Phuong Bui

Professor Ozkaya

IBM 4141

6/10/2021

Case Study - MontGras: Export Strategy for a Chilean Winery

1. Evaluate MontGras’s marketing strategy. Is it positioned in attractive markets/segments, or

will it suffer as the industry enters a period of oversupply?

MontGras did a great job of positioning themselves in attractive markets as the industry

enters a period of oversupply. Due to domestic overproduction, focusing on exports was just a

matter of survival because selling wine in Chile was not beneficial even the price of the bulk of

wine is much lower than a liter of water. Compared to the domestic, the international customer is

more sophisticated and has a higher purchasing capacity for higher quality wines. Wines of

Chiles was widely known for being in the lower end of the price range. However, the CEO of

Vina MontGras, Patricio Middleton decides to take another direction by positioning MontGras as

a producer of higher quality fine wines for export. By doing so, it helps the brand to establish a

good reputation for quality. Therefore, allowing them to raise their product price. By having that

competitive advantage over other brands, MontGras may have protected themselves from

struggling when global wine output is set to reach an all-time high, signaling the start of a period

of oversupply. The main focus for MontGras is that it must ensure that it has a good reputation

for quality that is strategically positioned. So, in the case that when the overproduction crisis

begins to cut into each company's profits, MontGras still be able to keep going.

MontGras vineyards produced 62% of the winery's grape supply. As a quality control

measure, this level of self-sufficiency was especially significant for reserve wines. It also
invested more than $3 million in the estate's Niquen Hill vineyard. Knowing it would generate

low yields of ultra-premium quality wine. When distributing internationally, MontGras always

has to ensure that its products are accessible to the local retailers, even when it has to pay for the

additional cost to the foreign agents. Also, when the company is discontent with having to give

up a portion of the supply chain. In addition, MontGras had invested heavily in marketing.

Especially to its premium line, MontGras spend twice times higher on marketing compared to

the varietal line because it knew that the consumers are leaning more toward higher-end wines.

MontGras had used many marketing strategies such as trade promotion, price promotions, media,

public relation events, wine tasting, and sales force incentives to influence how people view the

brand.

2. To what extent can MontGras control its own market position, as opposed to being dominated

by the country-of-origin effect, and be perceived as “a Chilean wine”?

A. What implications does this have for the marketing strategy?

Instead of being dominated by the country-of-origin effect and be perceived as “a Chilean wine,”

MontGras should do something different to differentiate itself from other competitors. Most

Chile wine brands decided to stick with the tradition and continue to produce lower price wines.

However, compared to those brands, MontGras still have more advantages over the overseas

market due to its affordable price and high-quality wine products. MontGras should be utilizing

marketing as a tool for it to promote its products from other brands in the region as a more

superior option.

B. Is the “Wines of Chile” industry plan an opportunity for Montgras?

The “Wines of Chile” marketing plan is an opportunity for MontGras. This marketing plan is

designed to upgrade the image of Chile. Also, it helps in brand building by opening promotions
offices in popular regions such as the United Kingdom, the United States, Japan, and Germany.

MontGras devoted five years and millions of dollars to improving production procedures and

modifying its wine to meet worldwide standards. But in return, it would have the opportunity to

expand the business through exports because the new international wine industry was moving

more towards an export-oriented approach.

3. Which U.S. distributor would you choose? Why?

I would choose Cabo Importer as my new distributor in the US market. The reason is that

Cabo and MontGras are both bold thinkers. Instead of being viewed as "a Chilean wine,"

MontGras had decided to cross the boundary and differentiate its products as the more superior

option from other competitors. Meanwhile, Cabo also thinks it is possible to raise the potential of

MontGras in the US market by giving it ideas on how MontGras should be positioning itself in

the US market. Cabo also recommended a range of retail price points from $7.99 to $14.99 with

an expected mix of 60% reservas and 40% varietals that match MontGras' long-term focus.

4. Would you do the large supermarket promotion in U.K? Why?

I think MontGras should do the large supermarket promotion in the U.K even though

knowing the company would have lower profit margins. However, in return, MontGras will

receive recognition of a product by its name. Besides, the op four grocery companies in the UK

counted, 60% of all wine sales in the market were accounted for by the top four grocery stores

and are projected to continue growing. Furthermore, specialist liquor stores are closing weekly,

and wine customers are more driven to supermarkets to purchase wine because of competitive

and appealing deals, such as the one with Tesbury.