Wine Industry - Porter's Five Forces
Porter’s Five Forces
Wine Industry
Contents
1. Bargaining power of buyers………………………………………………………………………….1 2. Bargaining power of suppliers………………………………………………………………………2 3. Rivalry between existing companies………………………………………………………….…4 4. Threat of new entrants………………………………………………………..……………………….5 5. Threat of substitutes…………………………………………………………………………………….6 6. References………………………………………………...……………………...…………………………8
1. Bargaining power of buyers
The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition between small private family wineries while there are in the “New World” only a few large companies that have a big market share. To give you an example of this Australia have four firms that at the moment have around 75 % of the market while in France there are around 230 000 wineries.
The power of buyers seems to be higher in Europe compared to the “New World”, in Europe the consumers have a more sophisticated taste and are more price sensitive compared to the “New World”. In Europe wine is sold through many different supermarkets which provide a wide range of different wine sorts from a lot of different private labels. This can be one of the reasons why the power of the buyers seems to be a bit higher in Europe than in for example the US. In the US they generally don’t sell wine at supermarkets, except from Wal-Mart that just introduced a private label in their wine collection. Another reason might be that the branding in the “New World” creates a wider product differentiation which seems to reduce the power of the buyers.
In general the power of the buyers within the wine industry is quite high if we talk about buyers like distributors and wholesalers. Buyers like distributors and wholesalers are probably the largest
Wine Industry
Contents
1. Bargaining power of buyers………………………………………………………………………….1 2. Bargaining power of suppliers………………………………………………………………………2 3. Rivalry between existing companies………………………………………………………….…4 4. Threat of new entrants………………………………………………………..……………………….5 5. Threat of substitutes…………………………………………………………………………………….6 6. References………………………………………………...……………………...…………………………8
1. Bargaining power of buyers
The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition between small private family wineries while there are in the “New World” only a few large companies that have a big market share. To give you an example of this Australia have four firms that at the moment have around 75 % of the market while in France there are around 230 000 wineries.
The power of buyers seems to be higher in Europe compared to the “New World”, in Europe the consumers have a more sophisticated taste and are more price sensitive compared to the “New World”. In Europe wine is sold through many different supermarkets which provide a wide range of different wine sorts from a lot of different private labels. This can be one of the reasons why the power of the buyers seems to be a bit higher in Europe than in for example the US. In the US they generally don’t sell wine at supermarkets, except from Wal-Mart that just introduced a private label in their wine collection. Another reason might be that the branding in the “New World” creates a wider product differentiation which seems to reduce the power of the buyers.
In general the power of the buyers within the wine industry is quite high if we talk about buyers like distributors and wholesalers. Buyers like distributors and wholesalers are probably the largest
References: Contemporary Strategy Analysis, Robert M. Grant http://hbswk.hbs.edu/item/3910.html http://www.customwritings.com/blog/sample-research-papers/wine-industry-research-paper.html http://www.ukessays.com/essays/management/wine-industry.php http://www.wisegeek.com/what-is-wine-industry-analysis.html https://maths2.web-prod.development.adelaide.edu.au/wine-econ/papers/0101.pdf The US Produce Industry and Labor: Facing the Future in a Global Economy, Linda Calvin and Philip Martin, United States Department of Agriculture