Global Wine War Analysis

Analysis, Pages 5 (1021 words)

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1. Due to French history and custom it was possible to get a strong image in regard to vinery and example, which can be highlighted may be the creation of Champaign. The experience of France as a quality wine manufacturer returning to the middle ages can be considered a source of competitive benefit. Another source is the strong white wine culture in France creating a favorable image for customers. The red wine market by itself is a very crucial financial consider France, in the mid 18th century the white wine market accounted for 17% of the overall market.

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As a repercussion, in 1855 the government categorized wine yard into five different levels of quality. This helped the customers to recognize the finest possible red wines and was unique at the time, which produced sustained competitive advantage. Concurrently, the introduction of mass production of bottles and use of cork stoppers assisted in the previous hard circulation of French white wine to foreign markets. The "phylloxera" pest damaged nearly all French wine backyards in the late 19th century, offering the first chance for New World (United States, Chile and Australia) wines to increase.

Due to the intricate defense system of French white wines, quality was a concern in the production of red wine when it comes to example watering systems under the "AOC"-label are forbidden while in the New World there were no limits towards developments. What changes in the international market structure and competitive characteristics led France and other traditional manufacturers to lose market share to oppositions from Australia, united States, and other New World nations in the late twentieth century? 2.

There were essential developments in the international red wine market that lead to shifts in market share of old world manufacturers to new world manufacturers.

First, demand changed severely starting in the late 19th century. Consumption in traditional wine consuming nations like France and Italy decreased significantly. This was mainly due to changing drinking preferences brought about by health concerns of substitute products. At the same time, although numerically not compensating for the decline mentioned before, wine demand rose in importing countries, a lot of them located in Asia. Second, drinking wine moved away from its mere traditional touch and became subject to quickly changing fashions and trends.

This put France at disadvantage: They were unable to adequately adapt to these fashions because the French vineyards were too small to grow different kinds of grapes that could have met the currently preferred wine and growing high-quality grapes took several years. On the other hand, the US producers’ vineyards, for instance, were many times bigger on average allowing them to spread risk by growing different grapes. Third, the new world producers took away market share by actively engaging in innovations in the areas of production technology and marketing.

For instance, Australian producers substituted the traditional glass bottles with containers reducing production costs and facilitating export. These innovations were possible because the new world countries were not subject to strict national regulations that wanted to preserve the traditional wine business in the old world countries. Fourth, the newly rising competitors often controlled the entire value chain from production to distribution. This left them with a bigger margin then their traditional competitors and made them less dependent of specific distribution channels. 3. a.

Advice to the head of the French wine industry •Develop a brand “Produit en France”: Customers do not know what they want when they enter a wine store. Sharpen the image of the certification system, reduce its complexity, and communicate this to the customers so that they recognize the classification label as a strong brand b. Advice to the owner of the a Bordeaux vineyard •Get to know your customers and discuss founding a consortium to better adapt to changing fashions: Engage in thorough market research to predict consumers’ preferences and try to influence their preferences with targeted advertising.

Discuss founding a consortium of different wine producers to produce different wines that will be high in demand soon in the future. c. Advice to the French Minister of Agriculture •Help your producers sell their vine: provide more funds for marketing campaigns and fund workshops on how they can identify their target group and do targeted, cost-efficient marketing ? 4. a. Australian Minister of Agriculture: The labeling of wine according to regions in Australia has been already done but not with protection by law.

Tighten laws in relevance of how to label wines can be beneficial in the long run when it comes to value creation, as can be successfully recognized in France. Simultaneously, a financially subsidy should support wine yards with their surplus production hence the successful long-term strategy “Directions to 2025”, which foresees value growth by 2015 and global leadership on the wine market by 2025 might be eased. This is necessary since Australia will cannot compete on price in the long-term bringing to mind low cost production countries such as Chile. b. Australian wine industry association.

Align marketing activities with the plan of “Direction to 2025”. Support the Australian’s wine image from cheap and cheerful into a classified and recognizable labeling scheme. It might be added that the new scheme can be restructured in a way that it does not mix up psychographic targeting with regional ones, since this might be confusing. The implementation of a regional scheme might pay off better, as it is currently done in other New World wine markets. Moreover the surplus production can be used in order to producing premium strong drinks hence value is added to products, as it is done in Italy with the “Grappa” or France with “Cognac”.

c. Mid-size, well regarded vineyard Target customers more directly through own website and social media activities. Moreover a convenient retail should be found, both domestically and globally in order to assure a thriving placement of the vineyard’s products reflecting the premium brand image. In the long run brand value should be sustained and if possible enhanced in order to assure that his products do reflect supreme quality and is not associated with the “cheap and cheerful” Australian wine image. This can be achieved through the transition towards organic wine grow.