Case study Pepper River – writing

1. Read the article below about Pepper Creek, an Australian winery.

2. Sara sent the following email to her father:

„Dad, we need to talk when I get back from Melbourne. I finally managed to meet Mr. Parker, but he

doesn’t want our wine. The usual reasons – we’re too expensive, we don’t do softpacks and we don’t do

blends. What’s more, they’re not interested in distributing Pepper unless we increase our volumes by 

around 40%. Look, Dad, you really have to take this seriously. I know you make the best wine in the state,

but we just can’t compete with the majors - not on price, not on volume, not on transport & packaging

costs when you insist on bottles not softpacks. And as long as you refuse to blend, we’re going to lose out 

every time we have a bad summer. Australia now exports more than half of its wine production with much

better values per litre than at home – we’re losing market share in S. Australia, we’re having to cut 

margins and we’re getting nowhere on the export market.

I had another call from Chris Willow at WWM / their offer to join the group is still open. I know it means

change, but it’s the only way. WWM shipped 16 million litres last year – mostly to the US. We can be part 

of their success – if you can’t beat them, join them!” 

3. Information on the wine export market. According to the latest figures, the main

world wine exporters are: Italy (27%), France (23%), Spain (14%), Australia

(6%), Others (30%).

4. The table below gives information about Australian wine exports in 2011.

Australian wine exportsin 2011

Volume in ML (millionlitres)

% Change (as comparedwith 2010)

Value/Litre

United Kingdom 216 17.9 $4.19

USA 120 53.3 $6.17New Zealand 26.7 14.7 $3.49

TASK 

 

Klein wins gold Wine grower Johnny Klein celebrated last night. For the third time in a forty-year career, his Pepper

River Chardonnay has won a gold medal at the South Australia wine festival. I’m over the moon, was

 Johnny’s reaction. It just shows that traditional methods will always produce a better wine than the

tasteless, low quality wine that today’s multinational conglomerates are selling.

Pepper River is well-known in the region for its traditional but expensive production methods. The

winery was founded in the 1930s by Johnny’s father, Jacob, who brought French know-how and

methods with him when he emigrated to Australia from Alsace. Johnny took over Pepper River in the

mid sixties and as the Australian public’s taste for wine developed, the family business grew. In recent

years, however, unfavourable climatic conditions and fierce competition from the industry’s majors

have made life difficult for Johnny Klein; only the exceptional marketing skills of his daughter Sara have

kept the winery in business.

 Just a few days away from his sixtieth birthday, Johnny is looking forward to handing over the family

business to Sara in the near future. “Sara has done a terrific job in building up a loyal customer base –

over sixty percent of our production is sold to customers who have been with us for more than five

years”, he says. “I am confident we can continue to satisfy discriminating customers who know the real

value of traditional quality”.

 

 You are a management consultant and you were invited to provide solutions. Use the

information above to analyse the current situation of the company in terms of Strengths,

Weaknesses, Opportunities and Threats. Based on your findings, write a report addressed to

 Johnny Klein including the strategy you propose the management should adopt. Write

between 250-300 words.