The Wine Industry in U.S has shown that although they are the fourth largest producer of wine, they still in the 34th place in world wine consumption according to statistics in 2001. The industry competion is matter that involves understanding the industry structure and ¿ how the fives forces affect the competition, consumption and the structure in the industry in U.S? Furthermore of this analysis, the fives forces approach is necessary to understand how companies can compete and use this forces to take advantages of weaknesses of the wine industry.
Threat of new entrants in Wine Industry in Us
The case shows that the dominance of key players in the low-price segment give them the ability to take advantage of distributors relationships having more chance to put their products in supermarkets and the capital requirements for entry were substantial for large and budget producers, this became a entry barrier, due to the difficulty to put product in supermarkets and capital requirements to start up a winery, on the other hand with the grape glut, more a more Wineries enter the market, this cause that the intense competition make almost impossible to establish a dominant position for big players, prove of this is that wine has being made in every state of U.S. To avoid this threat is necessary that actual players increment the barriers of entry not just thought big scales of production also differentiating their products and creating new markets for its products that leads in dominant positions and will made more difficult for actual and new entrants to compete.
Power of Suppliers
Consumers have a hundreds of different grape varietals, colors, sizes, styles, and country origins. And with a big excess of grapes, the bargaining power of suppliers can be considered low, proof of this is that wine production outstripped consumption by 15-20 % in 2001, but is necessary to take into account that distributors had...