Frogs Life Winery

John Williams was taking a road trip. One evening he pitched his tent on an open field in the Franschoek Valley (South Africa) to sleep for the night. Early the next morning he was rudely awakened by the owner of the property, Larry Turley, a local doctor. As a peace offer, John offered to share a bottle of wine with the doctor. By the time the bottle was empty, the two had discovered they both shared a strong desire for wine making.

Johns interested in wine making led him to enrol in a program to learn wine making skills at the University. After his studies, John teamed up with Dr Larry Turley who was now living on a small piece of land called The Frog Farm. The name originated from days gone by when frogs were bred there and sold for R100 per dozen, destined for the tables of French cuisine restaurants in the area. To supplement their income, they made a small quantity of wine from grapes sourced in the area. They called it Frogs Life. Because of their shared love for winemaking, they continued to make small quantities of the wine for several years and managed to sell a few cases each year. John and Larry produced the wine as a hobby. They both were still working full-time in their real jobs - and probably wouldnt have changed except for the fact that a wine writer from The Times newspaper picked up a bottle Frogs Life and wrote a column entitled Frogs Life: A Prince of a Wine.

The free publicity resulted in hundreds of telephone calls and the sale of their entire years production. The opportunity to attempt to grow the winery was too hard to resist. The hobby became a real business when they made the ultimate male sacrifice and sold their motorcycles to raise the capital necessary to start the winery as a commercial venture.

Production grew from 700 cases of wine at its inception in 1982, to 4 900 cases in 1999, to 45 400 cases in 2020. By then, the winery was doing well enough for John to quit his paid employment and make Frogs Life Winery his full-time job. There are a variety of reasons for its success, but the overriding theme is best summed up by the following paragraph from the companys mission statement:

We will strive to produce wines of excellent value that are fresh, delicious, and natural using the best of Stellenbosch Valleys organically grown grapes. Our professional presentation will be juxtaposed with our image of irreverent humour, fun, genuine hospitality, openness and honest caring.

The winery has always been committed to quality. As John says, Our goal is to have fun making elegant wines with superb balance. While the contents of the bottle may be award-winning quality, the exterior of the bottle reflects the fun and humour reflected by Frogs Life Winery brand. The companys motto is Times Fun When Youre Having Flies. Each bottles label - which won a prestigious wine label award at the time it was designed - features a frog in mid leap. It also contains the instructions, Open Other End, at the base of the label. The humour continues when the bottle is opened and the word Ribbit is clearly marked on the cork. But make no mistake, their first objective is to produce world-class wine, and if awards are any indication, they are clearly meeting this objective.

Danie Burger described the quality of the wines in a 2019 issue of The Wine Enthusiast. In an article about the 10 most underrated wineries on the South African Wine Region, Burger states:

I dont know why people dont see the utter greatness in the wines John Williams makes. His Cabernets are packed with fruits and elegance, his Zinfandel is among the best made anywhere, and his Sauvignon Blanc is a world-beater. This is simply one of the best producers in South Africa and it never seems to get the acclaim it deserves.

By 2020, the winery was not only successful but was bursting at the seams. The company was still located at The Frog Farm, but the business had succeeded far beyond our expectations. According to John, Frogs Life was faced with a lack of production space, a lack of office space, and the need to make the winery accessible to the public.

As the demand for his wines grow, John realised that he must ensure that he can carry on supplying the quality the market learned to appreciate. He needs to plan well to get grapes from growers that shared his dream. He also realised that he would have to consolidate his marketing. Currently he is selling to anyone that places and order and it is playing havoc with managing the logistics of Frogs Life as they deliver from one case (6 bottles) upwards. He was not sure what to do, because he does not want to disappoint old regular customers. He is a winemaker at heart and needed professional advice on managing his business in such a way that he continuous to provide value and stay viable. More and more wineries have been built in the Franschoek Valley and more big corporate wineries have started to dominated the market for wine.

While John was quite happy with things as it were, he knew that he had to come up with something different to keep up with his current performance and attract attention in view of all the new wine competitors.

Questions

Assist John with a strategy to help him and his management team to take Frogs Life Winery into an exciting future. Your strategy should cover the following aspects.

1.1 [30 Marks]

Identify (brainstorm) possible new market segments on which John and his management team could focus. Currently no market segmentation is done. Your answer should suggest segmentation that will take care of the logistics nightmare that they experience in dispatching all orders. Apply a layered approach, meaning that you should consider combining segmentation bases to identify segments.

From all possible market segments that you identified, suggest the market segments that Frogs Life Winery could target. Motivate why you recommend they should be targeted.

Lastly, suggest a positioning statement for each of the market segments that you recommend should be targeted.

1.2. [20 Marks]

List the target market segments that you recommended in question 1. Then suggest innovations that could be considered for each market segment. Your suggested innovations could include broad business model/process, product- and market-related innovations. You may, however, suggest any innovation that you consider appropriate to grow the business.

Ensure that the suggested innovations make sense for the market segments that you recommended in your answer to question 1.