Markting Environment – Australian Grape Growing Industry
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Introduction
This analysis intends to discuss the macro and micro environments that are currently impacting on the grape growing industry within Australia. IBIS.com.au defines the grape growing industry as “organisations mainly engaged in growing or sun-drying grapes from vineyards. Grape growers purchase raw materials such as herbicides, pesticides, bird nets and irrigation systems” (IBIS.com.au). The grapes are a highly perishable and seasonal agricultural product (www.winesa.asn.au). In 2006-7, of the 1.53 million tonnes of grapes produced in Australia, 1.4 million tonnes were crushed which is 93% of total grape production. The other 7% were sold to fruit wholesalers as table grapes and sultanas (abs.gov.au). Hence this analysis will mainly focus on the impact of wine grapes. There are around 8,000 grape growing vineyards in Australia, approximately 80% are owned by private enterprise and 20% owned by wine producing organisations. The grape growing industry employs more than 15,000 people directly and many thousands more in the service and supply industries which extend from the grape growing industry (www.winesa.asn.au).
Many regional economies are built on and remain largely reliant on grape production and while many vineyards have highly concentrated vineyard plantings, vineyards are widely dispersed and have become a common feature of much of the landscape of southern Australia, “South Australia accounts for 43% of the national wine grape crush” in 2006-7 (abs.gov.au).
Australian produced grape wine is highly respected globally; due largely to the extraordinary range of vineyard sites and grape varieties, together with the skills of Australian growers in producing consistently high quality grapes for the wide spectrum of consumer tastes (www.winesa.asn.au). In applying the criterion of Principles of Marketing 2006 Edition 3 to continue to facilitate satisfying exchange relationships, the grape growing industry must continue to innovate to enable the profitable supply of grapes, whilst maintaining economic and environmental sustainability in an increasingly competitive global market.
The past few years has seen the average price per litre of wine dropping. Last year it was $3.66, compared to $3.82 the previous year. In 2007 Grape production reduced half a million tonnes from the previous year (www.abs.gov.au). In recent years this was due to frost and drought (www.regional.org.au). If significant demand develops as a result in lost production this may result in price increases for grape producers, as the 2006/7 year revealed sales have increased whist production was down (www.abs.gov.au).
Micro Environment
Relevant Changes to the Micro Environment
The micro environments are the forces near to the organisations within the grape growing industry and are those which the grape growing industry will seek to manage, influence and control.
Marketing Organisation — Marketers need to provide and receive information gained from scanning the grape growing environment to and from other organisational groups, who ultimately have the same objectives, policies and strategies set by senior management (Principles of Marketing 2006 Edition 3). For example, marketers in needing to negotiate a price per tonne, say $650 which would equate to a retail price of $7.99 for a 750 ml. bottle to the consumer in the market. The accountants would need to know if this price is viable to plan future funding and releases of funds to the researchers and developers (www.winesa.asn.au). Advancements in research and development endeavoring to grow a cleaner grape, that is with less chemicals such as fungicide and herbicide, means that marketers need to persuade the resellers and consumers to make the “right decision” when purchasing, even though that may mean paying a price premium (www.regional.org.au/au).
Marketing Intermediaries —According to Principles of Marketing 2006 Edition 3 these are “firms that help the organisation to promote, sell and distribute” the grape to the final buyers. They include “resellers, physical distributors, marketing agencies and financial intermediaries” as defined by (Principles of Marketing 2006 Edition 3). Distributors and resellers are located very close to grape growers due to the grape being highly perishable (www.winesa.asn.au).
Customer markets — Applying the theory of Principles of Marketing 2006 Edition 3 the reseller, consumer and international markets in particular must be closely monitored by grape growers as their business health has a direct impact (Principles of Marketing 2006 Edition 3). Consumers wine tastes change rapidly but planting new vines to accommodate takes time and money whilst international growers are becoming more competitive with the consolidation of grape growing and wine making (www.regional.org.au/au).
Competitors — If the grape growers are to remain competitive they must be aware of the impact and opportunities arising from competitors actions, and how they will be perceived by their resellers, the wine producers and consumers that they have superior products and provide greater satisfaction than competitors, this is garnered by applying the fundamentals of Principles of Marketing 2006 Edition 3 (Principles of Marketing 2006 Edition 3). Currently the vast competition arising from international grape growers has led to reviews of the industry calling for greater efficiency and management. Australian grape growers need to collectively work together to combat the increased international competition and for future sustainable growth of the grape growing industry (www.vineyardshop.com.au).
Suppliers — According to (Principles of Marketing 2006 Edition 3) these are the “firms and individuals who provide the resources needed by the company and its competitors to produce goods and services” i.e. the wine growers to grow grapes. The grape growers main suppliers are those that provide “raw materials like insecticides, herbicides, pesticides, bird nets and irrigation systems” (IBIS.com.au).to provide water, by far the most important resource (www.winesa.asn.au).
Publics — Publics are defined as “any group that has an actual or potential interest in or impact on, an organisations ability to achieve its objectives” (Principles of Marketing 2006 Edition 3). Recently the Grape Growers Association has warned grape growers of planting too many grape vines