A Strategy You Can Taste
How Six Young Entrepreneurs are Turning the Wine Market Blue
By The Blue Ocean Strategy Team
When it comes to turning red oceans into blue ones, most people focus on steering away from competition and creating new market space. But occasionally someone takes this exercise a step further. GIK Blue is such an example. In light of an increasingly more challenging market for red wine, these six young Spaniards are turning the market blue. Literally.
With over 70.000 bottles of their blue wine sold, the entrepreneurs – all in their early twenties – have achieved their goal of never having to work for a boss. We spoke to one of the creators, Taig Mac Carthy, who shared that they owe it all to blue ocean strategy created by W. Chan Kim and Renée Mauborgne. Cheers!
They have focus.
“None of us had any experience in winemaking. Our team of six consists of two engineers, two business school students, one designer and one DJ. In order to create the wine, we had to partner up with the University of the Basque Country and the food research department of the Basque Government. But don’t forget: it was never our intention to make wine for the wine connoisseur. In fact, it’s quite the opposite. Our tagline is: We make the wine that connoisseurs don’t want you to drink!”
They saw an opportunity in a red ocean.
“Winemaking is a bloody red ocean. Just think about what you see in the supermarket: hundreds of different bottles, all competing on traditional factors such as age, grape, location and – primarily – price. And – up until you’ve paid and opened the bottle – you have no idea what you’re buying. Moreover, over the years, as competition intensified, the demand for wine has stagnated. This led to a global overproduction. In Spain, the problem is so significant that many vineyards are forced to pour their wine away! So we were definitely crazy to go into this industry. But we figured: if yellowtail can do it, so can we.”
They reach beyond existing demand.
“We never intended to go after the regular wine drinkers. We wanted to appeal to a broader and younger public instead. The ‘gin-tonic generation’ that sees their drink as an extension of their personality and beliefs. Today they turn to beer or spirits. Wine is too intimidating and – simply put – boring. But our wine is none of that. It’s different, it’s fun and it’s easy-to-drink. And it’s blue!”
They set a strategic price.
“We sell our wine at €10 per bottle. While this number might sound straightforward, it was actually set in a strategic manner. The Price Corridor of the Target Mass tool encouraged us not merely to benchmark our offering against other wines, but also to look at products that have different forms, but serve the same function or objective. So we went into supermarkets to compare prices of things like flowers, sushi and chocolate. Because at the end of the day, we’re not selling a drink. We’re selling a product to enjoy, to share and to cheer.”
They keep costs low.
“Remember how we said that some Spanish winemakers are forced to pour their wine away? This turned out to be a huge opportunity for us. As they have the means of production but are lacking demand, we saw our chance to create a win-win. By putting their underutilized resources to work, we don’t have to invest heavily in machinery or property. And, since we have such low fixed costs, we are able to scale quickly. So the future looks bright, or should I say: blue?!”
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