Champagne Cattier: The Diversification Challenge

The Cattier family had been active in the Champagne region of France for over 250 years. Starting out as growers of grapes, they moved into champagne production, initially for local consumption. By 2017, the Cattier company, which had reached 35 full-time employees, engaged in related diversification activities on multiple fronts and internationalized its market. Cattier was selling its champagne to markets such as the United States, Japan, and the United Kingdom. The company also created new product formats, developing signature branding and packaging. Cattier also partnered with fashion houses, bistros, and an international distributor owned by the American rap artist Jay-Z. However, Cattier faced a multitude of challenges in 2017. There was fierce competition in the home market, while sparkling wine consumption was down in all key European markets. Rising protectionism and the possibility of raising trade barriers in key export markets also created new risks. These challenges were compounded by the fact that harvest conditions for producing vintage wines were unpredictable. Cattier was considering using further diversification to manage these threats. However, how would diversification address Cattier’s problems?

This case is appropriate for undergraduate and graduate courses in strategic management to highlight different types of diversification—both in respect to the product market and the geographical market. It is also suitable in international business courses to discuss export orientation and export performance in small family businesses that want to gain benefits from international markets. The case is also appropriate for marketing and international marketing courses to discuss the importance of a strategic orientation. After completion of this case, students will be able to<ul><li>understand the nature of diversification and how it can be used to deal with threats in the external environment;</li><li>gain insight into strategy in small-sized family businesses, particularly how they can use diversification to ensure survival in increasingly difficult competitive environments; and</li><li>learn about the champagne industry, including its unique institutional environment, the process of champagne production, and the use of modern marketing techniques in this industry.</li></ul>

• Diversification, Champagne industry, Family business