Casella Wines – Export Success
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1.Identify its international markets
US and North America identified
Distribution network – 44 states.
Size – initially estimated 20-30 thousand cartons to 100 thousand cartons, reality was 20 to 200 thousand.
Annual sales $3 million.
Some regional supermarkets hoping to expand to majors.
Mainland Europe
Some beginning sales.
2.Describe and analyse the reason for its international expansion
Increase sales/find new markets – domestic market oversupplied
Minimise competitive risk
Economies of scale
Cushioning economic cycle
Comparative advantage
High cost of labour and land in US.
3.Explaing the influences on this business in the global market
Political
Tensions between free trade and protection
Globalisation seeing removal of barriers
Eg. Quotas, tariffs, subsidies – statistics
Exports of wine have increased from 3% of sales to 52% of sales in 2002. this equals $2.3 billion dollars or 414 million litres
US greatest source of export growth
Australias export policy has led to major reforms in the Australian wine industry
Rationalisation of wine production leading to overall efficiency giving them cost advantages over their competitors and reshaping of distribution lines.
4th largest wine exported in the world with 5% of global market
International organisations and treaties
1994 Uruguay multilateral agreement (WTO)
Agreement to reduce protection on agricultural products (wines/grapes) by 36% by 2000
UK has the largest export market of wine
Trade agreements
US and Australia have strong trade relations and trade agreements
War in the Middle East
Weak economic conditions
Social
Consumer tastes
Global markets have been increasingly integrated
Growing