Analysis of Treasury Wine Estates (TWE) Market Entry Strategies

This case study examines the market entry strategies employed by Treasury Wine Estates (TWE), an international winemaking company. The analysis covers TWE's approach to various global markets, including China, the US, and the UK, and their strategies to adapt to regional opportunities. The comp...Read More

MARKET ENTRY STRATEGIES

Treasury Wine Estates (TWE) is an international winemaking and distribution company
based in Australia. Until a demerger in 2011, it was the wine segment of the global brewing
brand Foster’s Group. The company’s business is segregated into 4 global regions: New Zealand
and Australia; Africa, Middle East and Asia; Europe; and The America. Before entry into any
new region or market, the company conducts a new market entry risk evaluation. Such analysis
entails an assessment of the probability and implications of myriad risks, covering reputational
and legal risks, through which the threat of human trafficking or slavery might be taken into
accounti.
Treasury Wine Estates distributes its wines to a variety of clients across different regions,
and it tailors its route-to-market framework by the nation to capitalize on regional opportunities.
The organization is now planning to shore up its business in China and intends to open
restaurants, wine bars and outlets for entertainment. Such move from B2B to B2C could be risky
but is one route that companies seeking to enter China need to consider. Keen on capitalizing on
this opportunity, TWE is reexamining its conventional distribution framework and making the
transition to selling the products to its customers directly1.
Another strategy used by TWE planning to enter other regional markets through its
branded stores is that of market penetration and cost. It tries to be strategic in communication
activities, brand development etc. to develop a powerful brand. Though TWE is normally
perceived as a low-cost winemaker, the company tries to position itself as a premium brand in
some regions. However, when planning to enter China, for instance, this may be a tricky
proposition. For a market in China that has a high-end consumer class, several organizations are
moving toward premium positioning. Usually, it is a decent strategy, because it can yield high
margins. Nonetheless, some customers typify TWE as a low-cost brand in its domestic
marketplace2. Hence, there could be a risk that customers of premium products become
eventually discerning and knowledgeable to be exposed to foreign products and brands.
1 Cole, Brett. “Treasury Wine Estates to Buy U.S. and British Brands From Diageo.” The New
York Times, 13 October 2015, https://www.nytimes.com/2015/10/14/business/dealbook/treasury-
wine-estates-to-buy-us-and-british-brands-from-diageo.html.
2 Perdue, Lewis. “Treasury Wine Estates & other Oz vintners boosted by Australia/China Free
Trade Agreement”. Live Oak Bank, 24 January 2017, http://wineindustryinsight.com/?p=77923.

The company also uses less capital-intensive market entry strategies like e-commerce and
digital marketing in other regions. TWE strives to scope out opportunities in the marketplaces
within the 2nd and 3rd tier towns and tries to rebrand its product lines to a luxury one. This is the
reason why it operates B2B globally but is interested in introducing a B2C brand in China for
stimulating demand via every channel and augment sales. As far as the American market is
concerned, the barrier to market entry are very low and hence the competition is high. Therefore,
TWE tries to establish a competitive advantage in the market through targeting varietal
segments, entering into strategic distribution and supplier partnerships, and differentiating itself
based on price and image3. In the UK market, TWE employs a joint market penetration strategy
because this is the only rational and economically feasible strategy.
3 Granata, Julien, et al. "Understanding the evolution of coopetition among SMEs in a wine
cluster: a social capital approach." International Journal of Entrepreneurship and Small
Business 31.1 (2017): 67-84.

Bibliography
Cole, Brett. “Treasury Wine Estates to Buy U.S. and British Brands From Diageo.” The New
York Times, 13 October 2015, https://www.nytimes.com/2015/10/14/business/dealbook/treasury-
wine-estates-to-buy-us-and-british-brands-from-diageo.html.
Granata, Julien, et al. "Organisational innovation and competition between SMEs: A Tertius
strategies approach." International Journal of Technology Management 71.1-2 (2016): 81-99.
Granata, Julien, et al. "Understanding the evolution of competition among SMEs in a wine
cluster: a social capital approach." International Journal of Entrepreneurship and Small
Business 31.1 (2017): 67-84.
Perdue, Lewis. “Treasury Wine Estates & other Oz vintners boosted by Australia/China Free
Trade Agreement”. Live Oak Bank, 24 January 2017, http://wineindustryinsight.com/?p=77923.

i