Greenstone Vineyards was founded in 2003, just over a decade ago, as a 40-hectare property located at Colbinabbin. Located around 90 minute drives north of Melbourne, it is very close to Melbourne Central Business District (CBD), providing easy access for both tourists and locals to visit. Greenstone Vineyards specialise in handcrafted and premium wine at affordable prices. Their strategy is to find the best locations to grow the best grapes regardless of the different variety of wine.
Growing their vine on the ridge of old Cambrian soil, which is neutral in pH and unlike most acidic soils in Australia, has allowed Greenstone Vineyards to produce premium quality wine. The success of Greenstone Vineyards has also led them to expand their wine range to Yarra Valley as well as opening a cellar door only 1 hour away from Melbourne’s CBD. Thus creating more opportunities for people to have a taste of their wines and to understand the Greenstone philosophy.Greenstone Vineyards are faced with many competitors.
With over 2500 wineries in Australia alone, the wine industry is saturated (Winetitles, 2016). Furthermore, there are many substitutes products such as beer, whiskey, vodka and many other alcoholic drinks. Due the highly competitive market, Greenstone Vineyards have proposed a unique value proposition to attract consumers’ attention with its premium handcrafted quality wine at affordable price.There are many cheap wines on the market and there is an increased demand for such products as many wine consumers are price sensitive (Kimmorley, 2015).
Thus, to capture this growing market, Greenstone Vineyards priced their premium product at a significantly lower price at $40 to $60, compared to $200 market price for premium quality wine. Furthermore, their locations are very attractive for tourists and locals as it is strategically located close to Melbourne CBD compared to other wineries and vineyards.This makes it easier and cheaper for transporting their products to the market, allowing them to decrease the price for their wine. Moreover, they provide shipping at a relative low cost for those consumers who do not have the time to travel to their wineries.
The function of SWOT analysis is used to evaluate the position of a business and guide strategy to go forward. The following SWOT analysis indicates the strengths and weaknesses of Greenstone Vineyards as well as the opportunities and threats the wine industry is facing.As shown below, Greenstone Vineyards’ strengths include its good channels of distribution and pricing, as well as their use of unique Cambrian soil that is rare to find in Australia. Likewise, their locations allow them to get close to their consumer.
Furthermore, there are many great opportunities for Greenstone Vineyards. The emergence of online presence in the wine industry has allowed them to reach a larger consumer base.Moreover, with the Australian dollar depreciating, the export market has been increasing significantly, with United States remained as Australia’s largest market and China’s market has gone up by 66% in 2015 (Worthington, 2016). Greenstone Vineyards, however, has its disadvantages. With low brand recognition and awareness, it is difficult for them to break into the market and surpass its well-established competitors like “Chandon” and “Dominique Portet” in Yarra Valley.
Furthermore, with wine domestic sales declining for the past five years by 2. % as well as locals preferring imports wine from Europe and New Zealand, it is difficult for local wineries to gain market share (Winetitles, 2016). Additionally, Melbourne has unpredictable changing climate, this could result in vineyards not being to achieve their potential to make great wine (Carmody & Creagh, 2013). Despite these weaknesses and threats, Greenstone Vineyards still has the potential to become successful in the industry as its unique value proposition justify their customer value and it also has the opportunity to tap into the growing export market.The Australian wine industry is one of the largest exporters and producers of wine in the world. It has also make a significant contribution to the Australian economy through production, employment and tourism (Anderson & Nelgen, 2013).
These three components of the Australian wine industry have strong linkages to many different industry of the Australian economy, in particular the businesses that supply goods and services demanded by the employees.Subsequently, the contribution of the Australian wine industry to the Australian economy is greater than just its direct effect. We will be applying Porter’s Five Forces model to identify and analyse five competitive forces that shape Australian wine industry and helps to determine its attractiveness. Firstly, threats of new entrants to the industry is relatively low due to the large sum of capital that is required to start the wine business as well as to gain access to winemaking technology.Furthermore, there are many established wineries such as Greenstone Vineyards and Chandon that have economy of scale and the core competitive point in the wine industry is price (Anderson & Nelgen, 2013). Therefore barriers of entry to the wine industry are high.
Secondly, there are many substitute products with locals preferring beer to wine over the past few decades. However, this trend has seen a change as beer now accounts for 41% of all alcohol consumption down from 75%, while wine share has significantly increased from 12% to 38% of all alcohol consumed over the past years (Pearlman, 2015).However, the threat of substitute products is still high, with drinks like whisky, cocktail and many other alcoholic drinks are readily available and attractively priced. Furthermore, the US government has been tightening the wine distribution in the country, thus it could affect the Australian export market negatively in the near future (Esterl & Kelly, 2015).
Thus, threats of substitutions in the Australian wine industry are relatively high.As established winemakers, Greenstone Vineyards are known for producing their wine from scratch. They grow their own grapes for quality control and act as their own supplier. Therefore, there is a low supplier power over Greenstone Vineyards. On the other hand, there is a high bargaining power of buyer as due to consumers having many choices of different brands of wine to choose from.
Furthermore, buyers are price sensitive and switching cost to different brands are relatively low.Additionally, consumers are not loyal to only one type of brand of wine (Lockshin, 2010). Finally, the Australian wine industry is extremely competitive. With over 900 producers in Victoria alone, Greenstone Vineyards need to stand out to gain attention from the market. They have successfully done this by competing in price war with their competitors and have achieved economy of scale through their expansion despite the high degree of rivalry.Referenceshttp://www.wsj.com/articles/SB10001424127887324348504578607221851262206http://theconversation.com/australian-wine-industry-tackling-climate-change-16758http://www.businessinsider.com.au/infographic-asias-love-for-australian-wine-has-made-exports-boom-2015-10http://academyofwinebusiness.com/wp-content/uploads/2010/05/File-030.pdfhttp://theconversation.com/australian-wine-industry-tackling-climate-change-16758http://winetitles.com.au/statistics/wineriestable21.asphttp://winetitles.com.au/statistics/domestic.asphttp://www.abc.net.au/news/2016-01-21/australian-wine-exports-2015/7104022?pfmredir=sm
