...Preface 1 1. Introduction 3 2. Case analysis 3 In the beginning 3 Political influence in the Old World 3 A New World was born 4 Global Wine War 4 The battle of the US market 4 3. Theory & application to the case 5 Porter Outside-In Model 5 Porter Outside-In model & the Global Wine War 6 The Resource Based View Inside-Out Model 6 The Resource Based View Inside-Out Model & the Global Wine War 7 Innovations 7 Red Queen competition 7 4. Conclusion 8 References 9 2. Case analysis In the beginning The first niche market for premium wine was created by the European nobility in the middle ages. They started to compete based on the quality of wine. Until the late 18th century, the size European vineyards were small because they were fragmented by wars. In that time, the wine producers did not own the whole value chain, the producers bought the grapes from the local farmers. Here, the local wine was not exported because of poor roads, complex toll and tax systems which made it too expensive. Political influence in the Old World The late 18th century was dominated by innovations, which led to greater wine stability and longevity, distribution to distant markets and bottle aging of good vintages. The result was an increase of vineyards and production. Because of the growing economic and political importance of the wine industry, there was an increased political attention and with it laws and regulations to control the whole wine chain. For example, the Appellation...
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...CASE REPORT: Global Wine Wars: New World Challenges Old (Harvard Business School Case # 9-303-056) NMI 1. How did the French become the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop to support their exports? Where were they vulnerable? French wine makers also face challenges that are not internal to the industry. For instance, France lost market share in the United States due to informal boycotts in the wake of the Iraq war. The rise of the euro against other currencies, such as the 30% increase relative to the dollar in the last few years, has put French wines at a comparative cost disadvantage. But consensus among experts is that the primary threat to the French export market is internal to the industry: the inability of the appellation system to appeal to what is becoming a global way of understanding wines (Business Report, 2004). France is the largest overall producer of wine, at 5.3 billion liters of wine in 2001, 20% of world production. France has traditionally set the standard for quality wine as well as defining these standards. French viticulture laws mandates four levels of quality as 1) Appellation d’Origine Contrôlee (AOC) 2) vins délimite qualité supérieure (VDQS) 3) vins du pays and 4) vins du table. French wine makers also face challenges that are not internal to the industry. For instance, France lost market share in the United States due to informal boycotts...
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...9-910-405 AUGUST 13, 2009 CHRISTOPHER A. BARTLETT Global Wine War 2009: New World versus Old “We have the people, expertise, technology and commitment to gain global preeminence for Australian wine by 2025. It will come by anticipating the market, influencing consumer demand, and building on our strategy of sustainable growth.” — Sam Toley, CEO of Australian Wine and Brandy Corporation. “By phasing out the buyback of excess wine and increasing incentives for farmers to uproot their vines, the EC reforms will only bring in the New World’s agro-industry model. We need to protect the age-old European model built on traditional vineyards.” — Jean-Louis Piton, Copa-Cogeca Farmers Association. In 2009, these two views reflected some of the very different sentiments unleashed by the fierce competitive battle raging between traditional wine makers and some new industry players as they fought for a share of the $230 billion global wine market. Many Old World wine producers—France, Italy, and Spain, for example—found themselves constrained by embedded wine-making traditions, restrictive industry regulations, and complex national and European Community legislation. This provided an opportunity for New World wine companies—from Australia, the United States, and Chile, for instance—to challenge the more established Old World producers by introducing innovations at every stage of the value chain. In the Beginning1 Grape growing and wine making have been human preoccupations at least since...
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...Australian Wine Industry Rebuttal Good afternoon ladies and gentlemen, my name is Justin Bardwell and I am here representing Group 4 of JBS Swift & Co. and we are going to present the rebuttal to Group 10’s Australian Wine Industry case analysis. My fellow group members who have aided in preparing this presentation are as follows:… We would first like to point out the case provided by Harvard Business School mainly describes the New World vs. Old World and the Global Wine Wars of 2009. While the case analysis provided by group 10 mainly focuses on the Australian Wine Industry, which is only one example of the New World wine production country. So how is everyone doing on this beautiful Wednesday afternoon? Good, good. I know none of you want to be here anymore than I do, so we plan on making this as short and sweet as possible. With that, let’s go on ahead and get started. What we have prepared for you all today is a brief rebuttal to Group 10’s Australian Wine Industry case analysis. Before we begin let me set the record straight by saying that Group 10 did an outstanding job with their analysis of the wine industry within Australia. They did an excellent job incorporating Porter’s 5 forces model and the Blue Ocean strategy throughout their analysis. With this in mind, my fellow group members did find a few areas that we believe we should shed light on today. Such areas that our group found were the goals and constraints, as well as the central problem and the alternatives...
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...Global Wine Wars Global Wine Wars case study is about the background, production and how New World Wine producing nations overtook Old World Wine producing nations. SWOT analysis of US Wine Market from point of view of the Australian Wine Industry. SWOT ANALYSIS Strengths: * Wine-in-a-box package, which helped reduce the box sizes and weights that reduced shipping prices. * Wide and Less expensive lands. * Control drip irrigation allowed expansion into marginal land and usage of mechanical harvesters and mechanical pruners reduced labor costs. * Night harvesting to maximize grape sugars, innovative trellis systems permitted wines to be planted at twice density with sunny Australian climate helped farmers freed from many stresses. * Replace cork stoppers with screw caps helped delicate white wines from spoiling. * Cost advantage to drive prices lower and a consistent supply of strong brands at a good price/quality ratio. * Most of Strategy goals had been achieved almost 20 years ahead of schedule. * Built trust in its products and leveraged its trusted brand name by creating Weaknesses: * Over production led to reduce in prices in all export markets. * Droughts led to major cost increases for water and also global energy prices were soaring, thereby increasing production costs. * Price and image problems in US market. Opportunities: * Import of Australian wines into US market. * Buyers not knowing what to purchase after...
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...Global Wine War 2009: New World versus Old “We have the people, expertise, technology and commitment to gain global preeminence for Australian wine by 2025. It will come by anticipating the market, influencing consumer demand, and building on our strategy of sustainable growth.” — Sam Toley, CEO of Australian Wine and Brandy Corporation. “By phasing out the buyback of excess wine and increasing incentives for farmers to uproot their vines, the EC reforms will only bring in the New World’s agro-industry model. We need to protect the age-old European model built on traditional vineyards.” — Jean-Louis Piton, Copa-Cogeca Farmers Association. In 2009, these two views reflected some of the very different sentiments unleashed by the fierce competitive battle raging between traditional wine makers and some new industry players as they fought for a share of the $230 billion global wine market. Many Old World wine producers—France, Italy, and Spain, for example—found themselves constrained by embedded wine-making traditions, restrictive industry regulations, and complex national and European Community legislation. This provided an opportunity for New World wine companies—from Australia, the United States, and Chile, for instance—to challenge the more established Old World producers by introducing innovations at every stage of the value chain. In the Beginning1 Grape growing and wine making have been human preoccupations at least since the times when ancient Egyptians and Greeks...
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...Global Wine War Case Analysis The global wine war has taken many turns since the 17th century. The largest impact was the immergence of New World wine makers. The largest disadvantages the Old World wine makers battled were the strict government classifications and controls. These rules prevented them from being able to become more efficient, innovative, and different. Before the New World entered the global wine industry, Europe dominated the industry. France became a dominant competitor for centuries because of its existing sources of competitive advantages and the advantages they were able to develop over time. France’s strong wine production and culture took root centuries ago. By the Christian era, wine became part of the liturgical services and monasteries planted vines and built wineries. The European nobility began planting vineyards as a symbol of prestige and competed in the quality of wine they served on their table; this was the start of the premium wine market. French wine producers became the dominant competitor as a result of many reasons. Their geographic and climatic features played a significant role. France is located in an area that has a suitable climate and soil condition for harvesting grapes. They also became the first high-quality wine market and gained a lot of experience for their huge domestic market. They used the latest innovations, which included mass production of glass bottles, the use of cork stoppers and pasteurization. These innovations...
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...Global Wine Wars 2009: New World versus Old World Executive Summary The concept of wine-making was originally an art dominated by several European countries, mainly amongst the noble class, competing against one another for the highest quality wines. Traditionally set in their ways, from their methods of planting, to harvesting, to marketing channels and their consumers, the “Old World” wine-makers were unprepared for what was ahead of them as the “New World” growers joined in the struggle to appeal to the tastes of their consumers. As the New World began gaining ground, a rivalry arose between the New and Old Worlds - the Old World set on its traditional ways which had been in practice for centuries, while the New World focused around maximization of crops and harvesting, as well as marketing to the changing consumer preferences - leaving the Old World in awe as the New World took over in sales and imports. With a shifting of palates and an economic recession which hit not only the consumers’ wallets, but also the growers’ vineyards, a continuous battle for leader in U.S. imports emerged as the preference for premium wines increased, leaving the U.S. out to dry with their high prices due to inherent domestic costs. Meanwhile, Australia and France were able to tap into the premium and super premium markets, respectively. Since Australia had already taken charge of U.S. imports in the middle segment with their Yellow Tail brand, their entrance into the premium market...
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...ways such an economically and politically. Global perspectives- 1) Uganda- A project planned, which is now in action, to benefit everyone by reforesting the Mount Elgon national park because of the increase in carbon dioxide. The trees were breathing most of the carbon dioxide which made the travelers feel good and the people of Uganda had a larger park. The carbon gas increases global warming which is not beneficial for anyone. Efforts at capturing carbon were not successful for most of the countries and created a difference between the rich and poor countries....
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...In most societies, wine can be found as a component of celebration or religious ceremony, but in today's world wine has been put into a new arena- a battlefield of tradition and innovation, where old world conservatives clash with new world revolutionaries. The difficulty of producers to achieve "branding" and to establish themselves in a modern, global market has caused the two conflicting worlds to adjust their practices. Wine-makers and new industry players alike find themselves challenged not only by each other but also by the ever-evolving market they find themselves in. In the following paper group ten collectively presents the research and case analysis of the article, “Global Wine War 2009: New World versus Old”, written by Christopher Bartlett. This paper will present the goals and constraints of the new world Australian wine industry breaking into the United States, along with our competitive analysis. We will show you the hurdles that this new world industry faces in a competitive environment and outline their strengths and weaknesses. After identifying the central problems, we will present alternative strategies that the Australian industry can use and the best alternative to take. Finally, we will present a way to implement the best alternative decision. Viticulture, or the cultivation of grapes, spread throughout the Mediterranean region under the Roman Empire and as wine drinking grew in popularity, was soon used in liturgical services, as monasteries started...
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...recommendation is to launch a mass-market product under a different product line in order to monetize excess inventory and position Neptune to capture more of the North American seafood market share. Going forward Neptune management must be more cautious in matching investment in production to growth in market demands. B. Situation Analysis Summary: Neptune Gourmet Seafood is currently North America’s third largest seafood producer with 4% in market share. Tagged “The Best Seafood on the Water Planet”, Neptune has a reputation to maintain and focuses heavily on its product to keep its customers satisfied. Neptune has done a great job reaching a variety of customer. 30% of revenues from grocery chains, 33% from wholesalers distributing across the U.S., and the remaining third coming from sales to the biggest cruise lines and also choice restaurants within 250 miles of Neptune’s headquarters. Through the situation analysis it is apparent that the root cause for excess inventory is a rapid growth in production capacity due to technological investment but less significant growth in its single high-end market segment (See Root Cause Analysis in Appendix D). The two sides of the decision to either cut prices or introduce a new line are best highlighted by the interests and concerns of Jim Hargrove and Rita Sanchez: (See full Stakeholder...
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...Case Analysis: GLOBAL WINE WARS Recommendations for the French Wine Industry * Issues: 1. French wine makers continue to lose global market share due to the entrance of new competitors from Australia and other “New World” wine makers. French wine makers face an existential threat should they concede the U.K export market. 2. 3. 1. The wine industry as a whole is handicapped by its own traditional production issues including high and rising input costs, long value chain (many middle men) and the fragmentation which enables suppliers to have extensive bargaining power. * Rationale behind our recommendations: * Rather than making recommendations for an individual wine company or an AOC, we believe that a national initiative along with industry-specific changes is necessary given the scale of the issue. We believe that implementing government-based recommendations will foster the changes sought with the industry-specific recommendations. Recommendations to the French government: * Create an initiative from the top by exploiting the long reputation of gold wine crafters and creating a national advantage: * Herve Gaymard, the French Minister of Agriculture, with the support and visibility of Jacques Chirac, President of France, should kick off a new initiative: La Renaissance du Vin Français de l’an 2003 (The 2003 French Wine Renaissance) with a new vision: “France, the gold standard in wine production with new innovations”...
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...Global Wine Wars SWOT Analysis of US Wine Market Strengths: 1) US imports are very difficult to crack due its distance from the most producing countries. 2) One of the main contributors to the US market growth was the Generation Y, they supported wine more than Generation X. 3) The complex 3 tier distribution system that the US will force all the sales to pass through the state licensed wholesalers, these wholesalers add cost and exercise their great power. 4) Of the World’s Top 20 wine brands, Nine US brands featured in that list which was an achievement. Weakness: 1) It has become a high cost producer due to the high land prices. 2) Another major drawback is unavailability of land for expansion in the premium wine areas. 3) American producers focused a lot on their large and high priced domestic market, but fell behind global price (low and high points). 4) Average wine prices for US in similarly rated wine was more when compared to Australia. EX: Californian wine was 55$ whereas Australian was 20$. 5) Controlled Immigration has resulted in the increase of labor costs. Opportunities: 1) The US wine market can look to target the super-premium and ultra-premium sections. 2) As the oversupply of the market grew surplus wine was being purchased on the spot which led to the creation of a popular low price brand named “Two Buck Chuck” which sold 5 million cases a year, here is there is an opportunity to market and expand this brand...
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...CASE: GLOBAL WINE WARS (A) Question 1 During the last decades, some remarkable evolutions of the global wine industry have dramatically influenced the base of the industry structure, with technological update, innovation, and new players coming in, the wine market as well as the competition within this market have come to a new dimension. In the following, we will analyze briefly the main points of this evolution and group those points into several categories. Change on the demand side ‐ Demand went down in the traditional market. There is a huge geographic shift in demand from the traditional highest-consumption countries like France, Germany, and Italy to the new markets in countries like the USA and Australia. In addition, there is a great growth in demand in wineimporting countries such as the UK, Belgium and Sweden. Growth in some Asian countries such as South Korea, China, and Japan was remarkable during the last decades of the century. ‐ On the consumer part, their preferences shift towards quality of products. There is a trend towards drinking more premium wine with a high quality instead of drinking simply table wine. The trend towards higher price categories is worldwide, and this reflects the change in the demand pattern in the wine industry. Furthermore, the demand is more fashion inspired. Together with the shift to quality this caused a wider fluctuation in demand. The consumer has now the preference of drinking more red wine due to health concerns and an emphasis...
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...in the wine industry, nevertheless, the company benefits from the high prices set by its limited production of Opus One which is priced between $90 and $100 a bottle in more than 65 world markets.RMC proves to have some strong key competitive advantages which distinguish the company amongst other rivals. Firstly, Robert Mondavi, being a dynamic sales man in the early years, never spent money on advertising. Instead he relied on trade shows, awards, salesmanship and showmanship. This is clearly described in the case study in which he spent entertaining influential people within the industry and invited the top wine writers to the RMC facility for free meals (Silverman & Castaldi 1999). In addition, he would conduct blind tasting of the RMC wines against reputable French and Italian wines so that the writers could taste for themselves. For over a decade, Mondavi traveled throughout the country and abroad as the company's chief salesperson. Consequently, the RMC wines were able to increase its recognition of and demand for the wines, Mondavi began slowly raising the prices until they were selling for as much as comparable French wines (Thompson & Strickland 2003).Secondly, RMC's strong brand name is associated with wine-growing excellence, award-winning products and marketing innovation. In this situation, RMC enjoys one of the most recognized brands by producing a limited quantity of super- to ultra premium wines using the most prestigious noble varietal grapes. RMC wines strictly...
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