Background Information & Problem Statement
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Châteaux Margaux is a historic wine estate in the Bordeaux region of France, which has been producing fine wine since the 15th century. The estate was one of four châteaux to achieve Premier cru, or “first growth,” status in the Bordeaux Classification of 1855, securing its status as one of the finest and most expensive wines in the world. The primary wine produced by the Châteaux, Grand Vin du Châteaux Margaux, is regarded as one of the top wines in the world, while its secondary wine, Pavillon Rouge du Chateau Margaux, was also considered in the top echelon of wines. Although the Pavillon was originally intended to occupy a slightly lower perceived quality point and lower price point, strong reviews of each wines have led to both the first and second wines garnering premier status and commanding exorbitant prices.
Due to the increasingly prestigious reputations of the wines fueled by strong reviews by the world’s preeminent critics, Châteaux Margaux has become increasingly selective in selecting grapes for their first and second wines. This increase in selectivity has led to an increase in leftover grapes, deemed to not be of high enough standard for the first and second wines. In the past, Châteaux Margaux had sold the remaining wine in bulk at a low price. In 2009, the Châteaux experienced a particularly strong vintage. This led to extremely high quality remnant wine after the first and second wines were produced. The Châteaux decided this wine was of too high quality to continue to sell in bulk, and decided it should be bottled as a third wine. With the decision to introduce a third wine, Châteaux Margaux faces many challenges. The company must determine the target customers and how the third wine should be priced, promoted, and