Analysis of Harvard Business Review case study. UCBX Fall 2012.

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

4.  “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

5.  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

6.  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

7.  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

8.  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

9. Strengths
Well-established prestige brand
High profit margins
Demand for first-growth wines is
strong and growing
Weaknesses
No knowledge of customer base
Marketing is outsourced to
Bordeaux wine merchants
No capacity to increase production
without weakening brand
Opportunities
Increasing demand worldwide
New type of customer: the luxury
consumer in Asia and Russia
New distribution channels,
especially online sales
Threats
French wines losing market share
worldwide
Connoisseurs tastes shifting
towards different style of wine
(heavy tannins) that aren't easily
produced in Bordeaux

10.  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?

12. • 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.

13. • 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

14.  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

15. Criteria
RelativeWeights ControlDistribution DevelopTourism
Business
IncreaseProduct
Line
StatusQuo
Marketsharelosstonewworldcountries 0.2 4 3 3 3
Verylimitedcompany'sstructure(nomarketingorsales) 0.1 2 1 2 4
Possiblebranddevaluationincaseofexpansion 0.4 3 3 1 5
Limitedsaleschannels 0.3 1 4 2 4
2.5 3.1 1.8 4.2
AlternativesChateauMargauxSummaryAssesment
RelativeIndex
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Control Distribution Develop Tourism
Business
Increase Product
Line
Status Quo
Alternatives

16. 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