Global Wine War
Introduction
Human beings have been dealing with wine for thousands of years, from the Mesopotamians to the ancient Egyptians, from the Greeks to the ancient Romans, the latter which under their vast empire spread viticulture through the Mediterranean region. Through centuries countries, such as France and Italy, obtained a consolidated position in the wine industry, both in demand and production.
In the last part of the 20th century newcomers (Australia, South Africa, New Zealand, Argentina, Chile, USA, etc.) have successfully challenged the leadership of the so-called Old World that represented the majority of global market share.
Wine Industry Analysis using the Porter’s Five forces Model
A brief Porter’s five forces analysis can help understand how the evolving of competitive environment is actually composed and why this market shake occurred.
Figure 1.1: Porter’s Five Forces Model
For what concerns the threat of new entrants; the Old World companies completely underestimated this threat. When the newcomers entered the market they could bargain market share of the pre-existing ones without facing real opposition, exploiting better marketing strategies and more efficient organizational approaches.
Regarding to the threat of substitute products; this seems to be a challenge for the future, with the introduction of branding as a marketing approach; the threats from the beer industry and “soft drinks” producers must be taken into account.
Referring to the bargaining power of buyers and suppliers, the entrants are in a much better position because of bigger production plants which allow them to gain a stronger contractual power towards distributors; moreover their value chains are more concentrated removing the troubles of the too much fragmentation and variety of actors between the producer and the consumer, which on the contrary, Old World’s competitors are facing.
Human beings have been dealing with wine for thousands of years, from the Mesopotamians to the ancient Egyptians, from the Greeks to the ancient Romans, the latter which under their vast empire spread viticulture through the Mediterranean region. Through centuries countries, such as France and Italy, obtained a consolidated position in the wine industry, both in demand and production.
In the last part of the 20th century newcomers (Australia, South Africa, New Zealand, Argentina, Chile, USA, etc.) have successfully challenged the leadership of the so-called Old World that represented the majority of global market share.
Wine Industry Analysis using the Porter’s Five forces Model
A brief Porter’s five forces analysis can help understand how the evolving of competitive environment is actually composed and why this market shake occurred.
Figure 1.1: Porter’s Five Forces Model
For what concerns the threat of new entrants; the Old World companies completely underestimated this threat. When the newcomers entered the market they could bargain market share of the pre-existing ones without facing real opposition, exploiting better marketing strategies and more efficient organizational approaches.
Regarding to the threat of substitute products; this seems to be a challenge for the future, with the introduction of branding as a marketing approach; the threats from the beer industry and “soft drinks” producers must be taken into account.
Referring to the bargaining power of buyers and suppliers, the entrants are in a much better position because of bigger production plants which allow them to gain a stronger contractual power towards distributors; moreover their value chains are more concentrated removing the troubles of the too much fragmentation and variety of actors between the producer and the consumer, which on the contrary, Old World’s competitors are facing.
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