...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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...Global Wine War 2009: New World versus Old Wine-making was originally considered an art, dominated by several European countries, mainly among the noble class competing against one another for the highest quality wines. Traditionally set in their ways, from the methods of planting to harvesting to marketing channels and their consumers. The old world winemakers were unprepared for what was ahead of them. As the new world began gaining ground, a rivalry arose between new and old world. 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 change in consumer preferences leaving the old world in awe as the new world took over and sales and imports with a shifting of pallets and an economic recession which it not only the consumers wallets but also the grower's vineyards a continuous battle for leaders in US imports emerged as the preference for premium wine increased leaving us out to dry with their high prices due to inherent domestic cost. 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? Where were they vulnerable? France had been delivering wine for quite a long time and has been known for its premium wines. At the point when the wine creation was a work with serious...
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...Global Wine War 1. How were the French able to dominate the worldwide wine trade for centuries? The French were the first to dominate the wine trade and largely due to their time advantage the European Union was able to create laws to assimilate all wine produced from the regions of France and Italy. This absolutely helped shaped the wine industry by having standards and laws; anyone who later produced wine had the structure to produce quality based on the French laws created. Being isolated in the European regions played a huge role in its success. For many years the whole world drank French wine that was grown using strict standards. Their understanding of concentrated retail channels gave the growers an edge in the market place providing a stronghold on the market. Although the France and Italy were reinforced when they produced quantity, if the opposite was rang true France strategically would placed themselves ahead in the wine industry for centuries to come. 2. How should the Australian/ American/ French respond to their situations? Foreign markets attempting to become competitors in a longstanding European dominated market should target their foremost problem; isolation. France is an isolated market with very little variability. Australia, China, and America all have access to the French markets variety in addition to their originating market. They possess the capability to capture even more economic advantage by reducing handling stages, holding less...
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...Global Wine Wars Perform a STEEP analysis to understand the general environment facing the global wine industry. How will the wine-producing countries/companies be affected by external factors? Social: There is a 20% drop in worldwide wine consumption but consumers demand more on premium wine (10 liters to 15 liters in EU) and less on basic wine (31 liters to 18 liters in EU). There is a decline in wine drinking culture, rise in importing countries, and growing demand in Asia markets. Figure [ 1 ]: Wine Consumption Per Capita Figure [ 2 ] World Wine Consumption 2002-2006 hectoliters (000) Technological: Change in the grape growing and wine making process from labor to specialize machinery and equipment. Other practices such as night harvesting, reverse osmosis, and trellis system also increase the quality and quantity of the grapes. Environmental: Environmental factors can greatly affect traditional grape growing and wine making because the quality and quantity of the wine can be affected by climate such as temperature, rainfall, humidity, and such. While the new practice of wine making can divert such effects by sourcing grapes and wines from the unaffected regions. Economic: While the economic downturn can make the basic wine consumers look for cheaper wine, it has little effects on the premium wine and upper segment. Political: One of the biggest factors that affects the global wine industry. Rules and Regulations in EU caused the region more problems...
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...Global Wine War 2009: New World vs. Old The French were able to become the dominant competitors in the increasingly global wine industry due to several factors, such as the large amount of grape growing in France, their focus on large volume production and their classification system. Grape growing accounted for one-sixth of France’s total trading revenue and was the country’s second largest export. Their customer base was small and spread and was not yet price conscious. As the wine industry became culturally and economically significant, their focus on producing large volumes of wine instead of on quality allowed them to gain a competitive advantage as more laws and regulations to control many aspects of wine making were developed. The French classification system helped consumers sort through the complexity of a highly fragmented market and gained wide recognition. They were able to develop a competitive advantage to support their exports by producing country wine, which was very inexpensive but very drinkable. They were vulnerable in the area of asset allocation. It was not focused and many of their vineyards were dedicated to below premium wines. In addition, their value chain and distribution processes were fragmented. Some changes in the global industry structure and competitive dynamics that led France and other traditional producers to lose market share to challengers from New World countries were the introduction of mechanical harvests and pruners, packaging...
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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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...Global Wine Wars 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? Where were they vulnerable? France had been producing wine for centuries and has been known for its premium wines. When the wine production was a labor intensive job they were able to create efficiencies in cultivation and increase farm outputs leading to a greater production and more profitable business. In the recent times the French wine industry worked in tangent with government regulations to differentiate their wines e.g. they categorized their wine yards into five different categories based on quality of wine produced. The government’s strict policies to control the quality of wine produced led to the AOC laws that defined rigid boundaries and rigid standards for vineyards and wineries. This worked as an advantage for the industry as it segmented the wine market making it easier to identify wines and also prompted confidence amongst the consumers that wine are of high quality. This allowed the process of choosing wines easier and helped the customers to sort through the complexity of the highly fragmented market. The French wines industry was vulnerable for several reasons, firstly the restrictions and rigid standards that signified quality for the industry also led to lack of innovation and efficiencies within the industry and left them unable to compete with new world...
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...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? “By the Christian era, wine became part of the liturgical services, and monasteries planted vines and built wineries. By the Middle Ages, the European nobility began planting vineyards as a mark of prestige, competing with one another in the quality of wine served at their tables – the first niche market for premium wine.” The French were the dominant competitors in an increasing global market because they believed in the same old tradition that brought so many of their ancestors’ success years prior. Many consumers preferred the taste and sophistication of a bottle of pure wine from a native land. To support their exports the French stuck by their plan of maintaining an old fashioned brand that was simplistic but full of quality. Consumers who drank aged wine originating from France considered themselves above normal society, in a class above the commoner. A medical publication supporting that French red wines helped promote low rates of heart disease certainly did not hurt either. French wine producers had several sources of competitive advantage beginning with their geographic and climatic features. This played significant role with France at the center of European culture with suitable climate and soil condition for harvesting grape, leading to first-mover...
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...the dominant competitor in the global wine industry due to the low effect of the five forces of competition. The main barriers to entry that kept the threat of competitors low for the French were incumbency advantages, unequal access to distribution channels and restrictive government policies. This first barrier, incumbency advantages, can be explained by the domestic French Wine Industry in the late 18th to mid 19th century that was already supporting 1.5 million families for both the growing of grapes and other wine-related businesses. France already had a domestic market for the growth and cultivation of vineyards that was able to provide French producers with a steady supply of agricultural inputs. Secondly, France possessed a domestic distribution system that created the second barrier to entry for competitors, unequal access to distribution channels. Their domestic market already utilized a distribution system by selling wine in bulk to merchant traders called negociants who would blend and bottle wine before distribution. With advances in both bottling and pasteurization allowing for long distance transportation of wine, France was in a premier spot to take advantage of exporting wine. Finally, as the wine industry continued to grow, the French Government created new barriers to entry by implementing a classification system that greatly benefited the French. This barrier to entry, restrictive government policies, allowed French wines to differentiate their product...
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...the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop? Where were they vulnerable? By the Christian era, wine became part of the liturgical services and monasteries planted vines and built wineries and the European nobility began planting vineyards as a symbol of prestige, competing in quality of wine they serve on their table, i.e. start of premium wine market. French wine producers became the dominant competitor as a result of four reasons. First, their geographic and climatic features played significant role. As France is in the middle of Europe culture with suitable climate and soil condition for harvesting grape, had accrued first-mover advantage and established its place as the dominant competitor in the global wine industry. Second, they became the first high-quality wine market and gained a lot experience. Especially, the negociants traded wine between France and other countries and this worked as word-of-mouth effect, increasing the reputation and dominance of French wine. Third, they used the latest innovations such as mass production of glass bottles, the use of cork stoppers and pasteurization. These innovations increased the stability and longevity of wine which allowed the transportation of wine to distant places, and birth of global wine market. Lastly, the government support made significant effect on the reputation and improvement of French wine industry. Government controlled the wine production and...
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...* BUS 690 Group 8 Trade Joe’s Trade Joe’s history, mission statement, value…. (Ch.01) [Suggested] * Q: In what ways does Trader Joe's demonstrate the importance of each responsibility in the management process planning, organizing, leading, and controlling? A: There are several ways to demonstrate the importance of each responsibility. first, the buyers will travel all over the world to search the great foods and buying direct from the producer to lower the costs. Second, Trader Joe's carry only 1500-2000 products so that the customer are easy to choose. Third, Trader Joe's managers are hired only from within the company. The future leaders should be enroll in training programs such as Trader Joe's university the foster in them the loyalty necessary to run stores. Fourth, when something happen, Trader Joe's will quick to respond and post their action alerts on their web site. Q: How has Trader Joe’s developed its brand? A: Trader Joes focused on the in‟-store experience by designing interiors to be similar to a beach scene. It trains its employees to be helpful. The company has strengthened its brand by ensuring its products are high quality and reasonable in price, which increases customer trust. There is no reason to go to an overpriced specialty store, nor is there any reason to get lost in a conventional grocery store with mundane products, when Trader Joes is Internal resources (Ch. 04) Isabel * What are Trader Joe’s intangible resources? ...
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...Global Wine War 2009 : New World versus Old How were the French able to dominate the worldwide wine trade for centuries ? What sources of competitive advantage did they develop to support their exports ? France and the Mediterranean region is closely tied to the Wine History. It has started since the Roman Empire, and has been fully integrated to the European culture with the Christian era : Monasteries planted vines and built wineries. The nobility started also planting vineyards as a mark of prestige. In this early market, France has been dominant thanks to key advantages : 1. Factors Conditions : First, their geographic and climatic features played significant role. As France is in the middle of Europe culture with suitable climate and soil condition for harvesting grape, had accrued first-mover advantage and established its place as the dominant competitor in the global wine industry. 2. Demand Conditions : The Distribution and Marketing made the fame of French wine. The négociants traded wine between France and other countries and this worked as word-of-mouth effect, increasing the reputation and dominance of French wine. 3. Innovation. In the late 18th century, French producers had experienced a massive innovation in the market. Mass production of glass bottles, the use of cork stoppers and the development of pasteurization revolutionized the industry. Those innovation got the distribution and Marketing easier. These innovations increased the stability and longevity...
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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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...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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...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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