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BRL Hardy: Globalizing an Australian Wine Co
Group No.5
Pooja Punjabi
Perwez Alam
Rupali Pawar
Sakshi Singh
Animesh Ratnam
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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
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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-
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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)
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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
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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
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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
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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
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How do you account for BRL Hardys remarkable post-m
success?
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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
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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
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What is the source of the tension between Stephen Da
Christopher Carson? How effectively has Steve Millar h
their differences?
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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
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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
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Should Millar approve Carsons proposal to launch D'is
Why or why not?
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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
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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
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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?
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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
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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
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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
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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
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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
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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
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ThankYou