CHATEAU MARGAUXCASE STUDY

AGENDA

Introduction Situation Analysis Problem/Decision Statement Identification of Alternatives Critical Issues Analyses Recommendations

CHATEAU MARGAUX

MISSION STATEMENT

“A brilliantly consistent wine of stunning grace, richness and complexity”, often called the most seductive and elegant of all Bordeaux wines

Greatness comes from the perfect mix of four things:

A grand terroir The right grape Variety Climate High-quality human work

SITUATION AUDIT - HISTORY

Andre Mentzelopoulos purchased the chateau in 1977

Located in the Bordeaux region, which produces the most prestigious wines in France

Officially classified in 1855 as a “first growth” (one of only 5 in the Bordeaux region)

Andre died in 1980 and his daughter Corinne (then 27 years old) inherited the estate

SITUATION AUDIT - HISTORY

Corinne hired a new General Manager, Pontallier, who in time became one of the world’s best wine experts

They transformed Chateau Margaux from the worst to one of the best first growths

Mentzelopoulos period one of the biggest achievements in Bordeaux’s history

80 hectares devoted to vines for production of red wines

12 hectares devoted to vines for white wines

170 hectares to mind the forests and meadows for the 39 cattle that produced fertilizers for the vineyards

70 production people, 4 with administrative functions

SITUATION AUDIT – BUSINESS MODEL

SITUATION AUDIT – BUSINESS MODEL

Produced an average of 150,000 bottles per year of its first wine, Chateau Margaux

200,000 bottles of its second wine, Pavillion Rouge du Chateau Margaux (grapes used from discarded grapes of first wine)

33,000 bottles of its white wine, Pavillion Blanc du Chateau Margaux

10% of grape production sold in bulk to other wine merchants

SWOT ANALYSIS

StrengthsWell-established prestige brandHigh profit marginsDemand for first-growth wines is strong and growing

WeaknessesNo knowledge of customer baseMarketing is outsourced to Bordeaux wine merchantsNo capacity to increase production without weakening brand

OpportunitiesIncreasing demand worldwideNew type of customer: the luxury consumer in Asia and RussiaNew distribution channels, especially online sales

ThreatsFrench wines losing market share worldwideConnoisseurs tastes shifting towards different style of wine (heavy tannins) that aren't easily produced in Bordeaux

PROBLEM/DECISION STATEMENT

Should Château Margaux take over distribution from the Bordeaux merchants?

Should Château Margaux add new, less expensive wines to its portfolio?

Should Château Margaux build marketing and sales capacity?

PROBLEM/DECISION STATEMENT

CRITICAL ISSUES

• France is losing wine market share to “new world” countries, such as Australia, Argentina, South Africa and New Zealand

• Connoisseurs could shift their tastes to “new world wines”

• Watching some competitors expanding

• Company has no structure besides production. No Sales, no Marketing.

CRITICAL ISSUES• All sales are made through the same channel since 1800’s

• Expanding could jeopardize Chateau Margaux’s brand

• Limited production of 200,000 bottles per year and impossibility to expand it, due to strict regulations in Bordeaux

• Market could see Chateau Margaux purely as a luxury product

• No track of final customer base

• Competitors Lafite-Rothschild Mouton-Rothschild Chateau Latour Haut-Brion

IDENTIFICATION OF ALTERNATIVES

Take more control of distribution or partner with distributors to employ a loyalty program for current customers

Develop a marketing plan for a tourism business

Increase product line to meet other consumers’ demands

Status quo

ANALYSIS

CriteriaRelative Weights Control Distribution Develop Tourism

BusinessIncrease Product

LineStatus Quo

Market share loss to new world countries 0.2 4 3 3 3Very limited company's structure (no marketing or sales) 0.1 2 1 2 4Possible brand devaluation in case of expansion 0.4 3 3 1 5Limited sales channels 0.3 1 4 2 4

2.5 3.1 1.8 4.2

AlternativesChateau Margaux Summary Assesment

Relative Index

Con

trol

Dis

trib

u-ti

on

Develo

p

Tou

rism

B

usi

ness

Incre

ase

Pro

du

ct

Lin

e

Sta

tus

Qu

o

Alternatives

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

RECOMMENDATIONS

Status quo

1. Château Margaux's brand is one of their strongest assets; why dilute it?

2. The current distribution system works well

3. Company management is tradition-bound and not ready to innovate

4. Demand is growing without action from Château Margaux

WHAT REALLY HAPPENED