Preserve the luxury or Extend the brand?

2. ABOUT THE COMPANY
Chateau de Vallois is a family owned wine making
Estate with a long term track record in quality and
reputation.

3. Classified as a Premier Grand Cru Classe meaning First
Growth in a ranking of Bordeaux wine estate to place top
tier prices on its wines.
ABOUT THE COMPANY

4. CHANGES PROPOSED
• Enter the ‘affordable luxury’ market with a branded
wine
• Target average, younger people to buy regularly
• Obtain greater flexibility
• Buy land overseas and capitalise the brand
• Sell directly to customers e.g. online sales
• Invest in new marketing and distribution channels

5. ISSUES
• Cons of chaging the brand
- Modern view and the traditional view
• No thorough ananlysis or study done in implementing
organisational change
• Cost problems
• Negitiations and Distributors
• Maintaining the brand equity

6. STAKEHOLDERS

7. Gaspard de Sauveterre
-Owner of Chateau de Vallois
• Possesses 50% of the estate
• Traditional perspective
• Worried about business sustainability for future
generations
• Must make decision

8. Clare de Valhubert
-Granddaughter of Gaspard
• Possesses 25% of the estate
• Newcomer
• Modern perspective
• Proposer of change
1. Enter the affordable luxury market
2. Sell directly to customers
3. Cpitalise the brand
4. New marketing and distribution channels

9. Francois de Sauveterre
-CEOChateau de Vallois
• Possesses 25% of the estate
• In control of the day to day operations
• Traditional perspective
1. Worried about reputation and loss of exclusivity of brand
2. Does not want to serve relationship with negociants and
distributors
3. Does not believe in investment of low quality, low priced
wine
4. High sense of tradition and family pride

10. Jean-Paul Oudineaux
-Estate Manager
• Worked 30 years for the estate
• An agricultural engineer
• Traditional perspective:
1. Does not want to make wines with other grapes
2. Believes production of two wines is enough
3. Question operations: who will make the wine?

11. NEGOCIANTS
Merchants and Dealers
• Wholesalers who buy the wine from de Vallois
• Sell and ship wine to distributors and importers
• Reputation determine the price
• Holds a good reputation with de Vallois
• Purchases wine before bottling
• Traditionalist perspective

12. Nature of Organisation

13. Famly Business
• Both advantageous and challenging
• Inherited wealth can be intimidating
• Profit goals can be secondary
• Long term cash flow perspectives
• Based on principles of trust

14. Why change?

15. • Political, Economic, Socio cultural and technological
reasons
• External and internal reasons
• Internal (cost, family pressure, losses, profit reduction
• External (increased competition, technological
development, industry in recession)

16. Why not to change?

17. • Disruption to routine is not liked
• People may fear job security
• Cost
• Strength of old culture
• Maintaining brand equity

18. Expert Opinions

19. Corinne Mentzelopoulos
Owner and CEO of Chateau Margaux
• The estate’s reputation will be at risk
• No experience in launching and capitalising a brand
with a lower price point
• Highly unaware of the mass marketing segment of wine
industries
• Company will need to compromise their time for
producing new brand, potentially damaging their
already existing wine
• Recruiting new manager could divert the focus of the
estate from Chateau de Vallois

20. Phillippe Sereys de Rothschild
Vice Chairman of his family’s estate
• Proceed with caution
• Keep exclusively branded wine independent to the
new brand
• Create two distinct business units within the
organasation
• Their marketing strategy (for the exclusive brand) should
emphasize the preservation of their brand
• Implement direct marketing, helping the estate better
understand the wine market and distribution methods

21. Recommendations

22. Boards of directors with a non family majority to resolve
the issues without biased perspectives and create an
effective business plan
1

23. Claire is inexperienced and should therefore let managers
and CEO take on the second branch whilst Claire remains
in a more suitable role
2

24. Either create their second ‘affordable’ brand as a
completely different brand altogether, not assuming its
connection to the traditional ‘exclusively’ braded wine so
as not to impact customer’s view negatively and maintain
their reputation
3

25. Create an even more exclusive brand of their wine to
positively impact customers and maintain their
organisation’s image
4

26. • There is a concern about brand equity and product life
cycle
• It is important to maintain brand equity, but maintaining
the brand equity should not hinder stop the changes in
the product line as the life cycle of a product clearly
shows that the life of a product declines after some
time and there arises a need for a “push” by
introducing some changes in the product line.
Some Basic concepts
from Kotler