For industry sectors the threat of globalisation to their local market has increased competition which in turn has lead to price cutting and increased spending to maintain a competitive advantage over the opposition. In New Zealand the wine industry has been on to benefit from globalisation as it has lead to expansion of their target markets, effectively leading higher returns as they are can expand production. The increase in the supply of wine has lead many wine producing countries to explore new and unexplored markets, already New Zealand’s wine industry has been identified as creating themselves a niche market within the Association of South-East Asian Nations (ASEAN). This report aims to identify the strength, weaknesses, opportunities and threats that exist in entering the Asian wine market.
For over twenty years the wine industry in New Zealand has enjoyed a share in the upper-premium wine market, the long stretch has established New Zealand’s domestic wine varieties in the international market. •
Many of New Zealand’s unique flavours such as their Sauvignon Blancs, aromatics and Pinot Noirs have already developed strong following throughout Asia (Barton, 2007). •
Many in the Asian market believe that the New Zealand wine industry can be seen as somewhat of an example for the countries other exporting industries such as dairy, furthermore stating that the industry has created itself a niche market to be imitated (Barton, 2007). •
Internationally, New Zealand is widely regards as being clean and green. New Zealand exports benefit from this image and the wine industry not one to be excluded from this list (Ministry for the Enviroment, 2001). For international consumers, association the New Zealand image in wine provides unique attributes that wines from other countries are unable to imitate, providing New Zealand wine exported with a competitive advantage. •
New Zealand is well known throughout the world as being famous for agricultural produce which includes fruits, vegetables, dairy and meat. The transfer of reputation for high agricultural standards transfers onto the countries wine. As a strength New Zealand is geographically positioned closer to the Asian market compared to Chile and France, the potential benefit this possess is that the country products would have less of a carbon foot print.
Wine has long been associated as being a luxury good, as is regard having an elastic demand. This is one of the major weaknesses for New Zealand, as the major segment in which domestic producer target is the upper premium end. Price sensitivity which may occur from a recession or larger cost occurring from inelastic goods such as food and gasoline is likely to have a dramatic effect on demand. •
At present the world’s supply of premium wine exceeding demand, like New Zealand, countries that manufacture wine are also searching to cater the Asian market. Unfortunately due to lower outputs and smaller operations, countries that also cater for these segments are likely to be use dumping as a form of push out competitors like New Zealand who have lower market share. •
Unlike France, New Zealand is not recognised as a traditional wine producer. This could pose as problem when considering that the countries wine is positioned in upper-premium market, the weakness is that consumers may associate high quality wine to be from France or Europe. New Zealand does not have this attribute as it has been manufacturing wine for just over 20 years.
The growth potential for New Zealand within Asia is likely to be valuable in an effort to combat the rise in supply available internationally of wine. China has long been identified as being a prime destination for export of luxury goods, this can due to the increase in the number of individuals that belong to the upper medium class (Beverland, 2002). China is...
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