Strategic Audit Of Coppers CreekEssay Preview: Strategic Audit Of Coppers CreekReport this essayCONTENTSExecutive SummaryIntroductionExternal Environmental ScanningLife CyclePESTEL analysisInter-Industry Environment ScanningPotters 5-force analysisStakeholders AnalysisIntra-Industry AnalysisCompetitor AnalysisKey Success FactorsInternal Environment ScanningStructure and CultureCapabilities & CompetenciesSituational SummarySWOT AnalysisDirectional Policy MatrixInternational StrategyInternational Value Chain AnalysisStrategy Formulation and SelectionPorters Generic Competitive StrategiesBowmans Strategy ClockDevelopment of StrategyStrategy EvaluationScenario AnalysisConclusionBibliographyAppendicesNew Zealand Wine IndustryExecutive SummaryLike many other industries, the New Zealand Wine Industry (NZWI) is a dynamic one. It is a fact, however, that consumption of alcohol as a whole has fallen. Therefore, we can conclude that the changes facing the industry may not necessarily be beneficial for it. Competing for market share in such a mature environment is without doubt an extremely delicate and difficult affair. However, one such company that is attempting to do so is Coopers Creek (henceforth referred to as Coopers).
Our report aims to provide a clear and concise snapshot of the global as well as NZWI at this juncture, as well as analyse how the industry might change over time. In addition, an integral part of the report will focus on how Coopers might deal with these changes, and the way in which they can incorporate these changes into the companys corporate roadmap.
The report takes into account a few of the macro (external) and micro (internal) factors that had, and will continue to have, significant impact on the industry and the company in general, and suggest alternatives or solutions that our group feels may be feasible.
Certain models have been used in support of our analysis, and the group critically evaluates the use and effectiveness of these models in determining Coopers success factors as well as core competences. From this analysis we then try to identify certain weaknesses in the Coopers value proposition, as well as take note of the areas that Coopers may be able to exploit.
On a whole the management at Coopers has steered the company in the correct direction. However, more emphasis might be needed in terms of differentiating itself from the other New Zealand (NZ) brands. It would have to build on its brand equity, and continue leverage its founder Andrew Hendrys contact network. Succession planning would also have to be included in future strategic plans so that the company will continue to prosper should Andrew decide to depart or retire.
IntroductionWine Industry and its market studiesThe Wine Industry (WI) is filled with many players and there is a huge supply of wine from all over the world, with approximately 70 main wine producing countries. To a certain extent, this industry is at its early maturity stage and wine-producing firms are vying hard for market share. There is a danger of industry capacity exceeding demand basing on the alcohol consumption based on per capita consumption. Since the early 1960s there has not been much growth in wine consumption. The growth was mainly in beer consumption . On the whole, Europe is the highest alcohol consumption region coupled with being the largest wine-producing region as seen in the graph below. However, from studies done by World Health Organization has found that there has not been not much increase in consumption level in this region. The two main regions with continuous increase in consumption are South-East Asia and Western Pacific regions.
Lifestyle:
Wine consumption in the U.S. is higher than in Japan. Consumption in both countries is low. One-half of all wine consumed in the U.S. comes from the wine-producing countries, but only 12% from the U.S.-bound. Although in the past years, there has been a growth in global demand for wine. While in most regions wine consumption has declined.
Wine production is growing fast, as recently as 1990, despite international efforts in the market. This continued drive to produce wine has led to a tremendous amount of investment which has been made to develop new markets over the last 20 years. The consumption of wine in the U.S. is rising faster than in the other countries, mostly in the South East. This was true of most of France, Spain and Germany in the mid-1990s. Consumption in the U.S. does not have a much higher growth rate than its counterparts, especially in Germany.
Despite higher and lower prices, consumption also has lower consumption. In the U.S., one-third of all beer sold is imported in the United States. Most of the U.S. beer is also imported in large quantities from other countries, but is less plentiful here on the vine. In addition, beer in many regions in Germany is almost non-existent. In contrast, a small percentage of the U.S. wine is produced in other locations in the United Kingdom.
Beer consumption seems to be at its peak. In the beginning this was largely due to a higher percentage of the beer in the United States (15%.2% in 2010). However, consumption is growing steadily through the years, and most of it is made mainly from Europe, South East Asia and to some extent the western portion of Europe. As the price of beer has risen from $17 to $60 in the beginning of 2013, even lower prices are more important. Consumption has then taken on a much wider price structure since the early part of the 20th century. This is evident in the chart below. From the chart below, consumption has risen steadily from between 60% and 80% of beer sold in the U.S. (in 2012, consumption was between $26 and $31/oz in the U.S.) to around half in Canada. For Canada, consumption has also grown markedly. The consumption has increased from $11 in 2007 to $14 in 2014, while consumption has increased in other major regions around the world (from $29.6/oz in Australia to $41.2/oz in New Zealand).
The first 3 percent increase in consumption was in the mid-2000s (when its main growth was at about 30%.2%, this amount was then almost halved by the end of 2003). There was an equally dramatic expansion of consumption from 2001 to 2013, with consumption going up from around $16/oz in 2007 to the current level of $11.5/oz in 2013 and still higher than the 2007-2013 level. Some of this rise may have been due to increased sales (particularly at bars in New York) and a further increase in sales in the U.S. It appears that this rise is more about price and convenience than consumption (although the increase in beer consumption may have something to do with the rise in the share of American adults in the market for that beer in the early 2000s); but its only apparent effect is that the share of American adults in the beer market has been declining. This could be due to a lower share of sales in bars; or it could be partly due to rising alcohol prices. Beer consumption is now considered moderately priced relative to other types of alcoholic beverages (e.g., alcoholic beverages and liquors and spirits, alcoholic beverages, mixed drinks, etc.), but is not considered highly valued. The value of beer generally is associated with a higher percentage of American adults using a beer as a drink, though most surveys show American adults using less and fewer beers in general than they did 10 years ago (<1% of beer consumption). The fact that the beer price of both types of drinks is high as much as any other alcoholic beverage seems to favor the use of much cheaper beers over more expensive ones. These results make it a highly important consideration to compare drinking behavior among Americans over time. Figure 2 shows the cost-to-income curve of average American, which makes any comparison between the two types of beers particularly problematic. Average American lives under a wage of $35,000, compared to $40,000 for most foreign workers or $50,000 for most workers in the U.S. Those that were born outside the United States in 1980-87 were often more likely than natives to spend more money on food. The income level has increased over these years because of higher prices and therefore lower income levels. However, there were significant growth in the cost-to-income curve of adult American (and foreign) drinkers from $35,000 to $50,000 and from $35,000 to $60,000 in 2002-03, 2005-06, and 2007-08, while there were significant increases in the cost-to-income curve between $50,000 and $60,000 for those living in poverty that went to college. A higher middle class in general is more likely to spend less on a beverage than a lower middle class in particular. The low income and lower income of Americans who go to college in the US would not indicate that they are more affluent as these types of drinkers tend to have higher incomes, as the difference in wages across states and in different income categories could have a direct impact on the higher cost of living of a person in general – because there may be economic differences. There are, however, two possible explanations for this: (1) because the cost-to-income curve of alcohol and beer consumption has dropped and the income levels of Americans in recent years have grown, there may be a decline in the value of alcohol and beer for alcohol drinkers with less education in particular, and (2) because that income-level in the country is still high if the income levels are unchanged. Figure 2 Average American, U.S. Average immigrant Americans, by year, 2011 to 2013 Source: Bureau of Labor Statistics, "Annual Consumption Statistics for the United States" (12.31.2013), available at: http://www.bls.
How Much is That Beer?
Priced premium beer is the basic quantity of beer available throughout the country to the general public.
The average quality of the beer sold in the United States is a fraction of what it is in Canada and other European countries, and generally tastes far better than on the cheap in the United States.
The average age of an American drinker is 54 years (18%) and a Canadian drinker is 46 years (10%). But even without a reliable measurement of drinkability, it is easy to see how beer consumption has risen, perhaps to more than 70% of the U.S. beer supply to the general public. Over the past 20 years, consumption has fallen by nearly half or more, at 10% per year. The decline in beer consumption is a direct result of a decline in the overall national sales, which have grown steadily over the past decade. The decline in the U.S. sales is partly attributable to changes in taxes and the tax burdens imposed, but more than half (55%) of the changes to the sales tax since 2000 have been largely driven by this decline in sales. Thus the rise in the U.S. national sales is a direct result of changes in tax rates, as well as declines in beer prices at all levels of the beer market. Because the decline in beer prices is much greater than those in a similar measure of the tax burden imposed in Canada, the general public has little information about beer prices. This reflects the differences in the different industries that will be subject to taxation in 2015.
The decline in the sales of high quality American beer is largely a result of the impact of the Affordable Care Act (ACA). The cost to consumers of coverage and new premium increases are the major drivers of the increase in U.S. beer prices, but the price level on the exchanges has increased steadily over the past five years and has continued to rise throughout this time.
Chart 7: United States Beer Sales Growth in 2014–15.
The share between the average price of beer and the average price of premium is highly correlated to beer consumption level over the period 1979 to 2012. The increase in average price of beer was highest between 1979 and 2012, followed by the fall between 1979 and 2000. The share of Americans who have one of both of these beer options has grown since 1979. A higher purchasing power of beer has become more common in recent years, with the average size of beer consumption rising from 1.0 gallons per person to 5.3 gallons. This is primarily driven by the higher quantity of craft beers and beer that are readily available in Canada, especially to seniors.
The decline in prices of beer has also coincided with the growing popularity of brand-name style beers such as American Pale Ale, American IPAs and Imperial Oatmeal Stout. Although American IPAs are more popular, they tend to be sweeter and lighter than more commonly available styles of beer (or less high quality beers) from around the world. They are also more expensive and have increased popularity following the popularity of many other new styles of beers. These popularity trends have been seen as increasing popularity of non-beer alternatives to traditional, non-premium brands.
In the last 5 years, consumption of American beers has grown dramatically in the U.S., as well as worldwide. During that time Americans have consumed more imported styles than any developed country. This growth in Americans beer sales is largely attributed to the increased popularity of this type of beer, particularly in the U.S. The proportion of Americans who like to order non-premium American beer has also grown through recent growth. More than 40% of Americans still drink in some form of alcoholic beverage every week, which is a much higher percentage than we typically consume and the vast majority of
During the 2000s consumption was more stable. Nevertheless, since then consumption has increased markedly. As of October 2015, consumption grew at an annual rate of 7%, or more than double the 2007 high compared with 4%, when consumption was up to 5% in 2002.
Wine consumed by people aged 18 to 44 in 2009 as well as at large U.S. wine processing plants.
The highest total consumption rate from 2009 was seen in the U.S., when consumption grew 3.2% per annum. This represented consumption growth of 7% per annum. In the U.S. it is 5.9% per annum in 2009 and 3% by 2011. The highest annual consumption rate has been in Denmark. During the 1960s consumption was mainly in the top 25% of alcoholic drinks, but since 2006 growth has remained mostly in the top 30% (in 2013) and in the top 500 (in 2013).
For those who choose to stay in the United States they tend to consume more beer and wine than other regions, which may be attributable partly to competition. However, the U.S. beer consumption reflects an increase in the distribution and distribution of the market, both for beer and wine.
The top 1% consume 6 times
Lifestyle:
Wine consumption in the U.S. is higher than in Japan. Consumption in both countries is low. One-half of all wine consumed in the U.S. comes from the wine-producing countries, but only 12% from the U.S.-bound. Although in the past years, there has been a growth in global demand for wine. While in most regions wine consumption has declined.
Wine production is growing fast, as recently as 1990, despite international efforts in the market. This continued drive to produce wine has led to a tremendous amount of investment which has been made to develop new markets over the last 20 years. The consumption of wine in the U.S. is rising faster than in the other countries, mostly in the South East. This was true of most of France, Spain and Germany in the mid-1990s. Consumption in the U.S. does not have a much higher growth rate than its counterparts, especially in Germany.
Despite higher and lower prices, consumption also has lower consumption. In the U.S., one-third of all beer sold is imported in the United States. Most of the U.S. beer is also imported in large quantities from other countries, but is less plentiful here on the vine. In addition, beer in many regions in Germany is almost non-existent. In contrast, a small percentage of the U.S. wine is produced in other locations in the United Kingdom.
Beer consumption seems to be at its peak. In the beginning this was largely due to a higher percentage of the beer in the United States (15%.2% in 2010). However, consumption is growing steadily through the years, and most of it is made mainly from Europe, South East Asia and to some extent the western portion of Europe. As the price of beer has risen from $17 to $60 in the beginning of 2013, even lower prices are more important. Consumption has then taken on a much wider price structure since the early part of the 20th century. This is evident in the chart below. From the chart below, consumption has risen steadily from between 60% and 80% of beer sold in the U.S. (in 2012, consumption was between $26 and $31/oz in the U.S.) to around half in Canada. For Canada, consumption has also grown markedly. The consumption has increased from $11 in 2007 to $14 in 2014, while consumption has increased in other major regions around the world (from $29.6/oz in Australia to $41.2/oz in New Zealand).
The first 3 percent increase in consumption was in the mid-2000s (when its main growth was at about 30%.2%, this amount was then almost halved by the end of 2003). There was an equally dramatic expansion of consumption from 2001 to 2013, with consumption going up from around $16/oz in 2007 to the current level of $11.5/oz in 2013 and still higher than the 2007-2013 level. Some of this rise may have been due to increased sales (particularly at bars in New York) and a further increase in sales in the U.S. It appears that this rise is more about price and convenience than consumption (although the increase in beer consumption may have something to do with the rise in the share of American adults in the market for that beer in the early 2000s); but its only apparent effect is that the share of American adults in the beer market has been declining. This could be due to a lower share of sales in bars; or it could be partly due to rising alcohol prices. Beer consumption is now considered moderately priced relative to other types of alcoholic beverages (e.g., alcoholic beverages and liquors and spirits, alcoholic beverages, mixed drinks, etc.), but is not considered highly valued. The value of beer generally is associated with a higher percentage of American adults using a beer as a drink, though most surveys show American adults using less and fewer beers in general than they did 10 years ago (<1% of beer consumption). The fact that the beer price of both types of drinks is high as much as any other alcoholic beverage seems to favor the use of much cheaper beers over more expensive ones. These results make it a highly important consideration to compare drinking behavior among Americans over time. Figure 2 shows the cost-to-income curve of average American, which makes any comparison between the two types of beers particularly problematic. Average American lives under a wage of $35,000, compared to $40,000 for most foreign workers or $50,000 for most workers in the U.S. Those that were born outside the United States in 1980-87 were often more likely than natives to spend more money on food. The income level has increased over these years because of higher prices and therefore lower income levels. However, there were significant growth in the cost-to-income curve of adult American (and foreign) drinkers from $35,000 to $50,000 and from $35,000 to $60,000 in 2002-03, 2005-06, and 2007-08, while there were significant increases in the cost-to-income curve between $50,000 and $60,000 for those living in poverty that went to college. A higher middle class in general is more likely to spend less on a beverage than a lower middle class in particular. The low income and lower income of Americans who go to college in the US would not indicate that they are more affluent as these types of drinkers tend to have higher incomes, as the difference in wages across states and in different income categories could have a direct impact on the higher cost of living of a person in general – because there may be economic differences. There are, however, two possible explanations for this: (1) because the cost-to-income curve of alcohol and beer consumption has dropped and the income levels of Americans in recent years have grown, there may be a decline in the value of alcohol and beer for alcohol drinkers with less education in particular, and (2) because that income-level in the country is still high if the income levels are unchanged. Figure 2 Average American, U.S. Average immigrant Americans, by year, 2011 to 2013 Source: Bureau of Labor Statistics, "Annual Consumption Statistics for the United States" (12.31.2013), available at: http://www.bls.
How Much is That Beer?
Priced premium beer is the basic quantity of beer available throughout the country to the general public.
The average quality of the beer sold in the United States is a fraction of what it is in Canada and other European countries, and generally tastes far better than on the cheap in the United States.
The average age of an American drinker is 54 years (18%) and a Canadian drinker is 46 years (10%). But even without a reliable measurement of drinkability, it is easy to see how beer consumption has risen, perhaps to more than 70% of the U.S. beer supply to the general public. Over the past 20 years, consumption has fallen by nearly half or more, at 10% per year. The decline in beer consumption is a direct result of a decline in the overall national sales, which have grown steadily over the past decade. The decline in the U.S. sales is partly attributable to changes in taxes and the tax burdens imposed, but more than half (55%) of the changes to the sales tax since 2000 have been largely driven by this decline in sales. Thus the rise in the U.S. national sales is a direct result of changes in tax rates, as well as declines in beer prices at all levels of the beer market. Because the decline in beer prices is much greater than those in a similar measure of the tax burden imposed in Canada, the general public has little information about beer prices. This reflects the differences in the different industries that will be subject to taxation in 2015.
The decline in the sales of high quality American beer is largely a result of the impact of the Affordable Care Act (ACA). The cost to consumers of coverage and new premium increases are the major drivers of the increase in U.S. beer prices, but the price level on the exchanges has increased steadily over the past five years and has continued to rise throughout this time.
Chart 7: United States Beer Sales Growth in 2014–15.
The share between the average price of beer and the average price of premium is highly correlated to beer consumption level over the period 1979 to 2012. The increase in average price of beer was highest between 1979 and 2012, followed by the fall between 1979 and 2000. The share of Americans who have one of both of these beer options has grown since 1979. A higher purchasing power of beer has become more common in recent years, with the average size of beer consumption rising from 1.0 gallons per person to 5.3 gallons. This is primarily driven by the higher quantity of craft beers and beer that are readily available in Canada, especially to seniors.
The decline in prices of beer has also coincided with the growing popularity of brand-name style beers such as American Pale Ale, American IPAs and Imperial Oatmeal Stout. Although American IPAs are more popular, they tend to be sweeter and lighter than more commonly available styles of beer (or less high quality beers) from around the world. They are also more expensive and have increased popularity following the popularity of many other new styles of beers. These popularity trends have been seen as increasing popularity of non-beer alternatives to traditional, non-premium brands.
In the last 5 years, consumption of American beers has grown dramatically in the U.S., as well as worldwide. During that time Americans have consumed more imported styles than any developed country. This growth in Americans beer sales is largely attributed to the increased popularity of this type of beer, particularly in the U.S. The proportion of Americans who like to order non-premium American beer has also grown through recent growth. More than 40% of Americans still drink in some form of alcoholic beverage every week, which is a much higher percentage than we typically consume and the vast majority of
During the 2000s consumption was more stable. Nevertheless, since then consumption has increased markedly. As of October 2015, consumption grew at an annual rate of 7%, or more than double the 2007 high compared with 4%, when consumption was up to 5% in 2002.
Wine consumed by people aged 18 to 44 in 2009 as well as at large U.S. wine processing plants.
The highest total consumption rate from 2009 was seen in the U.S., when consumption grew 3.2% per annum. This represented consumption growth of 7% per annum. In the U.S. it is 5.9% per annum in 2009 and 3% by 2011. The highest annual consumption rate has been in Denmark. During the 1960s consumption was mainly in the top 25% of alcoholic drinks, but since 2006 growth has remained mostly in the top 30% (in 2013) and in the top 500 (in 2013).
For those who choose to stay in the United States they tend to consume more beer and wine than other regions, which may be attributable partly to competition. However, the U.S. beer consumption reflects an increase in the distribution and distribution of the market, both for beer and wine.
The top 1% consume 6 times
Exhibit 1: Volume of Wine ProductionWith the foreseeable problem in mind, industry players in this market are strategically planning to carry out several activities to find out (1) The wine styles preferences of consumers (2) Characterize the quality attributes grapes & wine and develop appropriate research industry and tools to quantify them (3) Develop systems for the production of wines free from agrichemical residue (4) Develop systems for the consistent production of grapes of specified qualities with synchronized maturity attributes and wine of specified quality. The main objective for carrying all these activities is gaining competitive advantage.
External Environmental ScanningIndustry Life CycleThe Global Wine Industry is entering into the early maturity phase of its life cycle as evidenced by the consolidation and takeovers happening in the industry and the increasing level of competitiveness.
From a demand perspective, the worldwide wine consumption has stagnated. According to the Wine Institute, there is only a 2.04% growth in wine consumption from 1997 to 2001. In fact, worldwide consumption dropped from 227,875 hectoliters to 226,646 between 1999 and 2000. Generally there is a drop in consumption from the traditional wine drinking countries like France and East European countries, whilst demand has growth significantly from China.
The production of wine has shifted from the traditional vineyards in France to the rest of the world. There are New-World Wines from Australia, New Zealand and South Africa. These wines are generally thought to be of moderate to high quality and are essentially challenging the traditional