux and ensure a wide distribution of small amounts around the world. The reason behind why the chateaux only provide small amounts to the merchants is to create scarcity for their products and drive the price higher. The merchant’s job starts with tasting the wine earlier
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80 percent of their customers were connoisseurs. In addition, they have a new emerging customer base located in countries such as the United States, China, Taiwan, and Singapore. These newer customers are seen as luxury buyers because they see buying wines such as Chateau Margaux as a status symbol. A wine such as the Chateau Margaux is reserved for special occasions, for example the day their daughter is getting married. Some customers buy the wine solely because of the shape of its bottle or it being the highest priced. The reason why Chateau should not focus on the connoisseurs only, even though they represent 80 percent of their customer base, is because luxury buyers are willing to pay more for the product as opposed to the connoisseur. However, they should still keep the connoisseur in mind not just because of their percentage, but because they are loyal customers and the ones who are most likely to continue on purchasing the product …show more content…
What should she do?
As mentioned in the case, building a customer base for direct selling would not be difficult since Chateau Margaux already knew a significant amount of the retailers, distributors, and end customers from their visits to the chateau. To solve the issue of lacking the expertise for direct selling, I suggest that they offer job positions for the merchants they usually sell to a job in their marketing/distribution team. As for expanding to lower markets or not, I think that Chateau Margaux should expand. Rather than selling 10% of their grape production as anonymous bulk product yearly, they should create a third wine with it. This wine should be targeted to the mass market with a low price. This expansion would make them reach a new market of younger generations and increase the stability of their revenue.
If Mentzelopoulos was afraid that the company would lose focus of its core competency, which is producing higher-end wine, she should think of creating a subsidiary under the mother company Chateau Margaux that produces the lower-end wine. This would allow the company to produce the lower-end wine without tarnishing its well-known

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