Casella Wines – Export Success

1.Identify its international markets
 US and North America identified o Distribution network – 44 states. o Size – initially estimated 20-30 thousand cartons to 100 thousand cartons, reality was 20 to 200 thousand. o Annual sales $3 million.
 UK o Some regional supermarkets hoping to expand to majors.
 Mainland Europe o Some beginning sales.

2.Describe and analyse the reason for its international expansion
 Increase sales/find new markets – domestic market oversupplied
 Minimise competitive risk
 Economies of scale
 Cushioning economic cycle
 Comparative advantage o High cost of labour and land in US.

3.Explaing the influences on this business in the global market
Political
Tensions between free trade and protection
 Globalisation seeing removal of barriers
 Eg. Quotas, tariffs, subsidies – statistics
 Exports of wine have increased from 3% of sales to 52% of sales in 2002. this equals $2.3 billion dollars or 414 million litres
 US greatest source of export growth
 Australia's export policy has led to major reforms in the Australian wine industry
 ‘Rationalisation of wine production' leading to overall efficiency giving them cost advantages over their competitors and reshaping of distribution lines.
 4th largest wine exported in the world with 5% of global market
International organisations and treaties
 1994 Uruguay multilateral agreement (WTO)
 Agreement to reduce protection on agricultural products (wines/grapes) by 36% by 2000
 UK has the largest export market of wine
Trade agreements
 US and Australia have strong trade relations and trade agreements
War in the Middle East
Weak economic conditions
Social
Consumer tastes
 Global markets have been increasingly integrated
 Growing demand for mass market, high quality wines and a recognisable brand
