The Wine Industry

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TB0155
January 9, 2004

Andrew Inkpen Rod Phillips

The Wine Industry
The Aussies are on a roll, says Millar [CEO of Australian wine producer BRL Hardy]… In 50 years, it is not out of the question for Australia to be the world’s largest wine producer… Jose Fernandez, who runs Hardy’s U.S. joint venture Pacific Wine partners, said the French were a spent force, conceding the U.S. market to Australia. “Only the Italians have put up any sort of fight,” he added. The Daily Telegraph, September 12, 2002 Faced with the unpalatable prospect of destroying 10 million liters of unsold Beaujolais wine, the equivalent of around 13 million bottles, Maurice Large, president of the Beaujolais winegrowers’ association, has accused modern wine-drinkers of being “Philistines.” On a recent trip to Australia, he explained that “many new wine-drinkers are attracted to Australian or Argentine labels because they know no better than to treat wine like Coca-Cola.” “Unpalatable Message,” The Economist, October 5, 2002 Not so long ago, I looked forward to tasting a line-up of basic Australian wines. These days, I approach them with a mixture of boredom and distaste. All too often, the whites are bland and unexciting, while the reds, if anything, are worse: confected, sweet and over-oaked… The Australian wine industry has been, and continues to be, plundered by drink multinationals that are obsessed with short-term gain. Australian brands—the very wines that once offered tremendous value for consumers—are being milked for profit. Tim Atkin, The Observer, October 21, 2001 Robert Mondavi comes from an industrial civilization, not a traditional civilization… The Californians produce wine like other people make yogurt. We respect our landscape and our woods, while he insists on razing native forests to produce Californian wine in the Languedoc… The Mondavis will end up destroying our traditional artisans, just like McDonald’s is destroying French gastronomy. Aimé Guibert, French winemaker, commenting in 2000 on Robert Mondavi Corp.’s plans (later abandoned) to acquire land in the Languedoc region of France The wine industry is now globally interconnected. Large companies like E.&.J. Gallo are no longer California wine companies. [In the upstream] they are globally connected via contracts and production and sales of bulk wine and concentrate to the world. Wine industry expert, January 2005

Wine in the Ancient World
The two elements crucial to the development of large-scale wine production were vine cultivation and the invention of a means to conserve wine.1 Vines were first cultivated in the Middle East before 4000 BC. Wine produced in the Zagros Mountains was transported down the Euphrates and Tigris rivers to the Mesopotamian plain to trade. Imported wine was consumed by the Mesopotamian upper classes and used in religious ceremonies. From there, wine trade spread to Greece, Crete, Phoenicia, and Egypt. 1

Phillips, R., A Short History of Wine (New York: HarperCollins, 2000).

Copyright © 2006 Thunderbird, The American Graduate School of International Management. All rights reserved. This case was prepared by Professor Andrew Inkpen, Thunderbird, and Professor Rod Phillips, Carleton University, Ottawa, with research assistance from Khanh Nguyen and Chee Wee Tan, for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.

Evidence of imported wine was found in the burial chamber of Scorpion I, one of the early kings who ruled Egypt around 3150 BC.2 The Egyptians began making wine around 3000–2500 BC and left the earliest comprehensive records of winemaking and patterns of wine consumption. Egyptian wine consumption was reserved for the elites. When the Greeks colonized Egypt in the Fourth Century BC, they expanded the local viticulture into larger areas of the country. By then, wine was available to a wide range of consumers, most of them Greek. Egypt and Crete began to trade wine as...
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