Business Plan: Canadian Red Wine Business Plan for Los Angeles California

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Canadian Red Wine

This is a preliminary plan for the Tropika company to develop a unit that will import Canadian red wine into the Los Angeles market and establish that product as a viable item for the low to medium priced wine consumer. Canadian wine has a long history, but it is not well-known in the U.S. market. In contrast, American wines, especially from California, are very well-known in the Canadian market and have a good share of the Canadian wine market. California wineries have sought to keep out other wines from the market for some time, but that has less power in a time of free trade and globalization. The consumer does not know Canadian wine and must be educated to its value. The Tropika company is already involved in the import and export of wine to and from California, with an extensive network for the distribution of California wines in Canada. Creating a reverse flow for Canadian red wine is not that difficult, though it will entail a considerable outlay to start the process moving and to market the product and reach the consumer. The industry is affected by a number of forces, from weather that might alter the makeup of the wine to taxation that makes it more costly. Most of these forces cannot be controlled by the distributor, who will have to cope with each of these issues as they become important. Other foreign wines have made in-roads into the American market, notably Australian wine, which has no more reputation than Canadian wine, suggesting that Canadian wine has a good opportunity to make a mark and to gain a market share. Tropika has the opportunity to use its expertise and its distribution channels to create a new market and make it valuable for American retailers and Canadian producers.

Introduction plan is to be developed for the business called Tropika to import and sell Canadian red wine from Canada to Los Angeles, California. In considering the value of such a project, analysis is to be made of the company, the product, the Canadian economy, and the market in Los Angles for imported wine and specifically for Canadian wine, to the degree that a market for wine from Canada can be assessed in this market. One reason why there would be some difficulty in making this latter assessment is that the importation of wine from Canada is a small part of the market today, showing that this particular wine does not have a large following, especially in a market that has concentrated largely on selling California wines and on importing wines from France and to a lesser extent Italy. However viable the Canadian wine industry may be, it is not well-known in California and would be seen as another competitor for the California industry, which might create some opposition. Still, the retail wine business is more independent and will import any wine that can be shown to have a market of sufficient size to make importation viable. Some market can be discerned for wine from countries not known for win production such as Australia and some former Eastern bloc countries. Some of these wines gain a market interested in the exotic nature of some imports, though this would not be likely to apply to wine from Canada. To gain a larger market share, the wine has to be of high quality, perhaps with characteristics not as well defined by other wines, and must be sold at a price that matches the market formed around that brand and type of wine. The market for red wine is healthy in California and could be reached by a new wine with robust qualities that would appeal to the consumer. The analysis of the Canadian brands should consider the characteristics of those brands and how they might be received in the American market.

Tropika

Tropika is a company that came into existence in 1990 as a wine distributor in North America, linking wineries and retailers in the United States and Canada and serving the needs of both markets. The company has been involved most directly in distributing wine from California vineyards to Canadian retailers as part of the larger effort to make wine from California more competitive with established French brands, showing that the wines produced in California match and often exceed the more established French wines for various types of wine. The California wines have gained a strong hold in the market in the last few years, while Canadian wines remain less well-known and not as widely distributed.

Tropika was formed to distribute in both directions, though to date, the main part of the business has been to distribute California wines to Canadian retailers as well as to American retailers across the country. Tropika serves as a distribution center for a number of different wine producers in California, and the growth in the market for that wine has been increasing over the last two decades or so.

Tropika is headquartered in Los Angeles, a convenient location for bringing wines in from the Napa Valley region and also a port for importing French and other wines into the country. Wines are also distributed by ship north to Vancouver for distribution across Canada to different retailers in the different provinces.

The nature of the business changes all the time as the problems involved in winemaking alter the nature of the product available. The complexities of winemaking are such that there is much still not known about why it produces the wines it does, and much is also not known about the many substances that go into the making of wine. The complexities that are seen in production account for the many variety of wines produced. Wine production is primarily an agricultural pursuit, and the vineyards controlled by the different wineries are therefore a vital element in its business and in the success of its products. Production can be affected greatly by weather, leading to a shortage of supply in some years and to inconsistent quality in others. Just as the production of wine differs from that of beer and spirits, consumption of each also differs. It also differs geographically, with the consumption of wine being a daily occurrence in Mediterranean countries, and much less in the United States. Some markets, such as Japan and India, consume little wine. In the United States, wine consumption comes in behind that of beer and liquor, which is also the case in Canada.

The distribution channels for wine are also different, with sales through wine clubs, specialty shops, markets, and with few sales over the Internet because the system mitigates against it except in thirteen states. The market is segmented according to types of wine, brands, and price. Growth in the market has been steady in the United States, rising from $11.7 billion in 1990 to $18 billion in 1999, for instance. Today, the U.S. market ranks third in the world, though in terms of consumption the market only ranks thirtieth. The U.S. is now the second largest market for exported wine and the fourth leading producer of win in the world. The size of the market is considerable but also has a good deal of room for growth. Imports into the United States have also increased, as have exports. Both areas have room for growth. World trade patterns have also changed with the creation of the European Union along with the globalization of world markets, altering the balance of competition for many products. The segmentation of wines from most vineyards is on the basis of quality and price. Companies seek more efficient and effective ways of bringing these products to the market, and Tropika has been seeking ways of improving distribution and of reaching new markets, seeing the quality of Canadian red wine as such that it could be appealing in the U.S. market and could attract people interested in something different.

The company seeks to make adjustments to the distributor network over the next eighteen months or so, shaping its core business to be more effective and to acquire the products that are needed, while products that do not contribute to the synergy sought by the company will be jettisoned. This is a good beginning to shaping a new distribution system, by concentrating on the products that are needed. The company has a good reputation and so a good position in the market. The new products to be brought in from Canada have been proven in that market and need to be tested in the Los Angeles market to see what sort of clientele they can attract, how large the consumer base may be, and what sort of marketing will generate the most business.

Canadian Red Wine

Canada has had an expanding wine industry for some time, with the industry itself extending back some two centuries. Wine first came to Canada with the first settlers, and wineries were built by Italian and German immigrants in particular. Canada now has more than 400 wineries in nine… [END OF PREVIEW]

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Canadian Red Wine Business Plan for Los Angeles California.  (2008, May 13).  Retrieved May 19, 2019, from https://www.essaytown.com/subjects/paper/canadian-red-wine-business-plan-los/49175

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"Canadian Red Wine Business Plan for Los Angeles California."  Essaytown.com.  May 13, 2008.  Accessed May 19, 2019.
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