Strengths
Cloudy Bay is responsible for making New Zealand Sauvignon blanc an international brand.
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Excess production: A recent report voices concern over predictions that this year's harvest could weigh in
at a record-breaking 300,000 tonnes or more, pushing supply further out of sync with demand. It could be a
weakness for the wine industry however it can be viewed as strength for cloudy bay since they can export
the surplus.
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By Jo Burzynska
12:00 PM Sunday Jan 16, 2011
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Specialization in Sauvignon Blanc: The main produce of cloudy bay is Sauvignon Blanc wines and clearly
works as strength for them. The company makes other wines like Riesling and pinot gris but in lesser
quantities. http://cloudybay.co.nz/OurStory/CompanyHistory
Popularity of New Zealand wines: New Zealand wines are popular all over the world for their quality. A
recent example is where Walt Disney selected two new Zealand wines for it’s 2011 wine list. The list
includes Sauvignon blanc as well.
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Owen Hembry
5:30 AM Monday Sep 6, 2010
Company’s success rate in international business: Where every other New Zealand wine company was hit
by recession Cloudy Bay doubled it’s annual profits in European market.
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Anna Hart
5:30 AM Saturday Oct 16, 2010
High quality wines and own plantations: Cloudy bay uses traditional methods as well as modern techniques
to produce some of the finest sauvignon blanc wines which adds to its popularity. The company invests
innovation to keep an edge over others. Company has its own plantations in Marlborough region and does
not rely on others.
Own plantations: The company has its own plantations in Marlborough region and does not rely on others.
Weaknesses
Lack of experience in Asian markets: The company has sold wine in European market and has been
successful however the Asian market works in an entirely different fashion. This could be termed as one of
the prime weaknesses for the company.
Pressure from local market prices: In early 2000 the industry was hit by frost for two consecutive years and
the supply was low which led to the increase in wine prices. The wine companies enjoyed the high prices
until 2008 when more players entered the market and grape production also increased. There was more
wine and less demand and as a result prices fell. Simultaneously the country was hit by recession as well
and the profits of all wine makers went drastically down. The prices still havn’t rolled back and profit
margins in the local market have gone down. Which puts more pressure on international business
investments.
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Neal Wallace on Sat, 4 Sep 2010
New Zealand Dollar: The New Zealand dollar has got stronger in the last few years and as a result the
profits from foreign markets have gone down in terms of home currency due to exchange rates.
High initial capital investment: To set up business in Thailand it would take a high capital investment. The
research process might also be expensive to read the consumer behavior. Moreover there will be a
requirement to have offices in Thailand for better handling of operations.
Opportunities
Asian markets are a global driver: Asia as a whole is expected to be the driver of world wine market growth
– rising consumption coupled with growing middle class purchasing power, considerations of health
benefits and status symbols have boosted markets in Asia.
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New Zealand and Thailand free trade agreement: The recent economic co-operation agreements with
countries such as Singapore and Thailand and China have substantially increased the size of consumer
markets in New Zealand. The agreement allows easy trade between the two countries and there is a major
opportunity for cloudy bay to exploit the market in Thailand.
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Thailand Baht: Compared to other countries like India where the NZD stands at about 34 Rupees, Thai
Baht is comparatively stronger and allows Cloudy bay to have higher profit margins.
Competition prices: US wines are generally priced above the prices of other major imports. Australia has
tariff relief however New Zealand’s burden of tariff is lower compared to Australia. Hence it is a major
opportunity to increase the profit and market Cloudy Bay on price advantage as well.
Transportation cost: Since Thailand is closer to the borders of New Zealand it helps in saving costs on
transportation of wine.
Brand Loyalty: Thai’s do not have brand loyalty and price plays a major role for the consumer to decide
which wine to buy. The tariffs on wines are similar for both domestic and imported wines are same. Hence
it could be an opportunity for Cloudy bay to play on the price.
Threats
Local competitors: there are about 10 local producers of wine so Cloudy bay would have to compete with
them. The local producers would be well aware of the market and would have well defined distribution
channels and links.
Price Quotient: Cloudy bay Sauvignon blanc is priced slightly towards the higher side compared to other
brands in New Zealand. They might have to think about the price tag they would keep since the local
producers of wine in Thailand sell their wine at moderate price.
Lack of understanding of the market: Although Asian market is a big opportunity of international trade
however at the same time there are complexities in the culture and consumer behavior. Cloudy bay would
have to do some research to ensure the get a fair understanding of the people.
Hefty internal tax on wine: Cloudy bay will benefit from the free trade agreement however the internal tariffs
on wine are hefty and the agreement does not address these as they apply to both imported and domestic
wines.
Summary of SWOT analysis
Cloudy bay has done well in Europe and have gained some experience of international trade. However
they need to use that experience and apply themselves in Thailand because Asian market has a different
nature. The product is already popular throughout the world and is considered to be one of the finest wines.
A calculated marketing approach would allow Sauvignon blanc to capture a good market share in Thailand.
The free trade agreement between the two countries would help the cause of Cloudy bay since it reduces a
lot of initial work for the company. Thailand is close to New Zealand compared to Europe and the
transportation cost would also be very low comparatively. Hence they can subsidize the price of the wine in
Thailand to compete with the local producers. Cloudy bay has their own plantations in Marlborough region
and their produce is always surplus. So it only makes sense for them to try and exploit the market in the
neighborhood.
