Market Analysis and Potential of Penfolds Wine Company

The wine industry in Australia is a very progressive industry has is well renowned around the world for its quality products. The market delivers consistently high grade wines with value for money products which matches even with the lifestyles of the consumers. The per capita consumption in the county stands at around 25 litres a year at present which is a significant raise over a decade back (Theobald, 2008). The market has seen significant rise in exports in both the value and volume terms in the industry compared to the period a decade back. The players in the market continuously deal in exporting the wine as it is in demand across all the major markets across the world. This has kept the growth at a sustainable rate in the market. 

                The market has grown well in the past few years much of which is because of the demand from other countries. The Australian market has also grown domestically as people have become more agreeable to quality wines from premium grape varieties. Much of the farmland has been devoted for acreage thereby increasing not only the supply side but also the quality side. The sales of wine much depends on the economic cycle both within and outside the country (Snow, 2009). Considering the domestic market the sales took a hit because of the recessionary effect as disposable incomes as well as consumer confidence took a hit. However the effect seem to be reversing and the market is soon picking up. Also there is a change in the consumer behaviour over the years. The customers have developed a taste for wines and majority of them look at wines as a necessity rather then a luxury product. Close to 3 million tonnes of wine grapes were crushed in the year 2009-10 and the amount was one of the highest recorded in the country (Richards, 2009). The supply has been continuously increasing as well as the competition in the market as there is plenty of opportunities in the market for growth.

                The market has been shifting to take into consideration the preferences of the consumers towards high speciality wines. As a result of which the country has seen a surging production of red winegrapes as the demand is dominated by high qualities of red wine. The players are also trying on new varieties of grapes in the market on a small scale to do experimentation in the market for success.

STP Analysis

The wine market in Australia can be broadly classified into two segments which are wines which fall in the affordable segment and the ones which fall in the premium segment. This segmentation is basically based on the consumer buying pattern which depends on the income, usage, awareness, user status, attitude and lifestyle of the customers. Penfolds mainly target the customers who fall in medium and high income group segment, have an active lifestyle, high user of wines, very loyal to a brand and are very aware of the wines in the market (Jade, 2010). Penfolds has launched wines specifically to these customers which demand high quality wines with taste and texture.

                Penfolds is positioned as a premium brand in the market and its wines are one of the most sought after wines in the market (Kramer, 2008). The company positions itself on the lines of luxury in the market as its brands are well known in the market. Also the manner in which it makes wine is very different from the industry standards thereby helping the brand achieve a level of differentiation in the market.

Customer Analysis

Majority of the customers of Penfolds falls in the premium category which indicates customers with high 

disposable incomes. The brand stands strong in the premium segment although the product portfolio is wide enough to even accommodate the affordable brands. However it is a strategy to first attract the customers and then move them higher on the value chain. Customers of Penfolds falls in the high income profile having high disposable incomes. They are generally from the business background and thus have an average age of 35 plus. The customers are very loyal to the brand which can be supported by the fact that some of the brands have strong sales even after 4-5 decades of them being launched in the market (Clark, 2008). For e.g. Penfold’s Grange is the leader in the wine market in Australia even after four decades of its launch. The customers prefer it and are loyal to the brand and even promote the brand among others.

                The customers have also evolved over the years as they have moved to more premium brands in the market. Much has been due to the successful product profiling which first attract customers to the Penfolds brand and the lure them to move across the chain. This has resulted in customers demanding more of luxury wines in the market which has increased its share in the overall sales (Estelami, 1997). It is also seen that customers become more loyal to a brand when they move up the value chain and look forward to premium range offered by Penfolds in the market. Much of it has been the characteristic of the wine industry as consumer tend to develop a taste for particular type of wines and since Penfolds has a different taste and texture of wine because of its production process, customers like it even more (Jade, 2010).

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