BRL Hardy: Globalizing an Australian Wine Company

Group No.5
Pooja Punjabi (PGP/17/102)
Perwez Alam (PGP/17/225)
Rupali Pawar (PGP/17/232)
Sakshi Singh (PGP/17/236)
Animesh Ratnam (PGP/17/256)

Industry Background
Vines introduced in Australia in 1788 and by mid-nineteenth century the vine making skills as well as primary
demand was improving

Transformation from trend of fortified wines to more of vineyards

In 1990s Australian domestic consumption was 18.5 liters per capita, 18
th
in the world

By 1996, 1000 wineries but 10 largest accounted for 84% share

BRL Hardy was at second position and selling under Hardy, Houghton, Leasingham etc.

By 1990s rationalization and consolidation increased the power of distribution channels

Australian wine accounted for 2% of world wine production by volume (2.5% by value)

Fashion Driven Australian wine was becoming Hot Trend and projected export potential was estimated to be $2.5
Billion

Four Key export markets: United Kingdom, United States, Germany & Japan
Company Background
Thomas Hardy & Sons and BRL followed different strategies and developed different organizations
- Hardy : Award Winning Quality Wines; Polite & Traditional Culture
- BRL : Co-operatives specialized in fortified, bulk and value wines; Aggressive & Commercial culture
History
International Ventures
BRLs efforts were quite modest when compared to Hardys history of exporting high value added products
To explore the U.K. market Hardy believed they should stop relying on just distribution channel and acquired Whiclar &
Gordon in 1989
To have greater access in Europe they acquired vineyards in France and Italy
All three European Acquisitions were soon under loss
BRL Hardy Merger
BRL had access to fruits, funds and disciplined management while Hardy brought marketing expertise, brands and know-how.
They merged in 1992
Most of the BRL executives were at top positions. Steve Millar former MD of BRL was now CEO of the merged group
Sales Revenue increased from 151.5 Mn to 375.6 Mn in 5 years & operating profit from 16% to49% (Exhibit-1)
New Strategy
Commitment To Quality Merger Efficiency Decentralization
Protect bulk business &
Concentrate on bottle
sales

Repositioning with
strategy emphasizing
quality branded bottle
sales
Initial focus on domestic
market to ensure merger
efficiency
Have decentralized
approach, but hold
management
accountable

Earn your stripes to
have decision making
Launching International
Stephen Davies, ex-BRL, new Marketing & Export Manager found dispersed portfolio with marginal
or weal presence globally
Export strategy base don strong quality brand image
From existing product portfolio, key brands were repositioned at price points varying between entry
level to premium. (starting from 4.49 to 27.99- Exhibit-9)
BRL Hardy initially focused on multi-domestic
corporate strategy by catering to local
responsiveness, but presently it is trying to
become a truly international wine company by
adopting a global standardization strategy
This shift could also be seen through their
intent of centralized decision making vis--vis
decentralized decision making
Global
Standardization
Transnational
International
Multi-
Domestic
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LOCAL RESPONSIVENESS
Corporate Strategy
BRL Hardy: Key Markets
Parameter US UK Germany Japan
2010 Export Forecasts
(in A$ Mn)
400, 900% growth 330, 65% growth 250 30
Popular price points Wine priced 5 or
above accounted for
48% of the market
3-5 accounted for
57% of the sales
Wine less than 2
accounted for 65% of
market
-
Market Capture
opportunity
Distant from most of
the producing
countries; opportunity
to capitalize on strong
international
distribution
Traditional European in
super-premium
segment: losing ground
at home turf
Traditional European in
super-premium
segment: losing ground
at home turf

-
UK was a part of the emerging new world trends, which marked drastic shifts in consumer behaviour
Consumers appreciate Value for money, tend to go for recognisable brand or grape variety
Europe Operations
Christopher Carson was appointed as UK MD and realizing disastrous situation of companies he implemented various
cost-cutting measures, systems & policies

ROI also improved from -2.1% in 1990 to 11.9% in 1992 & to 35.7% by 1996 (Exhibit-4)
Carson highlighted need to focus on Hardy Brands, French Winemaker product and protect unstable Chilean Product

Disputes emerged for marketing strategy between Carson & Miller regarding rebranding & re-labelling

Finally in 1993 re-launch with new positioning was done and was successful
Local demand for control over branding and labeling started emerging

Strategic decision to emerge as International wine company (However ,objected by various consultants)

Reynella was made the headquarter with deciding on labelling, pricing & branding. Overseas role was sales ,marketing
Carson and U.K. management disagreed and wanted local labelling and branding decisions.

According to him :More push strategy than pull is required. Retailers support and local labelling is important
Europe Operations
BRLH Europe
The European subsidiary has marketing and distribution competence and is strategically important as is
has a growing market potential
The subsidiary works as a partner with the Australian management giving it a lot of autonomy in
operations
How do you account for BRL Hardys remarkable post-merger
success?
BRL Hardys remarkable post-merger success
Presence of complementary resources by BRL and Hardy
BRL: Fruits (Vineyards), Funds and Disciplined Management
Hardy: Marketing expertise, Brands and Winemaking know-how

Selection of top management who had the vision of becoming global wine company

Balance between level of decentralization and accountability to Central management

Overcame financial crisis by emphasising on cost cutting schemes & streamlining operations

Prioritizing on doing many small things rather than few large things to mitigate the risks

Experienced resource like Christopher Carson who ensured sales growth in foreign markets

Mitigation of production risk by sourcing fruits from different locations

Rebranding, positioning and labelling of the products to emphasize the global image
Lewins Theory of Organizational Change
Immediate goal to improve the financial situation and resolve operations problems
Selecting the team that can implement necessary retrenchment and position


Focus on the Decentralized approach but at the same time mitigate the risks
Concentrate on the domestic market to protect its profit share
Earn your stripes by performing to gain respect from others but being accountable
for actions


Reposition and re-launch products to emphasize on branded bottle sales
Commitment of the firm towards Quality
UNFREEZE
CHANGE
REFREEZE
What is the source of the tension between Stephen Davies and
Christopher Carson? How effectively has Steve Millar handled
their differences?
Conflict between Stephen Davies & Christopher Carson
BRL was bulk oriented seller and inclined towards centralization where as Hardy was having local approach and
emphasized the importance of retailer relations when deciding how to label and position the brand
Davies belief: Centralized Management
Davies was part of BRL before merger
According to Davies Reynella headquarter had to be global
brand owner
Too much decentralization would lead to loss of control over
the brand
Carsons belief: Decentralized Management
Carson was part of Hardy Co. before merger and used to
work in decentralized organizational structure
U. K. market was very different from Australia market
Retailers own labels dominated in U.K. market
For managing progression distribution is key, retailers
support is important & labeling plays a vital role
He didnt want to lose the autonomy over operations in U.
K. market
How Steve Miller handled the differences
Millars objective from the beginning was to create a decentralized approach to expanding the newly
merged company but to still maintain management accountable

Davies & Carson were of conflicting opinion, according to Miller positive conflict is good for
organization & he was open to new & creative ideas

Carson was reporting to Davies for marketing and brand strategies whereas was submitting profit
reports directly to CEO Steve Millar

His role in negotiation between Davies and Carson could be viewed as indicator of weak executive
management

Should Millar approve Carsons proposal to launch D'istinto?
Why or why not?
1. Launching of D'istinto will help BRL Hardy
diversify its suppliers and maximize its
leverage as a distributor. Also sourcing from
multiple regions will reduce the weather
related risks.
2. Gives a consumer a different view of wine
with food and hence helps in brand building.
3. Gives brand recognition, they have been
working on brand recognition for a while.
4. For the average wine consumer.
5. In order to make up for the Australian Red
wine shortage with Italian red wine

1. D'istinto might overload human
resources which is already stretched by
the rapid expansion of the company
2. D'istinto overlapped with Hardys
core offerings of Stamps and Nottage
Hill. Hence, cannibalisation of existing
brands.
3. Miller worried about Carson loosing
focus.
4. The strength of the European sales
to carry another brand while they are
still struggling with Mapocho.
P
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C
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Verdict Launch D'istinto

1. BRL hardy wishes to adopt Aggregation strategy in line with its vision to become a
global brand.

2. However, considering the high potential of UK market, Adaptation for local market
is also required. Hence, we suggest that BRLH should follow a AA framework-
Aggregation and Adaptation

3. In order to cater to the local market needs of Europe for average priced wine,
launching of D'istinto is a wise decision.

4. The problem of cannibalisation can be handled as the wine market is growing.
What recommendation would you make to the organization
concerning the conflicting proposals for Kellys
Revenge and Banrock Station? What would you decide to do as
Carson? As Miller?
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Nottage Stamp Eileen Hardy Raynella D'instito Kelly's Revenge Banrock Station
Alternatives
Kellys OR Banrock
80% of the market below 4.49
price point
Need to launch a low-to-medium price range, quality wine brand
Quality
Price
Kellys Banrock
BRLH UK products v/s price points map
Banrock Station
-Environmentally responsible product-
Good Earth, Fine Wine
-Seen as potential global brand for BRLH
-Great success in Australia. Also became
largest selling imported brand in New
Zealand
-Launch in Canada and US approved.
Immediate launch proposed
-Proposed to be launched in UK at same
price points as Kellys revenge
-Universally Positive reaction to BRLHs
conservation efforts during planting and
development phase
-Ascendancy in Brand Power, Fashion
element began to influence demand of
wine: The eco friendly image may give a
boost
-Green image would have limited appeal
to UK consumers
-Dull label, not very attractive

Low price range
Made particularly for UK consumers
Attractive label appealing to the youth
and first time consumers

ASDA, UK grocery chain not enthralled by Kellys
Revenge
Fear of decentralizing too much
Kellys Revenge
Launch Banrock
Station
Drop Kellys
Revenge
Parent Companys management was against Paul Brownes controlling nature
Launching Kellys Revenge would mean excessive decentralization of
branding and marketing which was against the global strategy they were
trying to achieve
Banrock Station can be re-positioned to appeal to UK consumers. The
marketing campaign can be locally adapted
Kellys Image ran the risk of seeming too Australian, thus alienating and
failing to attract consumers in the UK, particularly among the young crowd
Kellys revenge cannot be established as a global brand, hence would be
excessive resource usage for one particular market
Kellys Revenge Vs Banrock Station Millers Decision
Kellys aggressive/flashy label will be good for targeting youth or first time
consumers in the growing wine market in Europe
Banrock had dull & colorless label design and its eco-friendly position will
not appeal to European youth
Choosing Banrock would mean Ignoring local knowledge, underutilizing
UK subsidiarys strengths, demotivation for UK management
Banrock also had similar values as Distinto (warm, relaxed), hence there
may be a conflict if both are launched
Banrock may also pose risk of currency fluctuation greater, price equality would
be difficult
Launch Kellys
Revenge
Drop Banrock
Station
Kellys Revenge vs Banrock Station : Carsons Decision


Distinto makes a valuable contribution both in terms of money and brand value
as compared to Mapocho which has spiralling toward its decay

Banrock is already accepted in many countries like US, Australia and New Zealand
and gaining popularity, whereas Kellys Revenge has already got negative reviews
in supermarket test and doesnt seem to attract the target audience

Carson should not be too much fixated on supporting Paul Brownes pet Kelly
Revenge and should look for better alternatives with Banrock
Distinto
Banrock Station
Kellys Revenge
Mapocho
Conclusion
Thank You