The global wine industry is being influenced by a number of factors including consumer demand and changes in the way wine is produced and sold. There has been a shift in the perception of wine in the past half-century as consumers and producers have migrated away from the Old World philosophies to the modern-thinking the New World has brought about. By the 1990’s the average consumer’s palate changed – especially here in the U.S. where consumers were more apt to look for the premium ($7-14) and super-premium ($14+) wines. By this time, there was a drop in consumption in countries that traditionally consumed a great deal (France, Italy, Spain, Argentina, and Chile) while demand in other countries increased (U.K., Canada, Belgium, and some Asian countries).
Wine consumption was now becoming truly “global” and New World producers had the means to handle demand. Shipping overseas was now a cost-effective way to transport wine around the globe allowing consumers even more choices of quality wines. Therefore, one of the most important factors in how the wine industry is changing is in the education of the wine consumer. And consumers now can look at a bottle of wine and tell the type of wine and the region they came from along with the date bottled.
2. 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?
French wine producers became the dominant competitor as a result of four reasons. First, their geographic and climatic featuresplayed significant role. As France is in the middle of Europe culture with suitable climate and soilcondition for harvesting grape, had accrued first-mover advantage and established its place as thedominant competitor in the global wine industry. Second, they became the first high-quality winemarket and gained a lot experience.
Especially, the negociantstraded wine between France and othercountries and this worked as word-of-mouth effect, increasing the reputation and dominance of Frenchwine. Third, they used the latest innovations such as mass production of glass bottles, the use of cork stoppers and pasteurization. These innovations increased the stability and
longevity of wine whichallowed the transportation of wine to distant places, and birth of global wine market. Lastly, the government support made significant effect on the reputation and improvement of French wineindustry.
The sources of competitive advantage that they were able to develop to support their exports is to keen to taste and tradition in the production of wine (strongly tight to the French culture), artistic and historical talent and expertise in wine making and well located as to the high demand markets such as England,..
The main vulnerable aspects of French wine industry were highly fragmented vineyard and wine production, increasing vineyard prices per acre, complex distribution and sales system, long multilevel value chain, risk of bad weather and disease; and poor roads and complex toll and tax system. Also, they lack of rational assessment of their place comparing to other countries and they do not have any marketing plan or strategy.
Courtney from Study Moose
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