Gobal Wine Wars

Notes from Global Wine Wars: Summary: · In 2002, Old world, traditional wine producers were constrained by traditional practices, industry regulation, and European legislation. The macro environment in Europe provided an opportunity for New World, international firms from the US, Chile, South Africa, and Australia to enter the marketplace. Identify the industry: · The global wine industry. · · · · Wine is a premium product as a mark of prestige, not a commodity product. Grape growers have small vineyards, and payment is made based on weight. Little incentive to intensify flavor. Growers have little power since grapes are a commodity. Average land per producer is 158 hectares in new world, less than 1 hectacre in old world Wine takes a long time to produce- up to 35 years

Key Success Factors: · Negociants export wine from France to international markets (must have distribution relationship) · Adherence to political regulations for quality. Controled all aspects of production—sugar content, permissible types of grapes, required growing practices, acceptable alcohol content. Some regulations stronger than others. · Must avoid bad Weather and disease of vines. · High-quality wines demanded for export. · Must be consistent with quality-little variability in quality · Must have a good taste. · Capacity to produce vines · Need for consistent quality and supply · Production costs- controlled by value chain decisions Driving forces of Change: · Change in political regulations. · Availability of a new distribution channel or supplier · Technological improvements: controlled dip irrigation, automated processes · Climate changes can change quality. · New marketing techniques- large scale branding –reduced fragmentization- right now no company has more than 1% marketshare · Distribution: full control of the value chain. Higher control and power in the industry. Less rivalry. · Wine ratings such as the Judgement of Paris · Drinking preferences and social norms change demand...