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Marketing Strategy Otilia Flandro Romanian Wines in the U.S. Market

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Outline Study PurposeIndustryRomanian WinesResearch MethodFindingsRecommendations VIN

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Introduction Recession and competition from import wines decreased local demand Second largest wine consuming country (volume) VIN EXPORT Increase in interest to export to foreign markets Open to foreign wines regardless of country of origin

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Introduction VIN The challenge: finding and creating demand for the product Marketing is a crucial complement to successfully entering the US market

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Objectives Determine what are the drivers for wine sales in the US retail and distribution Define Romanias image in the US Determine the US consumers perception about Romanian wines Determine purchase intent and price point for Romanian wines Define distribution barriers and opportunities for Romanian wines in the US Make recommendations VIN

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Outline Study PurposeIndustryRomanian WinesResearch MethodFindingsRecommendations VIN Industry

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Wine industry VIN External threat: beer, liqueur External threat: beer, liqueur Extremely competitive Surviving in this industry is tough Relatively low barriers of entry Small vineyards Multinational companies

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Climate VIN The wine belt is the stretch of land around the globe between 35th and 51th parallel of north and south latitude where the climate is favorable for growing wine grapes.

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Old World vs. New World VIN Within the wine belt, the industry distinguishes between two major regions: Old World New World N N N N N N N N O O O O N N

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New classification VIN The Old World-New World division does not include emerging wine producing countries such as China and India and does not account for particularities of Eastern European countries. Old-Old Old-New New-Old New-New O O N N O O N N N N N N N N N N O O N N O O

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Lead producers VIN Source: OIV 2011 The competitive landscape is dominated by Italy and France who have been battling for the top position in wine production. Romania fell below the 12 th position in 2010

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Production vs. consumption VIN Source: OIV 2011 Germany and United States consume more than they produce Significant consumption-production gaps in China and Russia

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Lead exporters VIN Source: OIV 2011 The top three producers are also the top exporters Export Production Australia surpasses USA, Argentina, and China in export Moldova, Romanias neighbor is a Top 12 exporter

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Outline Study PurposeIndustryRomanian WinesResearch MethodFindingsRecommendations VIN Romanian Wines

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Romanian wines VIN Pre-Communism Romanian wines served and appreciated at the royal courts of Europe Communism Quality of the wines produced was sacrificed over high yields Post-Communism Major set back and overinflated perception of the quality 19471989

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Post-Communist Romania VIN Directed to vine replanting; no marketing and business development tools Ceased because of the threat of competing with US wines

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Current situation VIN Sweet wines Bad country reputation High domestic consumption Lagging business practices Domestic entrenchment

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Export opportunities VIN

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Outline Study PurposeIndustryRomanian WinesResearch MethodFindingsRecommendations VIN Research Method

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Research method VIN Research Qualitative - 4 experts in retail - 2 distributors - 7 producers - 4 industry experts Quantitative - Web survey - 81 respondents Interviews

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Outline Study PurposeIndustryRomanian WinesResearch MethodFindingsRecommendations VIN Findings

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Drivers for sales in the US VIN Grape variety Taste/Quality Price Other factors: *based on survey results

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Price VIN $50-$60* $10-$20* *Boutique price Average shelf price: $10

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Good wine: VIN A good wine is dry, full body, slightly fruity A good wine stays with you, its memorable speaks for the place where its fromit speaks for terroir, tradition, weather Our customer is more important than our idea of good wine Source: Interviews and survey

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Grape variety VIN

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Tools to sell a wine VIN Shelf talkers In-store expert advice Packaging Naming Shelf placement In-store newsletter Tastings Story Writers/Bloggers Word of mouth

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Perceptions about Romania VIN Beautiful mountains, pastoral setting, lively folk music, friendly people, medieval castles, gypsies Castles, Transylvania, Dracula Gypsy, untouched countryside, embroidery, folk art, lambs wool, pork products, castles Very poor country, Old world charm 3rd world country, former communist block country Gymnasts Source: Survey

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Perception about Romanian wines VIN Source: Survey

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Perception clusters VIN Source: Survey New-New World Old-New World New-Old World Old-Old World

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Expectations about style of wines VIN Source: Survey

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Purchase intent VIN Source: Survey

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Purchase by location VIN Source: Survey

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Price point VIN Source: Survey

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Opportunities VIN Hipsters One grape variety Domestic grape Curiosity

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Focus on the ethnic consumer Barriers VIN Lack of cooperation Lack of cooperation Distribution Monopoly Consistent supply Economies of scale Quality Importers Price Shipping conditions Price Relationships Quality Price Abuse from Communist forms of cooperatives Relationships

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Outline Study PurposeIndustryRomanian WinesResearch MethodFindingsRecommendations VIN Recommendations

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Recommendations for Romanian producers VIN Focus on cultivating domestic grapes Work with reliable distributors who are willing to invest in promoting Romanian wines on the US market

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Recommendations for export associations VIN Collaborate with other countries on building a favorable image in the US Open collaboration between small vintners in order to reduce trans-Atlantic transportation costs Collaborate with consulates and other official economic development bodies representing Romania in the United States

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Recommendations for distributors and marketers VIN Focus on one grape Focus on restaurant and bar outlets Vertically integrate import and distribution in order to assure quality and quantity Introduce wines at shelf prices under ten dollars to allow experimentation Inform the consumer