The Global Wine War

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9-910-405
AUGUST 13, 2009

CHRISTOPHER A. BARTLETT

“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 the times when ancient Egyptians and Greeks offered wine as tributes to dead pharaohs and tempestuous gods. It was under the Roman Empire that viticulture spread throughout the Mediterranean region, and almost every town had its local vineyards and wine was a peasant’s beverage to accompany everyday meals. By the Christian era, wine became part of 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. ____________________________________________________________

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Professor Christopher A. Bartlett prepared the original version of this case, “Global Wine Wars: New World Challenges Old (A),” HBS No. 303056, which is being replaced by this version prepared by the same author. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2009 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. Distributed by ecch, UK and USA www.ecch.com All rights reserved North America t +1 781 239 5884 e ecchusa@ecch.com Rest of the world t +44 (0)1234 750903 e ecch@ecch.com

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Global Wine War 2009: New World versus Old

910-405

Global Wine War 2009: New World versus Old

Wine Production
Tending and harvesting grapes has always been labor intensive, and one worker could typically look after only a three hectare lot. (1 hectare. = 2.47 acres) The introduction of vineyard horses in the early 19th century led to vines being planted in rows and to more efficient tending and allowed one person to work a plot of 7 hectares. Yet despite...
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