Introduction

New Zealand is world famous for its exotic wines. Wine industry is one the primary industries
in New Zealand and therefore, the organisation under consideration is “Villa Maria” which, is
one of famous wine companies in New Zealand. The company was started in 1961 and has
now been serving the most exotic and high quality vines sourcing grapes from the greater
Auckland region for more than 50 years (Villa Maria, 2017). The company exports its wines
to over 50 countries in the word and employs 250+ people on permanent basis.

Villa Maria has four major vineyards located in Auckland, Gisborne, Hawkes bay and
Marlborough. Moreover, the company has embedded sustainability in its work culture. The
company believes that sustainability is a journey and not the extremity (Villa Maria, 2017).
The primary objective of the company is to practice multiple bottom line in their business.

Villa Maria’s distribution channel consists of intermediaries and stockers through which, their
wine reaches the end consumer. The company follows the longest distribution channel for
making their wines available to consumers in over 50 countries (Stockits, 2017). The
company’s distribution system operates through a long-haul process, generally known as a
three-tier system. This means that for local distribution Villa Maria must first sell its wines to
whole sellers or distributors who will further sell it to the retailers. In New Zealand, wine
distribution system is controlled by Sale and supply of alcohol act, 2012. Local distribution of
Villa Maria wines is done through cellar door team, which is the company’s own subsidiary.
Retailers, stockists and whole sellers can directly place orders the cellar team through email.
International distribution is done through licensed and registered wine exporting companies in
New Zealand (Wine Directory, 2017). Additionally, Villa Maria Wines are available in all 52
countries through national stockists, who supply wine stocks to the retailers in that country.

Intermedia
ries Retailers
Wines and
and Consumers
Bottlers (Marketmakers
& hospitality
Matchmakers)

Figure 1 Distribution inside the wine supply chain. Source (Pomaric, Boccia, & Catapano, 2012)
Transactional and Logistical functions of Villa Maria’s Distribution channel

Transactional functions: Transactional functions in the company’s distribution channel

involve transaction of goods (wines in this case). The main elements that come under this
function are: risk bearing, sale and purchase. The company after producing the wines from its
wineries sells it to the intermediaries. The list of intermediaries that distribute Villa Maria
wines locally and internationally can be sourced from (Wine Directory, 2017). These
intermediaries would then sell it to local sellers or retailers in New Zealand and to mediator
companies in other countries. Companies like Tesco and Waitrose buy Villa Maria Wines
directly from the NZ distribution agencies.

The whole process involves some risk factors that can result in loss to the distributor company.
These factors are: fall in prices of wine, breakdown of trucks or transport carrier, Bottles
breaking in transit.

Logistical functions: Logistical functions at Villa Maria Wines manage the flow of wines,
assets and information between the point of beginning, i.e. vineyards to the point of utilization,
end consumer; so as to meet the necessities of the customers (Sam, 2013). Logistical functions
involve: stock keeping, inventory management, transportation, on demand and on time supply,
proper storage environment, proper packaging of wine bottles before dispatch and security
identification of wine packages/ boxes. With the assistance of efficient logistic capacity at Villa
Maria, wines are made accessible by the wholesalers to the buyers when needed.
Villa Maria’s Local and Global distribution network

Consequences of removing intermediaries from the distribution system

Wine distribution both locally and globally is controlled by the New Zealand legislation. There
are certain laws that have imposed certain conditions on the sale and supply of wines within
the country as well as offshore. These laws mandate the wine manufacturing companies to
follow the three-tier system for distribution of their products. In addition to the legal norms and
standards that have to be followed, the distribution system in wine industry confiscate
humungous burden from the wineries. The distribution company manages all kinds of risks
involved during the transportation and transition of wine bottles. However, they charge their
own share of money for distribution, global distribution through a subsidiary company or own
organisation would incur huge costs for Villa Maria Wines. The setup costs for a new
distribution system would be too high and the company will have to install new distribution
system through a subsidiary.

The current distribution network for Villa Maria wines is robust and lucrative. Furthermore, it
allows them to focus on their key objective of making superior quality of wines rather than
focussing on numbers in their balance sheet.
References
Pomaric, E., Boccia, F., & Catapano, D. (2012). The wine distribution systems over the
world:an explorative survey. NEW MEDIT N, 23 -32.
Sam, I. (2013, November 10). Logistical and transactional Functions of Channels of
Distribution. Retrieved from Hub Pages: https://hubpages.com/business/Functions-of-
Channels-of-Distribution
Stockits. (2017). Retrieved from Villa Maria: http://www.villamaria.co.nz/stockists
Villa Maria. (2017). About-story. Retrieved from Villa Maria:
http://www.villamaria.co.nz/about/story
Villa Maria. (2017). Sustainability. Retrieved from Villa Maria:
http://www.villamaria.co.nz/about/sustainability
Wine Directory. (2017). Marketing and Distribution. Retrieved from New Zeland Wine
Directory: http://nzwinedirectory.co.nz/industry-links/marketing-distribution/