Global Wine Wars Essay

1. How did the French become the dominant competitors in the increasingly world-wide wine manufacturing for centuries? What sources of competitive advantage were they able to direct to support their exports? Where were they vulnerable? French wine makers likewise face challenges that argon not inseparable to the industry. For instance, France lost securities industry share in the united States due to informal boycotts in the wake of the Iraq war. The rise of the euro against other currencies, much(prenominal) as the 30% increase relative to the dollar in the last a couple of(prenominal) years, has cast French wines at a comparative represent disadvantage.But consensus among experts is that the old affright to the French export market place is midland to the industry the inability of the appellation system to appeal to what is becoming a global modality 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 institute the archetype for quality wine as well as specify these standards. French viticulture laws mandates four levels of quality as 1) epithet dOrigine Controlee (AOC) 2) vins delimite qualite superieure (VDQS) 3) vins du pays and 4) vins du table.French wine makers excessively face challenges that are not internal to the industry. For instance, France lost market share in the linked 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).Although France has been slow to adapt to changin g production and consumption trends it was an archaean player in international partnering and acquisition. The first joint venture was index Philippe de Rothschilds venture with Robert Mondavi to create Opus One in 1979. Gallic presence in the Napa sparkling wine industry is besotted as Domaine Caneros, Domain Chandon, Mumm Cuvee Napa, Pieper-Sonoma, and Roederer Estate are all owned by French champagne houses. Pernod Ricard owns wineries in Australia, Argentina, Chile and Spain (Economist, 1999). Most (90%) production is laborious in California.Started primarily by French and Italian immigrants in the later(a) 1800s, Californias winemaking tradition is only a few generations old and was interrupted by Prohibition. A global reputation for delightful wine is even more recent, when two Napa Valley wines won gold medals at a 1976 blind-tasting competition in Paris, a success unexpected by the rest of the world, including many Americans (Lukcas, 2000). The US adapted the French a ppellation system with over 130 approved American vinery Appellations ranging in size from the multi-state Ohio River Valley to the smallest, Cole Ranch, a 150 acre keeping in Mendocino County (Wine Institute, 2003).One of the most acclaimed appellations is Napa Valley. Most American winemakers also label by varietal if a wine contains at least 75% of that varietal by volume. 2. What changes in the global industry structure and competitive dynamics light-emitting diode France and other traditional producers to lose market share to challengers from Australia, United States, and other raw(a) World countries in the late twentieth degree Celsius? International competition on the wine market is characterized by a considerable disparity of strategies used by the different producers and wine-producing regions around the world. modernistic World Challenges Old With the emergence of New World players in the global wine industry many of the Old World players have been losing market share. At first France, Italy, Spain, and Germany simply laughed at the wine-making techniques of the new players -U. S, confederation America, South Africa, Australia, and New Zealand. However, it quickly became apparent that the newcomers pose a serious threat to the traditional winemakers. The French were especially hurt when they began to lose their global market share as well as the coveted U. K. market to the Australians.Allows analysis of the way in which newcomers can change the rules of competitive engagement in a global industry. How incumbents can respond, especially when constrained by regulation, tradition, enter values, and a different set of capabilities than those demanded by the emerging market by changing consumer tastes and market structures. The case contrasts the tradition-bound Old World wine industry with the market-oriented New World producers, the battle for the US market, the most desirable export target in 2009 due to its large, fast-growing, high priced mark et segments.REINVENTING THE MARKETING puzzle New World producers revolutionized the packaging and marketing aspects of wine making. Americans and Australians greatly force wine packaging by replacing the Old World standard liter bottle with a half-gallon flagon in the U. S. and the innovative wine-in-a-box package in Australia. Australians have been praised for this idea because boxed wine not only saves on shipping costs but it has make storage easier for consumers. Australians have also begun to use screw on caps rather than the traditional corks on support wines this is to prevent spoiling due to deficient corks.On the marketing side, New World producers began to differentiate their products to attract customers unaccustomed to wine. Ripple, an American wine was state to be un cultivate wine and was marketed toward customers unaccustomed to wine. It was wildly successful and led to an increase in branding and marketing alike. These were not the only major(ip) changes driven by New World companies, another was distribution. Previously the tasks of grapevine growing, wine making, distribution, and marketing were handled by different entities, many of which lacked the scale and companionship to function proficiently.In contrast, the large wine companies from the New World typically controlled the full value chain, extracting margins at every level and retaining bargaining federal agency with increasingly concentrated retailers. Since these producers held responsibility at every level, the quality of the final product was immaculate. Wine Traditionalists felt the New Worlds complete grape-growing and wine-making ways were embarrassing. Arguing that in their drive for efficiency, consistency, and their desires to cater to less sophisticated palates, New World producers had lost the character that came with more vintage wines made in the traditional fashion.Annoying Old World producers even tho was the fact that new wineries would name their wines Burgun dy, Champagne, 3. What advice would you offer today to the French subgenus Pastor of Agriculture? To the head of the French wine industry association?To the owner of a mid-size, well regarded Bordeaux vineyard producing wines in the bountifulness and super premium categories? Evaluation of different strategies Premium & Standard wine market knowledgeability of an accessible French brand The Global wine company (acquisitions and mergers) Appellation dorigine controlee and competitive disadvantage Protectionism versus being marketing oriented.