Global Wine War
By Christopher A. Bartlett
Case Analysis Report
The concept of production and sale of wine was originated in the European countries known as the old world according to the article "Global Wine War 2009: New Word versus Old" these are; France, Italy, Spain and Greece. Here the wine culture was developed mainly due to the habits of religion and high society which caused them to have the highest consumption per capita in the world, creating a very attractive and important industry for the governments of those countries. On the other hand, countries known as the New World, have advanced in this industry breaking paradigms, using marketing strategies that allowed them to gain market share and to weaken its competitors from the Old World. These strategies are based on different forms of production, using technology, new packaging, creating wine segments, and an important support by a government that helps them to minimize the cost of production and sale of wine. In the next questions we’ll describe what should every country do to continue developing this industry and keep it from falling into its competitor’s hands.
1. How did the French become the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop to support their exports? Where were they vulnerable? France is part of the old world together with Italy, Spain and Greece. Since the origins of wine, France took an important role since it adopted the culture of wine consumption created by romans and high society classes from this region as well as religious events. The combination of the characteristics of its type of land, geographic location, weather and culture of wine consumption, made France become the country with the highest wine consumption per capita (120 liters), and the second best wine producer in the world. France was recognized to be a producer of high quality wine, it was the first to begin to distinguish the wine quality levels according to the Bordeaux committee, and began marketing to other countries and position its wine worldwide, creating a value chain starting with grape growers, vineyard owners, distributors and retailers to reach the ultimate consumer, this is what allowed them to advance their exports and begin to influence others countries since 1800, for example Australia (Amie Sexton pag 198). The competitive advantage that helped support its exports was the extraordinary range of wines produced, based on quality, location, and type of climate that allows France to produce different types of wine. In exhibit 1, we can see that France has classified its wine production regions. Because the weather is an important factor in the production of wine, we believe this has been the main problem that makes France a vulnerable country for the production of wine (Tara Holland and Barry Smit p. 125), and not to have a developed technology that controls this variable, this has made France to use other countries production to meet domestic demand, as the case mentioned in the reading, where in the last quarter of 19th century a plague affected the French wine stock.
2. What changes in the global industry and competitive dynamics led France and other traditional producers to lose market share to challengers from Australia United States and other New World countries in the late twentieth century? There had been identified some factors that have move the market share in the wine war industry between European countries (mainly France, Italy and Spain), against the countries of the New World U.S. , Australia, Chile, Argentina. These factors are classified within the concepts of Production, Distribution, Marketing, and government.
In the production variable, there have been created vineyards in the new world that been able to produce wines of the same quality of the old world with new technology systems, better production processes,...
References: * Christopher A. Bartlett, “Global Vine War 2009: New World versus Old”, Harvard Business School, August 13, 2009.
* Tara Holland and Barry Smit, “Climate change and the wine Industry: Current Research Themes and New Directions”, Journal of Wine Research, 2010, Vol 21 pp.125-126
* Wehring, Olly, Californian wine Industry review-Managament, Just-Drinks, 2005
* Amie Sexton, “The French in the Australian wine Industry: 1788-2009”, University of Melbourne, Melbourne, Australia.
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