Ceja Vineyards Marketing Analysis Essay

eja Vineyards Decision to Directly Market to the Latino Community analysis The Case Study, Ceja Vineyards Marketing to the Latino wine Consumer? by Armand Gilinksy Jr., Linda I. Nowak, Cristina Santini, and Ricardo Villarreal deSilva (2010) outlines a critical decision a diminutive, family possess vinory in atomic number 20 is facing. The drinkry, Ceja Vineyards, is located in the Carneros region and is equally owned by four Mexi raft born immigrants of farm workers. Amelia Moran Ceja, President, and her husband Pedro Ceja, Artistic Director, along with Pedros br new(prenominal) Armando Ceja, Wine even offr and Vineyard Manager, and his wife Armando Ceja comprise the self-will team. Amelia, Pedro, and Armando grew up working in the Napa Valley vineyards, and in 1983 purchased xv acres in the Carneros region to begin their own vineyard.They deep-rooted their graduation grapes in 1986, and had their first harvest in 1988. From 1989 to 2000 they purchased additional plots o f land and planted a variety of grapes. Their wine grape outgrowth compe genuinely is named Vina del Sol. They evoke enough grapes for 65,000 cases of wine per year. In 2001, the gild alikek an new(prenominal) large flavour and began producing their own wine, under the branded name Ceja Vineyards. Their wine is made use their own grapes grown by Vina del Sol. In 2002, Ceja Vineyards was named Winery of the Year by a panel of ninety wine writers. Now it is 2007, and their wine fruit has double almost both year to the current amount of 10,000 cases a year.Problem IdentificationThe get word issue in the case composition is whether or not they should make a concerted effort to stooge Hispanics in their foodstuffing efforts. They see the dominance of market to Hispanics concedeable to the inflow in Hispanic population in the U.S., and the continued intercommunicate increase. Their main(prenominal)(prenominal) concerns, atomic bet 18 that they will have to change th eir marketing st estimategies, and incur self-colored promotional expenses. They likewise will not lower their wine prices besides to market to Hispanics. Amelia wants the company to focus on direct sells to the consumer so they preceptort have to depend on the current diffusion system. abstractTo understand the present situation Ceja Vineyards is in and to best recommend a course of action, three analysis techniques were employed. These three argon the SWOT Analysis, hall porters Five Forces, and Value-Chain Analysis.SWOT AnalysisA SWOT Analysis was applied first to the situation to assess the internal Strengths and Weaknesses, along with the foreign Opportunities and Threats. Ceja Vineyards has a multitude of Strengths. Their ownership knowledge is based on a lifetime of real world experience. They grew up picking grapes, and envision of all timey aspect of the company guaranteeing top quality. They have a unique history, in that they argon Mexi displace immigrants and th e company is family owned. The vineyard is in a premiere location. Carneros was the first wine region based on climate quite than political boundaries. Their wine is estate grown using grapes from their wine ontogenesis company, Vina del Sol. The company is debt free from years of solid investing and planning. They implemented a wine club, to be suitable to sell promptly to the consumer.Ceja Vineyards is not without its weaknesses.Their small growthion amount limits their marketing strategies due to not being able to compete head to head with the mega-wineries. They also have limited distri unlession due to their size, though the emergence of boutique distributors and their wine club has helped. As for orthogonal doers, Ceja Vineyards finds to have a plethora of Opportunities to increase their demand. They could target the ever maturation U.S. Hispanic Market. There are currently forty trillion Hispanics in the U.S., 20% who earn more than than $100,000 per year. They are also projected to be the fastest increase population for the foreseeable future. In 2006, they had to bid people away from a wine tasting in Los Angeles because of the demand. Hosting more of these events could be beneficial. Their wine club members receive a discounted retail price, but Ceja Vineyards could introduce a Rewards Program for recruiting new members.The wine market has detonate in the 2000s, and has produced quite a few Threats for Ceja Vineyards. Competition has become wild recently as the number of wineries grew by 26% from 2004-2007. The three-tier system for scattering does not favor smallwineries. It places a different tax rate dependent on state, and the Big Five distributing companies hold 52% of the distributing market. Boutique distributors are not able to operate in all states, and are always at threat of being purchased by the major distributors. Ceja Vineyards has through with(p) well for itself so far, but there is always the threat of growing too fast, without the deald demand. The SWOT analysis shows a very luxuriously amount of strengths and opportunities that would suggest an aggressive strategy if not for Ceja Vineyards personal business concern strategy of slow growth.Porters Five ForcesPorters Five Forces was next used to determine the competitive environment. The Five Forces method acting is used to determine a companys profit potential for a particular industry.The Threat of New Entrants High. Despite the high start-up costs, and that vineyards and wineries are a long term investment, it has not stopped people from join the market. In 2006-2007, 12,000 new brands were introduced to the market. The number of imports in the U.S. market has also grown. more or less noticeably, imports priced above ten dollars, that would compete with Ceja Vineyards, have grown 44 pct annually from 2005-2007 (Gilinksy Jr., Nowak, Santini, and Villarreal deSilva, 2010, p. 15).The Bargaining Power of Buyers High. The main buyer of wines from wineries are supermarkets and store stores. These location account for 80% of wine retail gross sales. Another factor that is increasing the bargaining power of buyers is that there are few key buyers since the, retail sector witnessed considerable consolidation in the early 2000s, due to mergers of both supermarkets and liquor store chains (Gilinksy Jr., et al., 2010, p. 14).The Bargaining Power of Suppliers Low. Suppliers in this instance, mean small market suppliers. Gilinksy Jr. et al. (2010) states, The top ten wine companies in the U.S. controlled 82 percent of all shipments, so while the bigger producers may have some bargaining power, it doesnt allow any for smaller quantity producing entities.The Threat of Substitute Products and Services Low. Ceja Vineyards location is its sterling(prenominal) strength against the threat of substitute mathematical products and services. While there are other wine products, and other companies that sell even the same type o f wine as Ceja Vineyards, there are still so many that can produce it using Carneros grapes. In the wine industry, the quality of your grapes are your biggest asset, and to each one location produces a distinct flavored grape. People who prefer Carneros grapes will terriblely have so many options due to its limited size.The Intensity of contestation among Competitors in an Industry High. As stated previously, the wine market is growing each year, both domestically and internationally. As is the number of wine producers which is outpacing the market growth. This combination makes it harder each year to create a demand for your product with so many options available to the consumer.Value-Chain AnalysisTo understand if a company has a competitive advantage or not, a Value-Chain analysis can be performed on the companys business model. For this report, we will scarcely focus on the primary activities of the Value-Chain analysisInbound Logistics. Ceja Vineyards is classified as an estate-grown winery, because it is located in the same place the grapes are grown. The vineyard that grows the grapes, Vina del Sol, is owned by the same group so this makes this set apart of inbound logistics ideal. creation located in California, also helps with the inbound logistics of bottles, corks, and bottle labels because California has the largest number of wineries per state in the United States. This is going to mean any supplies require for wine making will be readily available.Operations. The four owners be of two married couples, and each has an equally weighted vote in any decision. They are also family, and live nearby each other making communication easy, in theory. They also grew up around vineyards so all have a deep understanding of what is needed to travel by the business. The quality remains high because according to Pedro, weve done quality control over every aspect, from growing to the cork that goesinto the bottle Gilinksy Jr. et al. (2010). The only i mprovement to the operations side would be if Pedro quit his day line of work and focused his full attention on the winery.Outbound Logistics. This is the area that is the main issue for the Cejas. The industry is set up to cater to the weed producing wineries. To mass distribute their product they would have to use the three-tier system, which would only pay them 50% of the retail value of their product. Other options are the boutique distributors, but they cant distribute to the entire U.S. This is why Amelia wants to sell directly to the consumer through their wine club, and tasting room to cut out the pith man and increase their wampum.Marketing and Sales. The grape producing side of their company, Vina del Sol, is doing terrific. The demand for it is very high as it already has five companies on the waitlist to buy grapes. While, Ceja Vineyards sales have doubled each year since introducing their branded wine it is hard to judge the ceiling. This is mainly because the compa ny has grown slowly, and been vigilant of growing too fast. The company realizes though, they have to decide on exactly how to market their product though if they want to continue increasing demand for it, and that is the issue we are trying to solve.Alternate SolutionsThe Cejas have multiple options they could take, and still be successful. The easiest option would be to change nothing. They have increased their revenue and profits each of the past three years according to their income statements. Also, they stated they had doubled their wine sales each year, and were ranked number 2 in Wine Business Monthlys Hottest New Small Brands. With the growing wine market and critic accolades, they would probably continue to grow without changing anything.They could decide to target the entire Hispanic population, and market heavily. This mass marketing strategy would reach the most people, but would be very expensive. It would require an understanding from all theowners that it could prod uce significant losses during the transition period. They could date at Round Hill Vineyards & Cellars as a blueprint. They did an ethnic outreach program in 2004 to target Hispanics and Asians. Their total case sales increased cd percent from 2005 to 2006.Ceja Vineyards could work directly with their current Wine Club members, communicate them for feedback on what made them join. Offer the members rewards for purchasing so many cases a year, or recruiting new members. Currently, half of the wine clubs 1000 members are of Hispanic descent. They could speak directly to this portion of the group to try more of a grassroots marking campaign.Ceja Vineyards could also market to only a portion of the Hispanic community. Since they refuse to lower their prices, they could market to the nine percent of Hispanics that make up the mostly acculturated percent of the Latino population. Wine consultant Sandra Gonzalez stated, these Hispanic wine consumers are 96 percent more likely to put a cross $20 or more a bottle than non-Hispanics. (Gilinksy Jr., et al., 2010, p. 14).RecommendationsCeja Vineyards in the desirable position of being a growing company with no debt in a growing market. After analyzing Ceja Vineyards business model and the state of the external environment, Ceja Vineyards should market to the Hispanic population.As of 2005, there were 12.5 million Hispanics in California alone. This is an enormous untapped market that if tapped into would allow Ceja Vineyards to rely less on the big distributors and more on direct to consumer sales. Ceja Vineyards should continue to grow their Wine Club through the use of promotions and a reward system, while also reaching out to the mostly acculturated percent of the Latino population. They should also look into the marketing strategies Round Hill Vineyards & Cellars employed to attract Hispanics and Asians to their brands.