Group 4

1.0

A brief on Barossa Winery

Established in early 1960s by Mr. Rolf Mann in the Barossa

Valley of South Australia.
Consolidated position in Australian domestic Market of table
wines- high quality premium table wines.
Despite rapid growth in early 1980s, growth slowed down
during the 1986-1987.
Passive exporter as of now.
Domestic sales at saturation levels (Growth stagnant at 2 %)
Export Sales growing rapidly.
Phenomenal growth on exports ( 42% Growth during 1987)
Overall sales and profits are by and large flat.
The company has good marketing skills as its strengths.
Acceptance on the premium quality brands internationally.
Has an established distribution system in the domestic front.
Has a competitive advantage on bottled table wine markets .
2.0

Models on Internationalization

Barossa winerys current activities on the domestic market and the

foreign market were analysed and the following is observed.
Market - U.K.
Sales through 2 importers,Star Importers and Reid Company
during the past 3 years.
But order consistency is neither maintained nor assured,as one of
the party has changed the source.
Dependant
fully on the importers as they have no source of
getting orders from the foreign country.
Star Importers purchased up to 10,000 cases of Barossa Wines. In
1985, Reid Company started buying and purchased 18,000 cases in
1987.
Market - U.S.A.
Contacts established among all the major importers ( six Nos ) of
the country
Exports booked through 4 of the major exporters. Considerable
Sales established during the year through 4 importers during the
year 1987. ( 400 - 4500 cases over the years with 9000 cases being
sold in 1987)
Market - Canada

Exports established through sales agents since last 4 years.

Sales of over 800 cases in Ontario and Alberta

Growing Market
Rest of the world
Exports through domestic
Micronesiaand the Far EastThus.

exporters

to

New

Zealand,

A totally diversified focus on the foreign markets by Barossa.

Various models have been applied based on the above, to

evaluabvtae internationalison phase and is as given below.

3.0

OCF Model

As per OCF model, BW is having all ownership control facilities in

domestic geographies whereas the exports are relied through
other importers from foreign countries.
Hence they are yet to move from Stage I as per the model. Even if
they explore and consolidate into foreign markets, facilities need
to be established so as to move into Stage II.
STAGES
OWNERSHI
P
CONTROL
FACILITIES

INTERNATIONALISATION - OCF MODEL APPLIED TO BARROSSA WINERY

STG 1
STG II
STG III
STG IV
DOMESTI FOREIG DOMESTI FOREIG DOMESTI FOREIG DOMESTI FOREIG
C
N
C
N
C
N
C
N

4.0 Functional
Barrossas current exports are through the importers who are
approaching the company based on the product awareness.
Company as such has not established any distributor / agent in any
of the foreign markets .
Hence the model is not suitable for any analysis of the company.

5.0

TCA Model

As the asset deployment is still limited within the domestic front

and the limited exports are happening through the importers.
They are in the LOW in asset specificity and Transactions are
growing from LOW to HIGH

High

Frequency
of
Transactio
ns

External
(Distributor/Importe
r)

Bilateral Agreement
Joint Venture

One Off Transaction

Contract

International
Vertical Integration
Wholly
Owned
Subsidary
Contract
Turnkey Project

Low
Low

6.0

SCALE -SCOPE-MODEL

Asset Specificity

High

SCALE:
Thrust

Matching of cost for both domestic and foreign market.

Better price in foreign market.
Good Brand Awareness.
Growing Consumption in USA and UK .
Good Economies of scale can be achieved
Domestic market saturated
Attractive growth of exports during 1985-86 period and 198687 period.

Trigger
Global acceptance on Barrossa Brands .
Premium quality of Australian wines.
Saturation of Australian domestic market.
Favourable exchange rates - Export a more viable option.
Matching Price in both domestic and foreign Markets
Increased competition in the domestic market leading to price
wars.
Wide supply demand gap in foreign market like Canada, UK,
USA

Qn No 2

Major Triggers for Barossa Winery

More favourable exchange rate, due to the sharp fall in

Australian dollar against foreign currencies

Excess Production capability of the Barossa Winery, which

was much higher than the requirement in Australian Markets.

Due to the growing awareness on the quality of Australian &

Barossa wines

Product Favourability

Glowing reports written by wine experts on the quality of the

Barossa winery products created brand awareness in the
other countries.
Barossa had the finest grapes and the latest technology in
producing world class wine quality.
Barossa has been appreciated as one of the outstanding
companies in terms of quality of wine produced with a series
of labels by Industry analysts

Company

Barossas production capability was much higher than the

local Australian demand, thereby allowing for exporting
Barossas products.
Total of 480 million litres of wine was produced in Australia,
and per capita consumption was a mere 21 litres during 198586, hence maximum was exported.

Canada Market:o Attractive Market due to their undeveloped domestic

wine industry
o 60% Increase in per capita Wine consumption within a
period of 10 years

o In which 50% of the sales are imported wines. Also, the

EU Grapes market (80% imports) is contaminated due to
the Chernobyl nuclear incident in Ukraine in 1986
o A chance of the import acceptance for Australian
companies is high as the government selection
committee may list at least 75 new wine brands.
US Market:o It was very staggering Market for Wines. Table wines
contributed about 65% of the overall wine sales.
o More opportunities for table wines as at present it
contributed only 0.06%
o Availability of Numerous spirit agents specialized in
product line to cover the entire country through
distributors.
UK Market:o Australian companies had only 2% of the table wine
market. But the wine sales increased to 10 litres per
capita in 1986.
o Earlier in 1981 & 1984 Barossa has already imported
wines via two U.K. importers which provide better
chance to enter to this market.

Qn No 3

Best Internationalization framework for Barossa Winery

It is concluded that scale/scope model will be best suited in

internalization of Barossa winery as it covers all the aspects in
detail on each faces of global marketing. Some of the useful
parameters are;
1. Decision Making
2. Triggers
3. Thrust
They can co ordinate the marketing mix across countries and
regions and go for global rationalization. This model provides
insights keeping both long and shortterm perspective in mind.