Strategic Analysis: Vincor's Expansion Strategy in Global Wine Market

This case study provides a strategic analysis of Vincor International Inc.'s potential expansion into the Australian wine market through the acquisition of Goundrey Wines. It assesses Vincor's current position as the fourth-largest wine company in North America and examines the rationale behind its ambition to become a global top 10 player. The analysis utilizes SWOT and PEST frameworks to evaluate the opportunities and threats associated with expanding into Australia, considering factors such as political and economic conditions, social and technological influences, and environmental concerns like climate change and water scarcity. The case study also reviews Vincor's mission statement and explores whether the acquisition of Goundrey aligns with its overall strategy. Ultimately, it provides recommendations for Vincor to ensure smooth operations post-acquisition, emphasizing the importance of addressing climatic conditions, cultural differences, and regulatory restrictions.

Running Head: STRATEGIC ANALYSIS OF VINCOR
STRATEGIC ANALYSIS OF VINCOR
Name of the Student
Name of the University
Author Note

1STRATEGIC ANALYSIS OF VINCOR
Response to the first question
Vincor has made to one of the best wine industry in Canada. There has been
considerable changes in their winemaking techniques. Wine consumption has globally
increased by 120 million cases by 2010. As the total wine consumption has increased from
37.5 billion in 2001 to 60.1 million litres in 2010[1]. This has also significantly affected the
market size for Vincor. They are North America’s 4th largest producer with leading brands in
all segments of the market. They have wineries in California, Washington, Columbia,
Ontario, Quebec and New Brunswick. Their family of estate wineries is supported by an
international distribution network, dedicated sales and marketing forces.

2STRATEGIC ANALYSIS OF VINCOR
STRENGTH
 The company has a good hold the
local market[2]
 The company has extended financial
backup
 The company has good skilled
workers
WEAKNESS
 The company is new to the
Australian market
 The company has less knowledge
about the Australian market
 The LCBO tax system is restricting
the flexibility of the company[6]
OPPORTUNITIES
 Australia being the largest wine
market gives the company a lot of
business[5]
 The company gets absolutely less or
no competition from other wineries
 The company’s acquisition of
Goundrey gives them a global brand
image
THREATS
 The company might face ethical
issues in Australia
 The company might face climatic
challenges there[3]
 The company might also face water
scarcity there
SWOT analysis of Vincor reveals that it has become the eighth largest company by
revenue collection. It also distributes and imports wine in the United Kingdom [2]. Now the
main goal of Vincor is the expansion of their market beyond the region and thus, establishing
a winery in Australia could be the next big step. Yes, it definitely makes a sense for Vincor to
try and become the global top 10 leaders in the wine industry. They have expanded their
business in the last 10 years exponentially. A considerable amount of wine which is sold at
the local wine shops is from the Vincor. Their main competitor in the market is Andrew
Peller limited [2]. However, as the company has some of the largest wine brands there sales
are always on the top as compared to their competitors.

3STRATEGIC ANALYSIS OF VINCOR
Response to the second question
Vincor has developed into the United States and is thinking of expanding their
territory in Australia.
POLITICAL FACTORS
 The company might face certain
political factors due to global
expansion.
 The foreign trade policies might
affect the company [6]
ECONOMIC FACTORS
 The per capita income of the
Australian group might be different
from Canada
 The supply and logistics might
hamper the company’s production
SOCIAL FACTORS
 The company might face social
atrocities from the rural Australia
 The company might face certain
issues as it does not know the
consumer demands
TECHNOLOGICAL FACTORS
 The company if acquires Goundrey
then it will enhance their technology
as they will get the bottling unit
along with the company.
 The company before acquisition
should also take care of the water
management plant in Australia to get
rid of water scarcity threats [3].
The pros and cons list below will help to determine whether the company should
expand or not.
The pros of expansion are:-
1. The company will get a bottling unit.
2. The company will be able to avail the resources of Australia.
The cons of the expansion are:-

4STRATEGIC ANALYSIS OF VINCOR
1. The company might face certain political pressure in setting up the new business at
Australia
2. The company might face tax difficulties.
3. Scarcity of water might affect the company.
4. As the company is new to Australian culture it might face cultural resistance from yhe
natives of Australia
According to the PEST analysis of the company there can be certain risks associated
with this expansion. As the global climate conditions are changing day by day there can be
impact on the global wine market trend. Studies have shown that the day temperatures in
Australia may increase by 2 degrees while there will be a decrease in the fresh water
availability in that region [3]. This might affect the manufacture of the company as they need
water for their production as well as to maintain their winery in Australia. If they opt to
choose to the export of wines from Canada to Australia it will be again a costly affair as the
cost of transportation will be very large as Australia is quite far from Canada. As the wine
market in United States in the third largest the company should concentrate on expanding
within it. Many studies have shown that the successful businessman focus on spots that have
less climatic risks and more profit. The United States becomes a way of sustainable
development for wine industry players [4].
Response to the third question
Vincor’s mission statement says that their idea is to build variety of wine brands that people
will love to drink. They also promote the idea of drinking wine with responsibility. They also
aim to produce Vincor named wine brands that will be marketed and sale through Vincor
management and distribution in all premium wine consuming regions. It is definitely a good
mission statement for the company as it shows the company’s sincerity and dedication

5STRATEGIC ANALYSIS OF VINCOR
towards their business. It shows how persistent the company is in reaching out to thousands
and thousands of consumers across the globe. Goundrey is a wine company in the Western
Australia. The winery had a own bottling capacity that enables it to support an export
business [5]. The CEO of Vincor, Donald Triggs felt that the takeover will really add to their
mission statement. It will first of all a global name to the company as the North American
company will be expanding in the Australian regions as well. It will also help to reduce the
transportation cost as the Goundrey wines have their own bottling unit. The other major
reasons for such an expansion could be that Australia has a reputation for finest wines and
that will also help Vincor to increase their company’s reputation.
Response to fourth question
The recommendations that will be needed by the company to have a smooth operations after
the acquisition of Goundrey is that they should be considerate about the climatic conditions
of Australia [3]. As already mentioned there is rapid climatic changes in Australia, which can
somehow affect the productivity of the company. There can also be some cultural differences
as the acquisition is from a non-Australian company. So the company should also take care of
the ethical and cultural issues of the place to have a smooth start in the company. The LCBO
regulations and restrictions can also affect the trade of the company. The company might also
have to deal with the reduced flexibility of LCBO that might also affect their sales. Thus, the
company should emphasize on using certain schemes to reduce their prices that will help
them to remain strong in the market [6].

6STRATEGIC ANALYSIS OF VINCOR
References
1. Winesofcanada.com. Wines of Canada Vincor Internation Inc [Internet].
Winesofcanada.com. 2019 [cited 25 May 2019]. Available from:
http://www.winesofcanada.com/vincor.html
2. Pinilla V. Wine historical statistics: A quantitative approach to its consumption,
production and trade, 1840-1938.
3. Mozell MR, Thach L. The impact of climate change on the global wine industry:
Challenges & solutions. Wine Economics and Policy. 2014 Dec 1;3(2):81-9.
4. Gilinsky Jr A, Newton SK, Vega RF. Sustainability in the global wine industry:
Concepts and cases. Agriculture and agricultural science procedia. 2016 Jan 1;8:37-
49.
5. CBC. Vincor buys Australia's Goundrey Wines | CBC News [Internet]. CBC. 2019
[cited 25 May 2019]. Available from: https://www.cbc.ca/news/business/vincor-buys-
australia-s-goundrey-wines-1.348920
6. Masson PR. The Competitive Position of Ontario’s White Table Wines. 2016.