Chateau Margaux: Launching The Third Wine Harvard Case Solution & Analysis


The global wine industry has reached its maturity level which is depicted by following symptoms.

  • France is losing shares in wine market of new world countries that includes market of Australia, South Africa, Argentina and New Zealand.
  • There might be shift in the taste of Connoisseurs to new world wines.
  • Expansion of business operations by competitors around the globe,
  • Company has no structure besides production. No sales, no marketing.


Mr. Andre Developments purchased chateau in the year 1977. The company is located in the Bordeaux region, which produces the most prestigious wines in France. Officially this was classified as a first growth in the year 1855. Mr. Andre died in the year 1980 and after him; his daughter Corinne inherited the state at the age of 27.

After the death of Mr. Andre, Corinne hired Pontallier as the new general manager of the company. They both transformed Chateau Margaux from the worst to one of the best first growths.

Common Causes:

Pricing Technique:

The top management of the company has to review their pricing procedures as the company is to make a new product and they have to observe the behavior of the customers on the prices of wines.

Innovation Strategies:

The company is going to innovate with the new wine as the wine will be having a new taste therefore,there is a risk of losing and the brand name will also be affected by this loss.


The competition is very high in the market as the wine industry is a big industry and companies all over the world are selling wines in a competitive market therefore,the risk of losing the name is high as the competitors will also want to defame the company.

Diversification Strategies:

The company and its management should look to diversify and invest in more business as travelling and hotels as the company owns a huge area covered with farms and tress. The company can also look to invest in the business of hotels.

Primary Problem:

Should the exceptional wine from 2009 be sold in bulk or under its own name?

This raised some more question.

  • How should company sell this 2009 third wine?
  • What happens if there aren’t enough sales a year?
  • How should they price it?
  • How should they promote it?

Supporting Facts

Following are the factors which acted as a hurdle for the top management of the company in order to develop an effective strategy in order to tap into the market efficiently and effectively.

Consumer Attitudes:

The consumers of wine are mostly related to one or two brands, which they prefer to have. The other type of consumers includes those customers who will pay high prices for the sake to show off. Other consumers are price related consumers, which fluctuates with the prices of the product.

Distribution Channel:

The distribution channel of wines is as old as the production of wine on the commercial plat form. The channel of wine distribution is slow and stale.

Lack of Communication:

The communication gap between the vine producers and their customers is due to lack of interaction between them.

Target Market segment and promotion strategy:

  • The target market of the wine producers is the customer of average income and the price of the wine is lower than latour wine. The company is looking to distribute the wine in trendy restaurants and wine shops.
  • The company is not making efforts to market its products as the company is already well known in the market in order to trade minimal or no marketing is done.

Strategic Partnerships:

The company is in contact with the distributors from years and is following the traditional distribution process so the strategic alliances are high.

Laws and Associated Cost:

  • The laws and regulation regarding the production of wine is limited by the government to 200,000 bottles a year and the age limit is also a restriction on the purchase of wine.
  • The cost of making wine is high as the traditional methods are used to make wine as the basic thing is to maintain the taste of wine which is the most likely thing about the wine.

Alternative Solutions:

Alternative 1:

The company should stick with the current distribution structure and produce wine with the company’s brand name.Chateau Margaux Launching The Third Wine Case Solution

The company is well known in the market and has a group of loyal customers around the world where there wines are sold. Therefore,the company should produce the wine with the name under its name.

The current distribution network is an old structured system thus,it will be a positive decision to stick with the system and provide a good quality product and let the customers decides about the products success........................

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