Château Margaux Case

1- Château Margaux’s distribution system

Château Margaux is one of the well-known wines from the Bordeaux region in France. It is famous by the fact that this wine has got a luxury and high quality notoriety, and also stand out from the competitors thanks to the quality of is first growth produce with carefully selected grapes. With only two mains wines (first wine: Chateau Margaux; Second wine: Pavillon Rouge; See in Exhibit 2) Chateau Margaux is a famous wine all over the world.

This situation is, in a part, due to its distribution system. Indeed, Chateau Margaux has not got is own distribution system because it entrust the distribution through specialist merchants which have good knowledge about the potential consumer and consequently allocated the product in the right places all over the world. This system allows Chateau Margaux to be concentrate on the producing activity in order to have always the best first growth whereas merchants take care about the promotion and the sale. There are many merchants in the Bordeaux region, where Chateau Margaux’s terroir is located, which assures them to have many choices to select the best specialist to sell the wine. After, selected the right merchant, this one allocate the wine in small amount in markets that they think interesting to create a scarcity climate that search Chateau Margaux to keep is luxury image.
More precisely, the distribution is mostly performed by the en primeur system. It means that Chateau Margaux sell its wine in barrel and no after bottling when the wine is in advance about the major vintage. This way of distribution is used by most of the chateaux and wine producers because they sell only between 5 and 10% of their wine in after bottling. The en primeur system is characterized by different step that Chateaux and merchants respect in order to fixe the final price. A good relationship in the long-term between Chateau Margaux and the intermediate ensure a equitable repartition of interest because the merchant sell to a high price whereas he buy the wine en primeur cheaper. But we can see that this system presents some drawbacks.

2- Change the distribution system

Even with the numerous of advantages of this distribution system (Concentration on the core business, knowledge about the market by the merchants) this one knows some drawbacks. That is why, in my opinion, Chateau Margaux should change, in a way, how they organize it.
Indeed, the important point by selling wine is to ensure it to be sell to the right consumer by inform him on all the characteristic of the product. As, Chateau Margaux wine is a very specific product by its high quality, its traditional fabrication, its luxury image, and its status, its really important that the merchant take that in count. Thus, the first drawback, in this system is that Chateau Margaux doesn’t know exactly who are their consumers and consequently let to the merchant this charge. But, as the consumer of luxury wine is really volatile, because they can change their consumption habits really quickly, Chateau Margaux has to be sure that all the information of the product is really highlight. Moreover, we can see that there is a problem because the objective of the merchant is to sell the more they can and not really to be concentrate on how they communicate. So as they have to sell not only the Chateau Margaux’s product but also the well-known competitors’ products their approach to the consumer can be the same for all the wine. Thus, it can have a lack in the communication about the specific image of Chateau Margaux. For example, Chateau Margaux and Latour haven’t the same specificities, because Chateau Latour is more concentrate on the tannic and powerfull image whereas Chateau Margaux is more focused on the elegant and balance of its wine. So, if the merchants don’t inform well the consumer on that, the image of the brand can be lost. So, this system doesn’t allow Chateau Margaux to communicate on their main advantage, which is the traditional and rigorous production.
On another hand, merchants don’t give the necessaries information to Chateau Margaux to allow it to adapt its activity to the characteristic of the market. Mentzelopoulos confirm this lack of communication by saying, “ we don’t really know who our customers are. The merchants don’t give us all the details and sometimes may not have the full information themselves”. That is why Chateau Margaux should change its system of distribution because the most important thing is to keep this final volatile consumer.

3- Propositions of changes

After analysing the drawbacks of the current distribution system, we understand that is really important to change it. But, it is not necessary to find a completely different system but only improve this one. Indeed, despite these drawbacks, merchants (specialists of wine selling) know the market, know how to enter a market, know who are the specific retailors in foreign countries, on what Chateau Margaux doesn’t know because it is only a real specialist on the Bordeaux region. So what Corinne Mentzelopoulos should do is to improve the relationship and the communication between the Chateau and the merchants. First, the aim of the improvement is to give the best information on the product to the merchant in order that he can communicate in the foreign market on the right image of the product. So, Corinne Mentzelopoulos should develop a marketing service, which can provide to the merchant the right communication tools (graphic design, main information, etc…) and consequently ensure the merchant to communicate all over the world about Chateau Margaux’s brand by keeping its own image and inform the consumer on the real specific product. In an exchange, as Chateau Margaux doesn’t know who are their consumers, the merchants will have to give some data, surveys, sells results, and all the information about the final consumer. These information will serve to the service marketing to have the best approach on the consumer and also may give some advices to the merchant on where focus the sell and which market they have to enter or not enter.
Serey de Rothschild said about the consumer, “they tend to be more volatile as they can easily switch from one luxury product to another”. So, it is really important to development a service which allows Chateau Margaux to keep their customers and to continue year after year to aware them about the quality of the vintage. That is why, I advice Corinne Mentzelopoulos to develop the communication activity by creating a private club (VIP club) for the connoisseurs, in order to allow them to discover or rediscover the Chateau Margaux wine and to discuss and exchange about it. As, Chateau Margaux wants to keep this luxury notoriety and the scarcity climate of the product, the main club will be located in the Chateau in the Bordeaux region and some secondary clubs in the main luxury and trendy capital as New York, Paris, Honk Kong, London, and Sydney. Each club’s place will have the same design and interior to keep the main image of the brand. Moreover, it could be interesting to create each year some events where members of the club and influencers (journalists, wine critics and knowledgeable merchants) are invited when a new vintage is launch. These events will take place in each country where the clubs are, so the influencers will communicate about the product all over the world and consequently will ensure the marketing. Also, the consumer will continue to improve this knowledge about the Chateau Margaux wine and thus loose the volatility. The marketing and the communication will be more focused on the world of mouth system.