Gascon winery signed a deal in 2007 granting rights to the company Constellation Brands (now named E. & J. Gallo Winery) to obtain all of it importing and distribution rights to the company while maintaining control over the brands property (winesur.com, 2008). Constellation Brands is a U.S based company that is a major producer and trader of wines. Company owners stated “”We expect it to become a national distribution brand present in the 50 states; during the first year we mostly worked in stores, now we are focusing on supermarkets. In May, we will enter the Publix chain, that has stores in Florida, Georgia, South and North Carolina” (winersur.com, 2008). By incorporating this business development Gascon winery has used the regionalization, or the joint venture strategy (Deresky, p.201,213). This strategy allows local markets linked within a region to decide on their own investment locations, product mixes and competitive positioning while gaining insider access to the markets. It’s also using globalization as a strategy since it is establishing a worldwide standardization of its products and marketing (Deresky, p.200). Along with Publix you can win this wine in local liquor stores in the Tennessee region as well as Target and Walmart. This product is also found online, which would incorporate the E-Business strategy into the mix allowing it to have rapid entry into new markets (Deresky, p.213).
What other countries does this company export to?
The United States is the largest importer of the of the Malbec brand wine that is distributed under the E. ; J. Gallo Winery collection of wines. In 2008 alone, Argentine Malbec, which is the main product of Gascon, showed exports to the U.S. had increased 61 percent, according to data compiled from customs filings by the Argentine research firm Caucasia Wine Thinking. Over the course of the previous two years, Malbec wine exports to the U.S. increased by an annual average of 54 percent (winebusiness.com). Other findings on this companies export data were not easily obtainable due to lack of information the company provides. It is worth nothing that online retailers that purchase this product from E.; J. Gallo have the capability to ship this product to anywhere in the world that allows the importation of wine.
What are the company’s local and international risks in doing business in this country?
Gascon faces many risks doing business in the country of Argentina. Economic risk such as extremely high inflation has become a potential headache for the government’s growth related economic policies. Consumer prices rose 10 percent in the 12 months through February 2018 according to official data, but private forecasts say real inflation is running at least twice that rate (reuters.com). Political risks also play a part in the company’s wellbeing in the country as well. President of Argentina, Mauricio Macri, has been on the receiving end of a lot of criticism from people in Argentina. Several different sectors in Argentina have suffered from greater exposure to international competition and energy prices have increased since government subsidies were cut (import-export.societegenerale.fr). The Argentine government has also faced extreme difficulties in trying to lower the countries high levels of unemployment which is something that a company must constantly stay aware of as its entire workforce falls into this category at some point due to seasonal work. Almost half of the national workforce in Argentina is thought to be employed in the informal sector (import-export.societegenerale.fr). There is also turbulence with the citizens of Argentina, pigeon-holed by constant tensions between the Government and trade unions over the political reforms that were announced by the president. Almost one third of the population in Argentina lives below the poverty line, its infrastructure requires more development for access to electricity and water in rural areas is not always ensured which is something that is considered a must have for a company like Gascon since its product is made entirely of grapes (import-export.societegenerale.fr). Gascon’s international risk of doing business in Argentina is low as the country has taken a very active role on the international stage. According to world bank, the country has assumed the presidency of the G20, expressed intention to join the OECD and became an observer in the Pacific Alliance that’s purpose is to guarantee the freedom in the movement of Latin American goods and services (worldbank.org).