The Wine Industry and Vincor
Vincor International Inc. is in the business of selling premium wine to discerning wine drinkers. The company relies on its firm resources and capabilities from which it derives its distinctive competencies. These include the ability to produce market and distribute premium New World wines to a growing market of customers around the world. The total estimated world market is worth approximately $190 billion dollars (U.S.).
Vincor’s strategy is based on its distinctive competencies (such as world renowned wine making experience, vineyard development and ownership, and the ice wine product/brand) and centres on an acquisition and takeover formula (sometimes with a joint venture component). The company believes that in a highly fragmented wine industry the only companies that are going to survive, grow and maintain a competitive advantage are those that can rationalize their cost structures, achieve economies of scale and control their distribution channels effectively. Synergies in marketing, sales forces, administration and other overhead factors can drive down per unit costs and make Vincor more efficient. By lowering its cost structure, Vincor can pass lower costs to consumers and gain market share in a global market place. Vincor has surmised that the best way to do this is expand, through a combination of equity and debt financing to take over competitors, whenever there is a good “strategic fit.”
The industry in which Vincor operates has several sectors, such as wine growers, spirit distributors, bottlers and retail / distributor operations. These sectors supply inputs (such as bottles), and expertise (marketing and distributing companies) that complements the main wine producers (i.e.: ice wine, premium wines, etc.). All these separate sectors make up the wine industry as a whole.
Porters Five Forces
Risk of New