Casella Wines - Export Success

1.Identify its international markets

 US and North America identified

o Distribution network - 44 states.

o Size - initially estimated 20-30 thousand cartons to 100 thousand cartons, reality was 20 to 200 thousand.

o Annual sales $3 million.

 UK

o Some regional supermarkets hoping to expand to majors.

 Mainland Europe

o 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

o 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

 Australia's 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