Global Wine War 2009: New World versus Old
1. 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? The wine production of France goes all the way back to being part of the first niche market for premium wine. Factor conditions of France, such as land and climate, were well suited for wine-production compared to other European countries. Since the early 19th century cross-border shipping was very expensive, France was able to cluster the related and supporting industries of wine production within their domestic borders. As a result, France increased its competitive advantage throughout other sources without much impact from other countries. As the industry became France’s second largest export, side by side with a culture of rich food, the demand conditions got affected, as consumers were expecting a certain quality. The French government provided the classification systems, which increased the rivalry and domestic competitiveness and raised the entry barriers so that entry of foreign competition was kept at a minimum. 2. Given the longstanding dominance of Old World wine producers, how were the New World producers, such as the Australians, able to expand their market share so rapidly in the 1990s?
As postwar increased demand for wine rapidly, factor conditions of the New World producers, such as widely available suitable land and it being less expensive, made it possible to meet the new demand and boosted the New World industry. The new demand conditions demanded higher quality wines and as new generations were born, the consumers got more price-conscious and convenient oriented. New World producers met these changes in demands by introducing a completely new firm strategy, structure, and rivalry compared to the Old World producers, who were constrained by tradition. Innovation was the key word in the New World strategy; suddenly, mechanical technology...
Please join StudyMode to read the full document