Giovanni Buton: International Marketing Strategy

GIOVANNI BUTON
International Marketing Strategy

Company Background
• Giovanni Buton was founded in 1820 by Marquis Filippo Sassoli and Giovanni Buton, who was a master
distiller and expert in spirits. . By the late 1980s Giovanni Buton had become Italy's largest spirits producer.
• The company's main activity was the production of Vecchia Romagna and a range of other Italian spirit
brands. Vecchia Romagna brandy, was Italy's leading spirit brand.
• During the 1980s, Buton acquired two independent spirits distributors, Italwell and Rinaldi. Italwell and
Rinaldi distributed competing portfolios of spirits.

• In 1988, Buton acquired a specialty food distributor, Berselli, that distributed a wide range of specialty Italian
and foreign foods to small high-quality food shops and restaurants.
Giovanni Buton's Management
• General Manager- Filippo Sassoli
• Commercial Director and Corporate Strategy Director- Lorenzo Sassoli
• Production & Finance Director: Filiberto Serpieri
• Domestic Marketing Operations Director: Nicoletta D'Alesio
• Export Director & Director of International Strategic Development: Nigel Brown
• Head of Sales Administration Department: Pascerini

SWOT ANALYSIS
STRENGTHS WEAKNESS
- High margins - Highly priced portfolio products.

- Strong brand image & brand awareness. - Lack of work force diversity.
- Strong relationships with existing suppliers. - Inefficient inventory management.
- Strong investment in research & development and
high focus on innovation.
OPPORTUNITIES THREATS
- Expansion into international market. - Independent players

- Partnership with different firms. - Increased competition
- Increase in consumer disposable income. - Culture of sticky prices in the industry.
The international spirit market
• The international spirits market began to undergo a dramatic change in the
late 1980s
• All the companies were under fairly traditional,conservative management.
With the exception of Seagrams.
• In April 1986, through, Guinness took over Distillers Co.
• In addition to becoming more vertically integrated, the spirits industry
experience consolidationn through mergers and acquisitions among producers.
• The only significant companies left independent were those where the
controlling family remained reasonably united and maintained control of the
majority of shares, or where the product wasinteresting, not large enough or
international enough to have attracted the major players’ interest.
The International Spirit Market
• All of them also marketed “agency brands,” i.e., liquors or wines
produced by others. The consolidation of the industry in the 1980s
was in response to two trends that characterized almost all
industrialized countries.
• The consolidation of the spirits industry paralleled a similar trend
among food producers.
• Large, diversified multinationals such as Nestle and BSN had been
aggressively pursuing acquisitio strategiess during the 1980s.
The International Spirit Market
Retail concentration in Europe resulted in the decline of smaller brands due to –
• the need for increased efficiency in the use of shelf space;

• the growth of private label brands in almost all sectors, thus reducing branded goods’ sales
• the rise in cost of product introductions as major retailers demanded listing fees and evidencence
of significant consumer advertising before providing shelf space;
• a polarization of the market between major brands with lower margins, high volumess, and blanket
distribution, and smaller, high margin, specialty brands not distributed in the supermarket chains or
in airport duty-free outlets.
In contrast to Western Europe, where most spirits sales were made by food stores, spirits
in the United States remained largely in the hands of small, specialized independent
stores or State operated retail outlets
Prospect of expanding Buton’s sales in
Europe
• 1988 – Only 10% of the Buton’s turnover came from sales outside Italy.
• Europe was a favorable market for expanding because of the probable integration of 12 European Community countries
into one marketplace.
• This market integration would help reduce costs and increase economies of scale for EC based companies.
• Initial research by Brown had resulted in three most suitable option for expansion, West Germany, Spain and Greece.
• West Germany- Despite of increase in excise duty and anti- alcohol campaign, the demand for brandy and liquor
remained strong. Germany was the largest export market.
Europe
• Spain- With increase in the economy, the consumption of liqueur was increasing.
• Greece- Even with high tariff and tax rate, the consumption, specially of imported brand, was increasing.
• Based on the estimates of spirit consumption of these countries, both Spain and Greece are set to see an
increase consumption of 15% and 16% respectively.
• The way ahead?
 Market Selection
 Market Segment Selection
 Acquisition of Distribution Channel

Europe
 Create Joint Venture Partnership with other Brand Producing Companies .
 Acquire New Brands
 Launch New Brands

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GIOVANNI BUTON

International Marketing Strategy

• Commercial Director and Corporate Strategy Director- Lorenzo Sassoli

• Production & Finance Director: Filiberto Serpieri

• Domestic Marketing Operations Director: Nicoletta D'Alesio

• Export Director & Director of International Strategic Development: Nigel Brown

• Head of Sales Administration Department: Pascerini

- High margins - Highly priced portfolio products.

- Expansion into international market. - Independent players

• the need for increased efficiency in the use of shelf space;

• The way ahead?

 Market Segment Selection

 Acquisition of Distribution Channel

 Acquire New Brands

 Launch New Brands

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