BRLHARDY Case Presentation

8/10/2019 BRLHARDY Case Presentation

1/25

BRL Hardy: Globalizing an Australian Wine Co

Group No.5

Pooja Punjabi

Perwez Alam

Rupali Pawar

Sakshi Singh

Animesh Ratnam


2/25

Industry Background

Vines introduced in Australia in 1788 and by mid-nineteenth century the vine making skills as w

demand was improving

Transformation from trend of fortified wines to more of vineyards

In 1990s Australian domestic consumption was 18.5 liters per capita, 18thin the world

By 1996, 1000 wineries but 10 largest accounted for 84% share

BRL Hardy was at second position and selling under Hardy, Houghton, Leasingham etc.

By 1990s rationalization and consolidation increased the power of distribution channels

Australian wine accounted for 2% of world wine production by volume (2.5% by value)

Fashion Driven Australian wine was becoming Hot Trend and projected export potential was es

Billion

Four Key export markets: United Kingdom, United States, Germany & Japan


3/25

Company Background

Thomas Hardy & Sons and BRL followed different strategies and developed different organizations

- Hardy : Award Winning Quality Wines; Polite & Traditional Culture

- BRL : Co-operatives specialized in fortified, bulk and value wines; Aggressive & Commercial culture

History

International Ventures

BRLs efforts were quite modest when compared to Hardys history of exporting high value added products

To explore the U.K. market Hardy believed they should stop relying on just distribution channel and acquired

Gordon in 1989

To have greater access in Europe they acquired vineyards in France and Italy

All three European Acquisitions were soon under loss

BRL Hardy Merger

BRL had access to fruits, funds and disciplined management while Hardy brought marketing expertise, brands

They merged in 1992

Most of the BRL executives were at top positions. Steve Millar former MD of BRL was now CEO of the merged

Sales Revenue increased from 151.5 Mn to 375.6 Mn in 5 years & operating profit from 16% to49% (Exhibit-


4/25

New Strategy

Commitment To Quality Merger Efficiency Decentralization

Protect bulk business &

Concentrate on bottle

sales

Repositioning with

strategy emphasizing

quality branded bottle

sales

Initial focus on domestic

market to ensure merger

efficiency

Have decentralized

approach, but hold

management

accountable

Earn your stripes to

have decision making

Launching International

Stephen Davies, ex-BRL, new Marketing & Export Manager found dispersed portfolio wi

or weal presence globally

Export strategy base don strong quality brand image

From existing product portfolio, key brands were repositioned at price points varying be

level to premium. (starting from 4.49 to 27.99- Exhibit-9)


5/25

BRL Hardy initially focused on

corporate strategy by catering

responsiveness, but presently

become a truly international w

adopting a global standardizati

This shift could also be seen th

intent of centralized decision mdecentralized decision making

GlobalStandardization

Transnational

International Multi-Domestic

ECONOMICINTEGRATION

LOCAL RESPONSIVENESS

Corporate Strategy


6/25

BRL Hardy: Key Markets

Parameter US UK Germany Japan

2010 Export Forecasts

(in A$ Mn)

400, 900% growth 330, 65% growth 250 30

Popular price points Wine priced 5 or

above accounted for

48% of the market

3-5 accounted for

57% of the sales

Wine less than 2

accounted for 65% of

market

-

Market Capture

opportunity

Distant from most of

the producing

countries; opportunity

to capitalize on strong

international

distribution

Traditional European in

super-premium

segment: losing ground

at home turf

Traditional European in

super-premium

segment: losing ground

at home turf

-

UK was a part of the emerging new world trends, which marked drastic shifts in consum

Consumers appreciate Value for money, tend to go for recognisable brand or grape va


7/25

Europe Operations

Christopher Carson was appointed as UK MD and realizing disastrous situation of companies he implemented vari

cost-cutting measures, systems & policies

ROI also improved from -2.1% in 1990 to 11.9% in 1992 & to 35.7% by 1996 (Exhibit-4)

Carson highlighted need to focus on Hardy Brands, French Winemaker product and protect unstable Chilean P

Disputes emerged for marketing strategy between Carson & Miller regarding rebranding & re-labelling

Finally in 1993 re-launch with new positioning was done and was successful

Local demand for control over branding and labeling started emerging

Strategic decision to emerge as International wine company (However ,objected by various consultan

Reynella was made the headquarter with deciding on labelling, pricing & branding. Overseas role was sa

Carson and U.K. management disagreed and wanted local labelling and branding decisions.

According to him :More push strategy than pull is required. Retailers support and local labelling is


8/25

Europe Operations

BRLH Europe

The European subsidiary has marketing and distribution competence and is strategicall

has a growing market potential

The subsidiary works as a partner with the Australian management giving it a lot of aut

operations


9/25

How do you account for BRL Hardys remarkable post-m

success?


10/25

BRL Hardys remarkable post-merger success

Presence of complementary resources by BRL and Hardy

BRL: Fruits (Vineyards), Funds and Disciplined Management

Hardy: Marketing expertise, Brands and Winemaking know-how

Selection of top management who had the vision of becoming global wine comp

Balance between level of decentralization and accountability to Central manage

Overcame financial crisis by emphasising on cost cutting schemes & streamlinin

Prioritizing on doing many small things rather than few large things to mitigate t

Experienced resource like Christopher Carson who ensured sales growth in fore

Mitigation of production risk by sourcing fruits from different locations

Rebranding, positioning and labelling of the products to emphasize the global im


11/25

Lewins Theory of Organizational Change

Immediate goal to improve the financial situation and resolve operations probl

Selecting the team that can implement necessary retrenchment and position

Focus on the Decentralized approach but at the same time mitigate the risks

Concentrate on the domestic market to protect its profit share

Earn your stripes by performing to gain respect from others but being accounta

for actions

Reposition and re-launch products to emphasize on branded bottle sales

Commitment of the firm towards Quality


12/25

What is the source of the tension between Stephen Da

Christopher Carson? How effectively has Steve Millar h

their differences?


13/25

Conflict between Stephen Davies & Christopher Carson

BRL was bulk oriented seller and inclined towards centralization where as Hardy was having loc

emphasized the importance of retailer relations when deciding how to label and position the br

Davies belief: Centralized Management

Davies was part of BRL before merger According to Davies Reynella headquarter had to be global

brand owner

Too much decentralization would lead to loss of control overthe brand

Carsons belief: Decentralized M

Carson was part of Hardy Co. before mework in decentralized organizational stru

U. K. market was very different from Au

Retailers own labels dominated in U.K.

For managing progression distribution issupport is important & labeling plays a v

He didnt want to lose the autonomy ovK. market


14/25

How Steve Miller handled the differences

Millars objective from the beginning was to create a decentralized approach to expan

merged company but to still maintain management accountable

Davies & Carson were of conflicting opinion, according to Miller positive conflict is goo

organization & he was open to new & creative ideas

Carson was reporting to Davies for marketing and brand strategies whereas was subm

reports directly to CEO Steve Millar

His role in negotiation between Davies and Carson could be viewed as indicator of we

management


15/25

Should Millar approve Carsons proposal to launch D'is

Why or why not?


16/25

1. Launching of D'istinto will help BRL Hardydiversify its suppliers and maximize its

leverage as a distributor. Also sourcing frommultiple regions will reduce the weatherrelated risks.

2. Gives a consumer a different view of winewith food and hence helps in brand building.

3. Gives brand recognition, they have beenworking on brand recognition for a while.

4. For the average wine consumer.

5. In order to make up for the Australian Redwine shortage with Italian red wine

1. D'istinto might overload humanresources which is already stretched bthe rapid expansion of the company

2. D'istinto overlapped with Hardyscore offerings of Stamps and NottageHill. Hence, cannibalisation of existingbrands.

3. Miller worried about Carson loosingfocus.

4. The strength of the European salesto carry another brand while they arestill struggling with Mapocho.

Pros


17/25

VerdictLaunch D'istinto

1. BRL hardy wishes to adopt Aggregation strategy in line with its vision to bglobal brand.

2. However, considering the high potential of UK market, Adaptation for loc

is also required. Hence, we suggest that BRLH should follow a AA framew

Aggregation and Adaptation

3. In order to cater to the local market needs of Europe for average priced w

launching of D'istinto is a wise decision.

4. The problem of cannibalisation can be handled as the wine market is grow


18/25

What recommendation would you make to the organiza

concerning the conflicting proposals for Kellys

Revenge and Banrock Station? What would you decide t

Carson? As Miller?


19/25

0123456789

101112131415161718192021222324252627282930

Nottage Stamp Eileen Hardy Raynella D'instito Kelly's Revenge Banrock Station

Alternatives

Kellys OR Banrock

80% of the mark

price point

Need to launch a low-to-medium price range, quality wine brand

Price

Kellys

BRLH UK products v/s price points map


20/25

Banrock Station

-Environmentally responsible product-Good Earth, Fine Wine

-Seen as potential global brand for BRLH

-Great success in Australia. Also becamelargest selling imported brand in NewZealand

-Launch in Canada and US approved.Immediate launch proposed

-Proposed to be launched in UK at same

price points as Kellys revenge-Universally Positive reaction to BRLHsconservation efforts during planting anddevelopment phase

-Ascendancy in Brand Power, Fashionelement began to influence demand ofwine: The eco friendly image may give aboost

-Green image would have limited appealto UK consumers

-Dull label, not very attractive


21/25

Low price range

Made particularly for UK consumers

Attractive labelappealing to the youthand first time consumers

ASDA, UK grocery chainnot enthralled by KellysRevenge

Fear of decentralizing too much

Kellys Revenge


22/25

Launch BanrockStation

Drop KellysRevenge

Parent Companys management was against Paul Brownes con

Launching Kellys Revenge would mean excessive decentbranding and marketing which was against the global stratrying to achieve

Banrock Station can be re-positioned to appeal to UK comarketing campaign can be locally adapted

Kellys Image ran the risk of seeming too Australian, thus failing to attract consumers in the UK, particularly among

Kellys revenge cannot be established as a global brand, hence excessive resource usage for one particular market

Kellys Revenge Vs Banrock Station Miller


23/25

Kellys aggressive/flashy label will be good for targeting youth oconsumers in the growing wine market in Europe

Banrock had dull & colorless label design and its eco-friennot appeal to European youth

Choosing Banrock would mean Ignoring local knowledgeUK subsidiarys strengths, demotivation for UK manage

Banrock also had similar values as Distinto (warm, relaxemay be a conflict if both are launched

Banrock may also pose risk of currency fluctuation greater, pricbe difficult

Launch KellysRevenge

Drop BanrockStation

Kellys Revenge vs Banrock Station : Carson


24/25

Distintomakes a valuable contribution both in terms of money and b

as compared to Mapocho which has spiralling toward its decay

Banrock is already accepted in many countries like US, Australia and N

and gaining popularity, whereas KellysRevenge has already got negatin supermarket test and doesntseem to attract the target audience

Carson should not be too much fixated on supporting Paul Browne

Revenge and should look for better alternatives with Banrock

Distinto

Banrock Station

Kellys Revenge

Mapocho

Conclusion


25/25

ThankYou

BRLHARDY Case Presentation

Documents

Transcript of BRLHARDY Case Presentation