Global Wine War 2009, Old World Versus New World

Topics: Wine, Terroir, Cabernet Sauvignon Pages: 9 (3034 words) Published: May 13, 2012
Authors:Femke de Jong – s2226197Martje Kiemel – s2247852Fatima Mourhiya – s2161516Linda Verkerk - s2224194| | case paper: global wine war 2009|

| case paper: global wine war 2009|

The assignment for this week was to write a paper based on the case Global Wine War 2009: New World versus Old. We experienced that it was an interesting case considering both Porter’s five forces model and Resource-Based theory, because they give two different perspectives of competitive advantage: Outside in and Inside out. Besides that we could have a closer look at innovations and what they mean for the competitiveness in the world wine market. In this paper we make an effort in explaining what the main aspects are of these theories and their appliance to the Global Wine War 2009. Enjoy reading this case paper!

Table of Content
1. Introduction3
2. Case analysis3
In the beginning3
Political influence in the Old World3
A New World was born4
Global Wine War4
The battle of the US market4
3. Theory & application to the case5
Porter Outside-In Model5
Porter Outside-In model & the Global Wine War6
The Resource Based View Inside-Out Model6
The Resource Based View Inside-Out Model & the Global Wine War7
Red Queen competition7
4. Conclusion8

1. Introduction
This case paper found its origins in the wine war which started between The Old wine world and the New wine world. The Old world existed out of countries In Europe and Eastern Europe that had already been making wine for many years, for example: Italy and France. The new world, all countries located outside of Europe and Eastern Europe, however started producing wine in the 18th century. At that moment it was only a small share of the total wine market in the world. Because of the ‘phylloxera’ a gap existed in the wine market which allowed the new world to make its entrance into this market. Harvests in the old world were largely reduced and therefore the demand was bigger than the old world could supply. In stages the new world increased gaining share in the world wine market. This led to huge changes and shifts in the competitiveness of the wine market; the new world was more focused on marketing, single variety wines, innovations in technology and therefore reduced producing costs and they were able to meet the average consumer demands better than the old world. Another factor was the decreasing shipping costs to other continents which allowed them to keep a low price while selling wines to other continents in the world. The old world however, was still largely influenced by rules and regulations, dispersion of the vineyards, and therefore higher production costs, and names of wines that were not understood by a large amount of consumers. This paper provides an analysis of the important events during the wine war and their influence on the changes in the competitiveness in the world wine market. These events are linked to Porter’s five forces model and Resource-Based theory. 2. Case analysis

In the beginning
The first niche market for premium wine was created by the European nobility in the middle ages. They started to compete based on the quality of wine. Until the late 18th century, the size European vineyards were small because they were fragmented by wars. In that time, the wine producers did not own the whole value chain, the producers bought the grapes from the local farmers. Here, the local wine was not exported because of poor roads, complex toll and tax systems which made it too expensive. Political influence in the Old World

The late 18th century was dominated by innovations, which led to greater wine stability and longevity, distribution to distant markets and bottle aging of good vintages. The result was an increase of vineyards and production. Because of the growing economic and political importance of the wine industry, there...

References: Barney, J (March 1991), “Firm Resources and Sustained competitive advantage”, Journal of Management
Barnett, WP; Hansen, MT (2007) “Red Queen in organizational evolution”, Strategic Management Journal
Case 2-1 Global Wine War 2009: New World versus Old
International Business Strategy, Alain Verbeke
K.J. McCarthy; lecture notes; lecture 6: Perspectives on firm competitiveness and industry analysis.
Porter, ME (1991), “Towards a dynamic theory of strategy”, Strategic Management Journal
Resource-Based theory, Barney, JB; Clark, DN. (12-10-2011)
[ 1 ]. (12-10-11)
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