eja Vineyards’ Decision to Directly Market to the Hispanic Community Analysis The Case Study. “Ceja Vineyards: Selling to the Hispanic Wine Consumer? ” by Armand Gilinksy Jr. . Linda I. Nowak. Cristina Santini. and Ricardo Villarreal deSilva ( 2010 ) outlines a critical determination a little. household owned wine maker in California is confronting. The wine maker. Ceja Vineyards. is located in the Carneros part and is every bit owned by four Mexican born immigrants of farm workers. Amelia Moran Ceja. President. and her hubby Pedro Ceja. Artistic Director. along with Pedro’s brother Armando Ceja. Winemaker and Vineyard Manager. and his married woman Armando Ceja consist the ownership squad. Amelia. Pedro. and Armando grew up working in the Napa Valley vineries. and in 1983 purchased 15 estates in the Carneros part to get down their ain vinery.

They planted their first grapes in 1986. and had their first crop in 1988. From 1989 to 2000 they purchased extra secret plans of land and planted a assortment of grapes. Their wine grape turning company is named Vina del Sol. They produce adequate grapes for 65. 000 instances of vino per twelvemonth. In 2001. the company took another big measure and began bring forthing their ain vino. under the branded name Ceja Vineyards. Their vino is made utilizing their ain grapes grown by Vina del Sol. In 2002. Ceja Vineyards was named “Winery of the Year” by a panel of 90 vino authors. Now it is 2007. and their vino production has doubled about every twelvemonth to the current sum of 10. 000 instances a twelvemonth.

Problem Designation

The cardinal issue in the instance survey is whether or non they should do a conjunct attempt to aim Hispanics in their selling attempts. They see the potency of selling to Hispanics due to the inflow in Latino population in the U. S. . and the continued jutting addition. Their chief concerns. are that they will hold to alter their selling schemes. and incur significant promotional disbursals. They besides will non take down their vino monetary values merely to market to Hispanics. Amelia wants the company to concentrate on direct sells to the consumer so they don’t have to depend on the current distribution system.

Analysis

To understand the present state of affairs Ceja Vineyards is in and to outdo urge a class of action. three analysis techniques were employed. These three are the SWOT Analysis. Porter’s Five Forces. and Value-Chain Analysis.

SWOT Analysis

A SWOT Analysis was applied foremost to the state of affairs to measure the internal Strengths and Weaknesses. along with the external Opportunities and Threats. Ceja Vineyards has a battalion of Strengths. Their ownership cognition is based on a life-time of existent universe experience. They grew up picking grapes. and command every facet of the company vouching top quality. They have a alone history. in that they are Mexican immigrants and the company is household owned. The vinery is in a Prime Minister location. Carneros was the first vino part based on clime instead than political boundaries. Their vino is estate adult utilizing grapes from their vino turning company. Vina del Sol. The company is debt free from old ages of solid investment and planning. They implemented a vino nine. to be able to sell straight to the consumer.

Ceja Vineyards is non without its failings.

Their little production sum bounds their selling schemes due to non being able to vie caput to caput with the mega-wineries. They besides have limited distribution due to their size. though the outgrowth of Boutique distributers and their vino nine has helped. As for external factors. Ceja Vineyards looks to hold a overplus of Opportunities to increase their demand. They could aim the of all time turning U. S. Hispanic Market. There are presently 40 million Hispanics in the U. S. . 20 % who earn more than $ 100. 000 per twelvemonth. They are besides projected to be the fastest turning population for the foreseeable hereafter. In 2006. they had to turn people off from a vino tasting in Los Angeles because of the demand. Hosting more of these events could be good. Their vino nine members receive a discounted retail monetary value. but Ceja Vineyards could present a “Rewards Program” for enrolling new members.

The vino market has exploded in the 2000s. and has produced rather a few Menaces for Ceja Vineyards. Competition has become ferocious late as the figure of wine makers grew by 26 % from 2004-2007. The “three-tier system” for distribution does non prefer little wine makers. It places a different revenue enhancement rate dependant on province. and the “Big Five” distributing companies hold 52 % of the administering market. Boutique distributers are non able to run in all provinces. and are ever at menace of being purchased by the major distributers. Ceja Vineyards has done good for itself so far. but there is ever the menace of turning excessively fast. without the needed demand. The SWOT analysis shows a really high sum of strengths and chances that would propose an aggressive scheme if non for Ceja Vineyards personal concern scheme of slow growing.

Porter’s Five Forces

Porter’s Five Forces was following used to find the competitory environment. The Five Forces method is used to find a company’s net income potency for a peculiar industry. The Threat of New Entrants – High. Despite the high start-up costs. and that vineries and wine makers are a long term investing. it has non stopped people from fall ining the market. In 2006-2007. 12. 000 new trade names were introduced to the market. The figure of imports in the U. S. market has besides grown. Most perceptibly. imports priced above 10 dollars. that would vie with Ceja Vineyards. have grown “44 per centum yearly from 2005-2007” ( Gilinksy Jr. . Nowak. Santini. and Villarreal deSilva. 2010. p. 15 ) .

The Bargaining Power of Buyers – High. The chief purchaser of vinos from wine makers are supermarkets and warehouse shops. These location history for 80 % of wine retail gross revenues. Another factor that is increasing the bargaining power of purchasers is that there are few cardinal purchasers since the. “retail sector witnessed considerable consolidation in the early 2000s. due to amalgamations of both supermarkets and spirits shop chains” ( Gilinksy Jr. . et Al. . 2010. p. 14 ) .

The Bargaining Power of Suppliers – Low. Suppliers in this case. intend little market providers. Gilinksy Jr. et Al. ( 2010 ) provinces. “The top 10s wine companies in the U. S. controlled 82 per centum of all cargos. ” so while the larger manufacturers may hold some bargaining power. it doesn’t let any for smaller measure bring forthing entities.

The Threat of Substitute Products and Services – Low. Ceja Vineyards location is its greatest strength against the menace of replacement merchandises and services. While there are other wine merchandises. and other companies that sell even the same type of vino as Ceja Vineyards. there are merely so many that can bring forth it utilizing Carneros grapes. In the vino industry. the quality of your grapes are your biggest plus. and each location produces a distinguishable flavored grape. Peoples who prefer Carneros grapes will merely hold so many options due to its limited size.

The Intensity of Rivalry among Competitors in an Industry – High. As stated antecedently. the vino market is turning each twelvemonth. both domestically and internationally. As is the figure of vino manufacturers which is outpacing the market growing. This combination makes it harder each twelvemonth to make a demand for your merchandise with so many options available to the consumer.

Value-Chain Analysis

To understand if a company has a competitory advantage or non. a Value-Chain analysis can be performed on the company’s concern theoretical account. For this study. we will merely concentrate on the primary activities of the Value-Chain analysis

Inbound Logistics. Ceja Vineyards is classified as an estate-grown wine maker. because it is located in the same topographic point the grapes are grown. The vinery that grows the grapes. Vina del Sol. is owned by the same group so this makes this part of inbound logistics ideal. Being located in California. besides helps with the inbound logistics of bottles. corks. and bottle labels because California has the largest figure of wine makers per province in the United States. This is traveling to intend any supplies needed for vino devising will be readily available.

Operationss. The four proprietors consist of two married twosomes. and each has an every bit leaden ballot in any determination. They are besides household. and unrecorded nearby each other doing communicating easy. in theory. They besides grew up around vineries so wholly have a deep apprehension of what is needed to run the concern. The quality remains high because harmonizing to Pedro. “we’ve done quality control over every facet. from turning to the cork that goes into the bottle” Gilinksy Jr. et Al. ( 2010 ) . The lone betterment to the operations side would be if Pedro quit his twenty-four hours occupation and focused his full attending on the wine maker.

Outbound Logistics. This is the country that is the chief issue for the Ceja’s. The industry is set up to provide to the mass bring forthing wine makers. To mass administer their merchandise they would hold to utilize the “three-tier system” . which would merely pay them 50 % of the retail value of their merchandise. Other options are the dress shop distributers. but they can’t distribute to the full U. S. This is why Amelia wants to sell straight to the consumer through their vino nine. and savoring room to cut out the in-between adult male and increase their net incomes.

Selling and Gross saless. The grape bring forthing side of their company. Vina del Sol. is making terrific. The demand for it is really high as it already has five companies on the waitlist to purchase grapes. While. Ceja Vineyards gross revenues have doubled each twelvemonth since presenting their branded vino it is difficult to judge the ceiling. This is chiefly because the company has grown easy. and been argus-eyed of turning excessively fast. The company realizes though. they have to make up one’s mind on precisely how to market their merchandise though if they want to go on increasing demand for it. and that is the issue we are seeking to work out.

Alternate Solutions

The Ceja’s have multiple options they could take. and still be successful. The easiest option would be to alter nil. They have increased their gross and net incomes each of the past three old ages harmonizing to their income statements. Besides. they stated they had doubled their wine gross revenues each twelvemonth. and were ranked figure 2 in Wine Business Monthly’s Hottest New Small Brands. With the turning wine market and critic awards. they would likely go on to turn without altering anything.

They could make up one’s mind to aim the full Latino population. and market to a great extent. This mass selling scheme would make the most people. but would be really expensive. It would necessitate an apprehension from all the proprietors that it could bring forth important losingss during the passage period. They could look at Round Hill Vineyards & A ; Cellars as a design. They did an cultural outreach plan in 2004 to aim Hispanics and Asians. Their entire instance gross revenues increased 400 per centum from 2005 to 2006.

Ceja Vineyards could work straight with their current Wine Club members. inquiring them for feedback on what made them articulation. Offer the members wagess for buying so many instances a twelvemonth. or enrolling new members. Presently. half of the vino nines 1000 members are of Latino descent. They could talk straight to this part of the group to seek more of a grassroots marker run.

Ceja Vineyards could besides market to merely a part of the Hispanic community. Since they refuse to take down their monetary values. they could market to the nine per centum of Hispanics that make up the “mostly acculturated” per centum of the Latino population. Wine adviser Sandra Gonzalez stated. “these Latino vino consumers are 96 per centum more likely to pass $ 20 or more a bottle than non-Hispanics. ” ( Gilinksy Jr. . et Al. . 2010. p. 14 ) .

Recommendations

Ceja Vineyards in the enviable place of being a turning company with no debt in a turning market. After analysing Ceja Vineyards’ concern theoretical account and the province of the external environment. Ceja Vineyards should market to the Latino population.

As of 2005. there were 12. 5 million Hispanics in California entirely. This is an tremendous untapped market that if tapped into would let Ceja Vineyards’ to trust less on the large distributers and more on direct to consumer gross revenues. Ceja Vineyards’ should go on to turn their Wine Club through the usage of publicities and a wages system. while besides making out to the “mostly acculturated” per centum of the Latino population. They should besides look into the selling schemes Round Hill Vineyards & A ; Cellars employed to pull Hispanics and Asians to their trade names.