Crafting Winning Strategies in the Wine Industry

791 Words Nov 25th, 2011 4 Pages
CRAFTING WINING STRATEGIES IN A MATURE MARKET

The Wine Industry in U.S has shown that although they are the fourth largest producer of wine, they still in the 34th place in world wine consumption according to statistics in 2001. The industry competion is matter that involves understanding the industry structure and ¿ how the fives forces affect the competition, consumption and the structure in the industry in U.S? Furthermore of this analysis, the fives forces approach is necessary to understand how companies can compete and use this forces to take advantages of weaknesses of the wine industry.

Threat of new entrants in Wine Industry in Us

The case shows that the dominance of key players in the low-price segment give them the
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Power of Customers

As the market is not highly concentrated, the volumes of purchases by customer are not really high, the market products are differentiated, the buyer power is low. The industry has detected that customers are interested in price and quality, as result of this it has segmented in premium and budgets wines, giving the chance to every customer to find a wine that adjust to its necessities. But a fact is that consumers don’t know much about wines and this decrease consumption, its necessary to create more conscious customers that became more regularly consumers.

Threat of substitutes

The threats of substitutes are considerable high due that only 10% of Americans drank wine regularly; the other 90 % prefers other alcoholic’s beverages as beer or whiskey, this lead in a weakness for the industry and in a necessity to conscious more people of drinking wine, in addition 80% of wine drinkers think that their knowledge in wine is average or below, that results decreases consumption because of the lack of knowledge of the different kinds of wine, now the industry is focusing in older and wealthy people, and there is and opportunity to expand to other segments.

Rivalry among existing Competitors

Right now the industry is competing in tow strategic groups: budget and premium segments, and there is intense competitions in the budget segment were the key is the price; additionally the distribution

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