Chapter 7 - Article Summary

Question 1

1 LCBO

Answer 1

The LCBO (Liquor Control Board of Ontario) began operations in 1927 after Prohibition ended in Ontario. Initially, alcohol sales were highly regulated, with customers needing permits, which were carefully monitored. This system aimed to curb excess drinking and was associated with a strict, often paternalistic, oversight. Over time, the LCBO evolved, with customer service becoming a focus, moving from counter service to self-service stores in the 1960s. The article reflects on the LCBO’s role in regulating alcohol while balancing public health concerns and the increasing demand for a consumer-friendly shopping experience.

Question 2

2 Wine

Answer 2

The article examines the evolution of the global wine industry, focusing on the dynamics of “catch-up” between traditional wine-producing regions (Old World or OW) such as France, Italy, and Spain, and emerging players (New World or NW) like the USA, Australia, Chile, and South Africa.
Historical Context:
OW countries dominated wine production and export until the 1980s, leveraging their rich traditions, domestic markets, and established reputations.
NW countries began gaining market share in the late 20th century due to shifts in global demand and consumer preferences.
NW Success Factors:
Exploitation of windows of opportunity, including increased demand from non-traditional markets (e.g., the UK, USA).
Modernization in production methods, branding, and distribution, such as precision viticulture and supermarket partnerships.
Institutional support, including research and development initiatives, branding strategies (e.g., Brand Australia), and collaborations with academia.
OW Response:
After initial inertia, OW producers adapted by modernizing production, improving quality, and leveraging terroir-based branding to appeal to increasingly sophisticated global consumers.
Countries like Italy and Spain saw significant growth by focusing on premium wines, while France’s performance was mixed due to structural issues in certain regions.
Current Dynamics:
NW producers have challenged but not displaced OW leadership, with both groups adapting to changing consumer preferences.
Emerging players like Argentina and New Zealand are gaining traction, and Asian markets (e.g., China) are poised to influence future dynamics.
OW producers maintain their edge in high-value segments through terroir-linked prestige and innovations in traditional methods.
Conclusion:
The global wine industry demonstrates a “gradual catch-up” dynamic rather than complete disruption. OW producers retain leadership in many key markets, but NW players have reshaped the competitive landscape by innovating in production, branding, and institutional frameworks. Future shifts may come from new entrants like China and the evolving preferences of global consumers.

Question 3

3 Brand Stretching

Answer 3

Brand Stretching and Extensions:
Alcohol companies employ brand stretching to expand their reach and visibility while bypassing advertising restrictions.
Two primary methods:
Line Extensions: Variations within the same category (e.g., light beers like Bud Light).
Category Extensions: Expanding into new product categories (e.g., Guinness-branded chocolates, Jack Daniels barbecue sauces).
Marketing Strategies:
Alcohol brands use non-alcoholic products like clothing, food items, and merchandise to build brand equity and connect with consumers beyond direct advertising.
These strategies help maintain brand recognition and loyalty even in markets with strict advertising laws.
Influence on Youth and Consumer Behavior:
Studies show that exposure to branded merchandise (e.g., alcohol-branded T-shirts or ice cream) increases the likelihood of young people initiating drinking behaviors.
Brand familiarity often begins before purchasing behavior, influencing later consumer choices.
Case Studies and Examples:
Successful examples include Baileys ice cream and Jack Daniels sauces, which align well with the parent brand’s identity.
Unsuccessful attempts (e.g., Coors spring water) illustrate the importance of “brand fit” in consumer acceptance.
Global Perspectives:
Countries like India, with strict alcohol advertising bans, see alcohol brands leveraging category extensions (e.g., Kingfisher Airlines, Bacardi Music CDs) to maintain visibility.
Regulatory and Ethical Considerations:
Concerns remain about brand extensions promoting alcohol in ways that appeal to minors or circumvent marketing laws.
The Portman Group’s Code of Practice governs such practices in the UK, but some argue for stricter regulations to limit alcohol branding’s influence.
Brand stretching enables alcohol companies to navigate regulatory landscapes while embedding their brands in consumer consciousness. However, it raises ethical concerns, particularly about its influence on youth and the potential for increased alcohol consumption.