Ceja Vineyard, a California based producer and marketer of premium wine has seen a decent amount of growth in their business over the last three years. However the owners of Ceja vineyards, led by CEO Amelia are trying to decide whether to primarily target the Hispanic market which will cause them to completely change their marketing efforts or leave it up to the distributors and retailers to make that decision.
For the Ceja vineyard team to be able to determine what decision to be made we must first look at some of the key issues they face. First they don’t have a business or marketing plan to execute a drive into the Hispanic market and they are also limited in marketing due to the three-tier system. Another issue that is noted is that the price point of their current premium wines might be too high for the Hispanic market. Finally the last challenge which is more like an opportunity is how Ceja vineyards will manage the growth of the wine club, which has seen a considerable amount of growth since its inception.
According to the data, Amelia clearly states the lack of a business /marketing plan that Ceja vineyard has when she states that the last time a plan for the business was developed was in 1990 during her student days. The data also reveals that expanding distribution by traditional channels would be extremely difficult due to the limits imposed by the three tier system. The three tier system comprised of Producer-distributor-retailer. This was dominated by the big 5 us distributors which made it extremely difficult for smaller firms like Ceja vineyard to compete. Another issue that Ceja vineyard had to face was the uncertainty to how the Hispanic consumers would receive their higher priced wines.
Pedro, Amelia’s husband according to the data believed that to target the Hispanic consumer they would need to reposition their price, a marketing strategy that could hurt their boutique distributors. However according to appendix 2, the wine market council said the Hispanic consumer wine growing rate was higher than any other demographic. The research also said that Hispanic market was an untapped market for wine and that they were 96percent more to spend 20dollars or more on a bottle of wine than the average American consumer.
Finally the growth of the wine club was deemed as the biggest opportunity for Ceja vineyard. According to the data this group had grown an extensive amount from its inception date. It was launched in 2003. In 2004 it had 150 people but in 2006 it had already grown to 1000 people. This fit right to Amelia’s plan of marketing to Hispanics because out of her 1000 members half identified themselves as Hispanic. This market would be was the best shot at Amelia’s goal of eventually selling 80% of production directly to consumers.
It is obvious Ceja vineyards needs a new business/marketing plan since their last plan was about a decade ago. Also Due to the lack of flexibility the three- tier system gives them in competing against the big US wine distributors I would suggest they stick to the plan they have right now and let the distributors pick their market because currently they don’t have the marketing expertise or capital to reposition their brand and price completely to fit the Hispanic market. Finally I would suggest Ceja vineyard invest at least 30-40%% of their capital and resources towards the wine club. According to the data they had to turn back people at the last event in Los Angeles. This group was already responsible for 25% of their wine purchases and was growing at an exponential rate. Ceja vineyard will need to harness resources to cater to this group because it was their future “bread and butter”.