Analyzing the potential entry into Vietnam ice wine market using the porters 5 forces model
1. The bargaining power of suppliers: the supplier constitutes a larger proportion of total cost of the produce of the buyer, as such the supplier’s bargaining power is greatly increased. Fresh plaza (2021) identifies that fresh grapes and apple, are always in supply in Vietnam from markets from France, US and Australia making access to grapes very cheap for potential buyers. This is critical age that a ice vine making company can capitalize on and make profits. The supplier facilitates forward integration by encouraging additional costs to the production process thus compelling most producers to alternative markets.
2. With limited markets and high consumer base of grapes, Vietnamese buyer and producers of grape are creating a very profitable product that is essentially on high demand across the growing Vietnamese buyers.
3. Threat of new entrants: There are no formidable obstacles to the business as majority of the traditional industries in Vietnam are still small and relatively merger compared to the developed world. Also majority of the people still prefer hard liquor such as spirits with nearly 35% ABV, while the Ice Wine contains 6% ABV far below the 12% ABV wine percentage. Traditional unregistered liquor continues to dominate the traditional world as such likely to take charge and dominate the space for Ice wine within the traditional regions in the urban centers where (consumerism is growing) lifestyle dictates consumers, Ice wine is set to grow with a smaller degree.
4. Threat of substitutes: The government prioritizes MFN markets. Most favored nations are those where which wine comes from. Ice wine is under threat from this perspective as cheaper wine from Germany, Australia, France and USA are considered more superior to locally produced products as such, Ice Wine made from Vietnam is likely to be discriminated by the buyers.
5. There is limited competition from existing buyers as Ice wine remains relatively unfamiliar among most Vietnamese buyers. This product is uniquely new with the Vietnamese buyer as a product from Europe.
References
Fresh Plaza. (2020). Grape and apple craze in Vietnam. Freshplaza.com. Retrieved 22 March 2021, from https://www.freshplaza.com/article/2185491/grape-and-apple-craze-in-vietnam/.
