Strategic capabilities of niche firms in India: A study of Indian wine companies

Abstract

Our project focuses on the study of niche firms in wine industry. The Indian wine industryhas shown remarkable growth in the last decade. It is growing at a CAGR of 15%. Porter fiveforces analysis showed that wine industry in India has high growth prospects andsustainability and hence, is seeing advent of many foreign players. This is attributed to rise inincome level and standard of living of the young population. However, there is stiffsubstitution from other alcoholic drinks. Consumption of wine in India had seen the growthrate of 25% few years ago but during 2008-2009, the growth rate had a setback which wasattributed to Mumbai terror attach which led to a slump in tourism. But the forecasts are goodand it is expected to reach 4million cases by 2015.Tax burden for domestic producers as well as importers, ban on advertising, stringent qualitymakes it difficult for new entrants. However, government of Karnataka, Maharashtra havereduced their excise duty and are encouraging the industry. Industry players with rightmarketing mix have tremendous potential to grow.In order to identify the dynamic capabilities of firm in this industry, we studied three winefirms which are going great guns: Samant soma wines, United spirits and Pernod Ricard IndiaPvt Ltd. We carried out the secondary analysis alongwith getting insights from the marketinghead/ production manager of the firm. Our questions were focussed to understand thecapabilities of firm which are of strategic value and are helping them to maintain their share.Samant soma wines has recently become the market leader overcoming Indage vintnerswhich was going through a credit crunch. It leveraged this situation by investing heavily inbrand building and quality assurance. United spirits, a part of UB group has also emphasizedin the wine industry in last few years and made various acquisitions for the same. Earlier,they were focussed of scotch and spirits. Similary, the Pernod Ricard group is also investingin brand building. There has been a dramatic increase of brands in the premium segment.Based on our study, dynamic capabilities for firms in wine industry are efficient productionprocess, vineyards and their differentiation. Firms are investing heavily to maintain qualityand developing brand awareness among consumers by surrogate advertisement andeducational trips to their vineyards.