Wine and spirits and globalisation. Ricard case study.

by cbouyer1 (student)

University Degree Business and Administrative studies

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Wine and spirits vs. globalisation

Executive summary

At first, wine and spirits sector is really important in france, because it’s the second heavy industry of exportation. The French wine is very popular, that’s why a lot of foreign people want to consume it. On one hand, globalisation is a way to facilitate the exchange with other cultures, But on the other hand, it can represent negative point. By this phenomenon, the internal market has reduced, but also vineyards can’t cope with the multinational firm. The cost of deportation is really important and vineyard need treasury to deal with foreign country.

Then, we will see a French firm in this sector : Pernod Ricard, which is the leader.

This firm has to cultivate its intimacy with its clients, to keep its leader place.

The pastis ricard is the most important product of this firm it’s come from the south of france, by its marketing mix this firm assure the sustainability of its pastis.

Table of contents

I. The influence of globalization on the wine and spirits sector.

A. Presentation of the wines and spirits sector

B. The negative aspects

C. The Positive aspects

II. The company Pernod Ricard face of globalization

A. The pastis ricard story of the Pernod Ricard company

B. Marketing strategies to adopt in this globalized world

C. The ricard marketing mix

Introduction

Many economists have examined the issue of globalization, in order to define its challenges, as well as the various factors that have led to this phenomenon.

According to Clarke and Wilson (2009), globalization is defined as "The process of Reducing Trade Barriers across the world by promoting the ideals of free trade."

In France, the wine and spirits are involved in this phenomenon of globalization. which is why it would be interesting at first to be concerned about this area by studying its major drivers of globalizations and defining the positive and negative aspects of this phenomenon of wines and spirits.

Then we will use the example of the company Pernod Ricard, by implementing marketing strategies and a marketing mix, in order to cope with globalization.

The influence of globalization on the wine and spirits sector.

Presentation of the wines and spirits sector

The sector of wines and spirits, becomes more and more complex, because now it has to answer on has multiple world stakes.

The French market is important, because, France becomes again the first producer to the world. In 2000 this sector represented 500 000 jobs : the wine creates jobs, allows to value the partimoine and favors the biodiversity.

When we speak about some French alcohol we make especially reference in wines, in particular, thanks to the fact that this alcoholic product is inked in the traditions of France, however spirits represent the biggest market share (80 %), their production amounts to 610 million liters.

In foreigners, it is especially wines and French champagnes that are asked the export. The market of the alcohol in France does not stop prospering. The wine and spirits sector plays a big role in the french balance commercial, because it’s an heavy industry of the French export. Indeed, the wine represents 10 billion euro of exports.

The main drivers of globalization in it sectors are:

- Reduction of the trade barriers (in particular in Europe with the treaty of Schengen)

- The evolution of the technology (the ogms which allow a better efficiency)

- The social and cultural convergence

- The cost of the product developments.

It’s thanks to these main factors that the globalization settled down within wines and spirit but what are it’s consequences?

The negative aspects

Because of the globalization, the market became more important and the wine growers, in one concerns of productivity, use ...

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The main drivers of globalization in it sectors are:

- Reduction of the trade barriers (in particular in Europe with the treaty of Schengen)

- The evolution of the technology (the ogms which allow a better efficiency)

- The social and cultural convergence

- The cost of the product developments.

It’s thanks to these main factors that the globalization settled down within wines and spirit but what are it’s consequences?

The negative aspects

Because of the globalization, the market became more important and the wine growers, in one concerns of productivity, use chemicals which denature the wine and even, causes dangers for the consumers health.

However there are still vineyards who preserve the notion of soil, by producing wines of origins, authentic and delicious.

The consumption of wine per capita fell with 1,8 liters a year. We observe from now, on that there is more of occasional consumption than regular. The current French way of life, doesn’t favor any more the daily consumption of wine, the workers are used to eat quickly and the restaurants offer excessive prices sometimes, what urges the customers to reduce their consumption. The consumer drinks occasionally some wine and thus brings more importance to the quality of the product.

We took the example of the wine, but it's the same with the other alcohols such as spirits.

The globalization led to the increase of the competitor,s in the wines and spirits field. Indeed this competition is translated by the reduction in the internal markets consumption, in the traditionally producing countries.

This competition influenced the wines prices, which led in the loss of small vineyards.

We assist to the disappearance of the small independent producers who can’t manage to cop with the big international producers.

The wine producers of the " new world " increase by important way.

The world market being rapidly expanding, and it from now on 10 years. So to distance itself, the vineyards have to find better distribution channels and have to claim their image.

The globalization allows in company to be able to sell their products to new countries, however certain countries have Muslim faiths what forbids them the alcohol consumption so the export of wines and spirit shall not turn to the Muslim countries. Furthermore there are countries where the sale of strong alcohol is forbidden, as the republic tchéque, so if french firm wants to export in this country it will have to choose its products to export and thus not to spread spirit. On the other hand the wine would be authorized.

The last negatives aspect of the globalization is the deportation cost of the goods. Indeed to export can be expensive and companies have to plan certain margins to realize a minimum profit.

The Positive aspects

The globalization allowed a lot of companies, to reorganize their intern work by specializing and by producing what they master best. So, it became possible, thanks to the acquisition of new technologies, to reach the improvement of the products quality.

We attend the birth of a prosperous competitors, however, vineyards have a French knowledge which put them shielded from the international competition.

The trade barriers opening as well as the important climate change, incites the producers to relocate by gaining a better efficiency for better prices.

But if we saw that there was a reduction in the wines and spirit export, it remains rather strong and represents the second heavy industry of the French export, after the aeronautics. Indeed we have atteind a historic figure of 10 billion euro in the export, in particular, thanks to the Bordeaux, to the cognac, and to the champagne.

One of the big actors of this export is China, indeed we attend a reel craze of the Chinese for the French wine, which is at present the first importer of Bordeaux. French spirits represent 80 % of the Chinese imports regarding spirit, against 50 % of French wines for their wines import .

We can thus say that the wine and spirits sector is essential in the French economy because without these drinks the French food-processing industry, shall post an important commercial deficit.

Even if we had noticed previously that certain cultures did not get ready for the alcohol consumption, we attend an evolution of the mentalities, which leads to a cultural convergence, so we can imagine ourselves, that the wines and spirit export can spread soon in new countries.

Thanks to the globalization, the wine becomes a real asset for France. Indeed, this made beverage left the French heritage, and, thus is completely integrated into the French culture. The wine becomes then attractive for the foreigners who think that by consuming some wine, they can discover the French culture. The image of French is, from now, on a person with a beret, a baguette, some cheese, and some wine.

The company Pernod Ricard face of globalization

The pastis ricard story of the Pernod Ricard company

Everything begins in Marseille of the 1930s. In coffees, aniseed liqueurs are secret legions, most of it are candestin , and too sweetish in the taste of the consumers.

To saint-Marthe, the son of a vintner, Paul Ricard, dreams about a formula " who answers to the taste of the largest number ". Every night, in a laboratory of fortune, he makes soak plants of Provence, seeds of fennel, essence of anise …

Finally, one day of 1932, he holds his recipe : " it will be called Ricard, the real pastis of Marseille! ".

Paul Ricard is only 23 years old. He has just invented the first French-style long drink: a volume of pastis with five volumes of water and ice.

" I hire my name, it proclaims, because I am sure of the high quality of my pastis and I am proud of its unique taste. "

Alumnus of the Fine arts(School of Fine Arts), the young man draws his first poster and his first label.

The success of the pastis Ricard is lightning. From 1938, sales reach more than 2,4 million liters. In 1984, the brand, known all over the world, celebrates its billionth bottle.

The company is present in 150 countries and the volume of foreign sales is 13.7 million liters.

Marketing strategies to adopt in this globalized world

Ricard company must implement strategies to retain its status as world leader. why it must strengthen its range appetizers, develop its close link with its customers, becoming an actor of high-end products, and of course continue to promote its brand.

To gain market share internally and externally, we must first reorganise its marketing department : three marketing services should work together to better commprendre sales trends, customer expectations and needs.

Regarding communication, pernod ricard company should participate in more international participation such as sporting events: the Olympics, compete competition tennis etc ...

Moreover, it should do more television advertising, it should also be present in social networks know no borders world (facebook, twitter ...)

to retain customers and strengthen intimate relationships with consumers, pernod ricard should implement mass customization, this means the ability of a company to meet the wishes of each client through the products, services, programs and mass communications designed and adapted individually.

the consumer brings a lot of importance to the appearance of a product which is why a budget should be reserved to the design and style of the product.

style is the external appearance and emotions it engenders. Many companies are looking to add style to their products, such as Pernod Ricard holds absolut vodka brand that has a specific style, the company should rework one of its other products.

The design brings together all the elements that affect the appearance and operation of the product for the user.

For the company, a well designed product should be easy to manufacture and market / for the consumer, it must be nice to look at and use, easy to open, install, master, use ...

ricard company should substantially reduce its prices in effect this fall, would that getting new customers, who thinks the product too expensive.

in product innovation, people working in research and development and those working in the service should liaise in order to create the product that meets customer expectations.

The Ricard marketing mix

We are going to the marketing mix of the most popular product of this firm : thericard pastis.

Product : The product Ricard consists of anise drinks, licorice and various Provence aromas. The marriage of the various ingredients is made according to the secret rules of an art which guarantees the constancy of the flavor and the Ricard aromas.

As for the range of products, it declines under bottles of various volumes, going of the miniature bottle of 25cl to the 4,5 liter bottle. This range of choice allows the brand to adapt itself and to meet the expectations of the consumer, but also to adapt itself to the various places, moments, and way of consumption. Products are thus in adequacy with the circumstances of tasting as with the places of consumption. The company moreover threw in 2003 Ricard "bottle", Ricard ready to drink.

Price : At the level of the mass-market retailing, the price is variable. Indeed, there is an agreement between the brand and the buying groups, and the price thus varies according to the contents of these agreements. The applied margins so influence the final sale price to the consumer.

As for the network of the C.H.R (coffees, hotels, restaurants), it benefits from price less advantageous than in the mass-market retailing, because of volume less important. Consequently, the C.H.R owes apply margins more raised to compensate for its costs of supplies, what echoes on the final sale price to the consumers.

Placement : The distribution concentrates essentially around bars, coffees, restaurants, discotheques and hypermarkets. Thanks to a diversification of its range of products, Ricard is omnipresent: of the liter bottle for hypermarkets in the miniature of 25cl for the discotheques, Ricard follows the consumer very closely, and accompanies him in all its night out. In any place, the consumer can drink a Ricard!

In mass-market retailing, the sales force Ricard has the peculiarity to cover the completeness of points of sale: hypermarkets and supermarkets as well as minimarkets.

Communication : We can analyze the communication and the image of Ricard according to several levels:

· Fame and image with the current and potential customers:

Ricard possesses a strong brand image, connected to it’s story. it enjoys a strong image and a fame of good quality product. Besides, this image respects the tradition and the standards imposed by its founder. The customers are generally faithful to the brand, and do not buy the other aniseed drink.

Most of the persons who do not consume the product know it nevertheless. We can thus say that the brand Ricard is anchored in the French culture. The brand is synonymic of quality; Ricard has a capital embellish with images hardly who allies conviviality and modernity.

· Fame and image with the distributors:

The distributors are proud to possess the brand Ricard in their shelves and cannot take place of its referencing. Ricard thus has a quality of image and efficiency for the distributors.

Ricard thus benefits from a strong capital of image. This profit is the fruit of an innovative and offensive marketing strategy which shows itself first of all by a powerful advertising and factual initiative. Indeed in 2006, Ricard launches a new advertising campaign, a continuation of a real advertising legend with a rate of gratitude amounting to 75 %. Its new slogan " Ricard Un Vrai " emphasizes the integrity, the quality and the lifestyle of a brand which represents in the front row French of spirits.

Next to these powerful advertising campaigns, the marketing Ricard also develops important promotional means intended to value the brand : bottles in limited editions, creation of objects by a lot of designers.

Conclusion

To conclude we can say that the process of globalization, does not stop proliferating. Just like the company French Pernod Ricard, firms have to cop with the globalization by setting up of new marketing strategies, or it would disappear. To be more offensive, to have a range of Prosperous product allowing to answer every culture and, to have a valuable price ladder corresponding to every portfolio, are the keys to success of a company within this globalized world.

Furthermore, with campaigns advertising executive inciting to stop the alcohol consumption the companies of wines and spirits owe regild their company and put in tone of the market of products less containing a lot of alcohol. So the consumers will respect the public health preoccupations because he will drink less, but you have to make so that what it drinks result from your company.