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Introduction
The negotiation alternative for establishing the wine distributor between Yarra Wines Limited and Falcon Prestige Wine distributor will be based on the actual reality of the wine market and analysis of the wine distribution principles. The key aim of the alternative discussion will be to analyze and confirm the best alternative, as the wine market is subjected to particular rules and principles.
Market Analysis
Because Falcon Inc. is an American company and the distribution network will be arranged on the territory of the USA, the US wine market should be analyzed. Therefore, wine consumption has increased for the recent five years in the USA, and the total sales reached $ 25 billion. As it is stated by Rose (731):
Wine demand is likely to be boosted strongly by the aging of the U.S. population. Per capita consumption of wine increases with age, with early consumers drinking only 6.6 bottles per year. Consumption peaks at 16.4 bottles annually among adults 50-59 years old. “Baby boomers, more than any other previous generation, view wine as a simple, affordable luxury.” Given that the strongest growth in population over the next 10 years will be among these adults, who currently consume about 40 percent of all wines, it is easy to understand Motto’s bullish outlook.
In the light of this fact, it should be emphasized that the US wine market is one of the most rapidly growing in the world, and by the wine market forecast to 2012 it will continue growing due to the increased interest in wines among the young population, and constantly changing wine consumption among women.
Alternative Negotiated Agreement Discussion
The general outline of wine supplies, and cooperation with Falcon Inc. should be based on the statement that Yarra wines will be responsible for the quality of the product, while Falcon undertakes to pay all the custom tariffs. Yarra company will have to control the quality and quantity of the supplied wine, as this is the only reasonable point why Falcon should cooperate with Yarra Company.
Since the key aim of Yarra is to increase the sales volumes to 27 000 bottles per year, quality control will have to be number one priority for both companies. However, while Yarra has to control the quality of the product, Falcon Inc will have to consider the effectiveness of the sales. This will involve the necessary marketing efforts, as well as offer all the necessary rebranding tips for more effective penetration to the US market. Since the actual importance of quality control is explained by the necessity to hit the target audience, the marketing background study will be under Falcon’s responsibility.
Ohio, Indiana, and Michigan are regarded as the states for the initial penetration efforts, the Falcon Inc will have to study the marketing backgrounds of these states, and consider the opportunity of improving the brand name awareness of the Yarra wines. This will be required for proper assessment of the company’s potential, as well as improve sales activity associated with the necessity to penetrate.
By the research by Just-drinks.com (2):
There is potential to build sales among less regular wine consumers. Wine Intelligence divides the drinking audience into five distinct consumer groups: Generation Treaters; Premium Brand Suburbans; Senior Sippers; Kitchen Casuals; and Un-engaged. Generation Treaters, with 42%, and Premium Brand Suburbans, with 32%, account for 74% of total wine sales in the US.
In the light of this statement, it should be emphasized that Falcon Inc will have to consider proper sales volumes for fitting the supply rates to the consumption rates of wine in the regarded states.
Therefore, the agreement will be based on the necessity to establish an exclusive distribution network in Ohio, Indiana, and Michigan. Since Falcon Inc. is intended to distribute the total allotment of 13 333 bottles of Cabernet Sauvignon, the sales volumes of Yarra’s wine will have to be sufficient for the further increase of the supply. Hence, the actual importance of the agreement is closely associated with the necessity to establish mutually advantageous cooperation, with mutual responsibilities. Hence, Yarra company will have to control the quality and quantity of the supplied goods, as well as take care of crossing the Australian border, while Falcon will have to mind US custom tariffs, and the development of the distribution network. (Hayward and Lewis, 124)
The analysis of the US wine industry will have to be performed by both sides to the agreement, and the study of market trends will have to be considered by both sides. Falcon will have to change the promotion and marketing strategies, and Yarra will consider product changes and adaptation by the latest trends.
Conclusion
The best alternative for the negotiated agreement will have to consider the proper assessment of the marketing background and research of the marketing trends. These researches will be performed by both cooperators. The further division of the responsibilities will be associated with the necessity to supply and distribute the necessary quantities of wine.
Works Cited
Hayward, David, and Nick Lewis. “Regional Dynamics in the Globalising Wine Industry: The Case of Marlborough, New Zealand.” The Geographical Journal 174.2 (2008): 124.
Just-drinks.com. Report in Focus – US Wine Market set for Continued Growth. Just-Drinks.com Editorial Team. 2008.
Rose, Brian. “No More Whining about Geographical Indications: Assessing the 2005 Agreement between the United States and the European Community on the Trade in Wine.” Houston Journal of International Law 29.3 (2007): 731.
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