Inniskillin and the globalization of Icewine
Introduction
Inniskillin was created by Ziraldo and Kaiser in Canada in 1975. It became known over the world for its famous award-winning product known as the Icewine. Inniskillin earned popularity when it won the high-status awards like the 2004 “star product of the year” at the event titled, the “Frontier Awards Events.” Booth, Colomb, & Williams (2008, p.108) imply that a good research paper makes claims, backs them within reasons from reliable sources, supports them with evidence from reliable sources, and explains the reasoning principles. Therefore, in answering the case study questions, the paper presents claims, backs them with reasons, and supports them with evidence from the case study. Specifically, the paper examines the recommendations that Constellation Brands should consider as the best go-forward strategy for Inniskillin and explains how much effort Roger Provost ought to put forth to preserve the Icewine designation.
Deciding on what Roger Provost should recommend to Constellation Brands is a matter of weighing the benefits of the current distribution strategies in comparison to that of maximizing Inniskillin premiums margin through the use of Constellation’s distribution networks. The current distribution strategies utilized by Vincor entails the use of Duty-Free Shoppers Group (DFS Group) (Jones & Hirasawa 2008, p. 129). DFS Group is one of largest travel retailer in the world. The DFS Group owned more than 150 stores situated in 15 nations in 2005. Essentially, this is a very strategic channel to distribute products since it is tactical in terms of targeted customers. And due to the associated uncertainties of selling a product in the global market for a little known product, the use of DFS Group is the only competitive strategy for attracting international consumers of the product.
Additionally, the Vincor Company’s current distribution strategy is recommendable because it already has established customers who are loyal to the Icewine. For instance, Inniskillin products have gained popularity among tourists from Japan. Therefore, it is advisable for Constellation to use the strategy because it will enable the company to take advantage of the Inniskillin products’ good reputation that exists amongst the Japanese tourists. What’s more, the DFS Group distribution has practically enhanced the recognition of the Vincor inc. globally. The Inniskillin Icewine became a key term item in all the stores in Singapore’s Changi international airport in 2000 (Jones, G., & Hirasawa 2008, p 129). Moreover, the use of another distribution strategy other than the DFS Group by Constellation will erode the relationship of the company with the DFS Group. DFS Group would discount the Icewine, and this will affect the vigorous margins that DFS Group accrues to the group. Consequently, Constellation will be impinged in that it will have to pay a rebate to the DFS Group as compensation to their price to the competitors.
Current distribution strategy is advisable to be used by the Constellation due their well established distribution and marketing network in the United States and Canada. It would be beneficial for the Constellation in that it directly assumes the good distribution network previously established reputation within the Inniskillin products distributors. The Inniskillin brand has gained popularity in the United States, mainly in the one-premise locations as well as in the off-premise retailers (Jones, & Hirasawa 2008, p 129). Furthermore, the Constellation will also enjoy distributing the Vincor’s in the restaurants and bars which have become very well profound. The use of the agencies is instrumental in aiding the products of the company to obtain and maintain listings and sell the product in that state and province agency. Additionally, Vincor international has variety of licenses and distribution agreements for the sale of the company's brands and those of the third parties. This distribution agreement would help in trimming down the cost of distribution and marketing in the area.
The other reason for recommending the use of Vincor current distribution strategy is the fact that the Vincor’s trade secrets still remain unknown to their competitors in the industry. Upon Vincor’s initial expansion into the global markets through the utilization of the travel trail industry, it has managed to penetrate without disclosing its important strategies including the distribution approach.
The maximization of the Inniskillin ice wine’s premiums margins through the use of the Constellation’s distribution network may be disadvantageous. Vincor international, under the management of Provost, utilizes the differential strategy to increase the sales volume of icewine in the industry. Furthermore, Vincor international also used the entry-level ice wines to its suppliers in order to survive the in the ever-changing environment especially in when it expanded beyond the DFS Group. The case with Constellation is totally different. According to Symbol (2014), the global strategies used at Constellation to expand the consumption of its products is primarily premium wines that constitute a fixed price floor. If Constellation tries to utilize its distribution networks to distribute the ice wine with a fixed premium, then most likely the loyal customers will tend to be discouraged by the new price under the new company. The Constellation distribution network will turn to be ineffective as it would reduce the sales Volume for the ice wine. In addition, consumers will tend to suspect that the brand is a counterfeit of the original icewine under another different organization. The act of suspicion may display Constellation as exploitative.
The effort that Roger should put forth in encouraging the VQA to preserve Canada's Icewine designation
In order to protect icewine from the threat of imitation by counterfeiters, Provost has to ensure that the laws protect its company’s brand designation. He should raise concerns about the counterfeits of the Vincor’s company products both inside and outside Canada. It is the role of the VQA to carrying the review as part of the verification process as indicated by Carew & Florkowski (2012). Provost should assume the responsibility of making sure that brands that imitate the Vincor products are approved through testing and then approval. If any changes are made to be a label after approval, corrective orders must take a full course. As in France, it is wise for Provost to agitate for designation protections. Collective action to demand such rights would help considerably to protect original brands from counterfeits.
Provost in an effort to protect the company’s product from the threat of counterfeiting and vague brands should make sure that wine approval should only be issued upon the supply of compliant label. The VQA should check to ensure the labels applied to all wines conform to the requirement stipulated by the VQA label approvals. Provost as a concerned individual should request the VQA additionally to verify the wines labels that are similar to that of his company product. The wines that do not meet the required standard by the VQA should be prohibited to be designated as the VQA products (Carew, & Florkowski 2012, p. 39). Provost should ensure that the icewine be designated as the ‘Icewine’ for the sake of authenticity
In the contemporary global economy, the idea of preserving the brands designation can be considered as a futile effort. The need for the designation protection can be perceived as an anti-globalization movement that discourages free trade. The drawing of boundaries on which drinks to produce restrict the participation of competitors from entering the particular markets. VQA can potentially make it very cumbersome for others actor to gain entry into the wine industry in Canada and worldwide too. This protection will limit competition in the wine industry, and free markets proponents will start agitating for the consumers’ rights that becomes limited. And eventually the forces of consumers’ power will succeed and thus the laws that favor protection may be done away with the authority due to the consumers’ pressure. In addition, forces of free trade are unstoppable in the current world. Virtually all industries across the globe are operating under the forces of demand and supply. In a situation where the designation is protected the supply can be manipulated by the producers in order to alter prices to their favor.
Although the threats of globalization are real and sure to happen, protection of the Icewine as per the Canadian VQA can be justifiable due to some reasons. For one, the protection policy makes sure that the consumers get a wine that is of standard quality. The VQA ensures that the quality is guaranteed to the consumers. The VQA regulation, therefore, plays a crucial role of ensuring that quality is not compromised unlike in a free economy where such regulation may be counterfeiting is common. Nevertheless, regulation will still remain a futile effort because of its limitations to the consumers in terms of products variety.
Recommendation and suggestion
The best measure that Provost should take into account to mitigate the threat of imitation and counterfeiting is to create a massive awareness about the uniqueness of icewine. A vivid narration on the taste of the icewine will be crucial in countering the threats of the counterfeit products especially in the countries that are famous in selling the vague icewine. Additionally, as a chief marketing officer, Provost should ensure that the company trademarks are well known and easily identifiable by the consumers worldwide. Proper awareness will be the best alternative in countering the inevitable forces of globalization particularly in areas where the icewine is gaining popularity. Furthermore, Provost needs to introduce a diverse production line so as to enhance distribution competitiveness in the industry. This measure would be prudent because it will help company overcome the weakness of lack of product line extension.
References
Booth, W. C., Colomb, G. G., & Williams, J. M. (2008). The craft of research (3rd Ed.). Chicago, IL: University of Chicago
Carew, R., & Florkowski, W. J. (2012). Regulatory and institutional developments in the Ontario wine and grape industry. International Journal of Wine Research, 4(25), 33-44.
Jones, G., & Hirasawa, Jillian. (2008). Inniskillin and the Globalization of Icewine. Harvard Business School Case Study, (9-805), 129.
Symbol, S. T. Z., & Year, F. (2014). Constellation brands, Inc.
