I’ve not had much time to read the January 2011 issue of The Harvard Business Review yet but over breakfast this morning I managed to enjoy the case study, which are always written in a slightly breathy but compelling way.
This particular case study covers two subject matters which I find interesting: fine wines and brand extensions. The dilemma is based on a fictional, family owned, renowned and profitable Bordeaux wine estate faced with the ambitions of a business school trained family member who wishes to see a mass premium brand extension to capture new market share.
Unsurprisingly the two experts asked to comment on the case, Corinne Menzelopoulos – Owner and CEO of Chateau Margaux and Philippe Sereys de Rothschild – Vice Chairman of Baron Philippe de Rothschild, both suggest caution is required.
And they are right in my opinion. The temptation to tap into a more mass market is fraught with difficulties, especially one so dominated by entities with better distribution and more efficient means of production.
Probably the most interesting suggestion, however, came from HBR’s online community – a “mid market sales manager” from IBM in Croatia, called Alen Gojceta, who suggested that rather than look down they should look up. Take 5% of their total production, sell it directly from the Chateau and market that as a very exclusive brand extension.
For luxury brands the safer and more logical brand extension option is nearly always at the top not the bottom.
Now I am thirsty.