Global Wine War 2009, Old World Versus New World

Bonny Doon Vineyards, a successful winery business based in Santa Cruz, California, has grown from selling 5,000 cases of wine a year in 1981 to 200,000 cases a year in 1999. To keep growing and be more profitable, the business must choose amongst three possible strategic directions. The first strategy is to start importing wines from Europe into the United States. The second alternative is branching into a retail outlet for unusual wines of great value, accompanied by a high level of service. Lastly, the business’ D.E.W.N could be expanded to include wines not made by the company itself but by other wineries that follow the same values and philosophy.

• The demand of American beer has been increased in Europe, Asia and South America.

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

The structure of the wine industry is quite different around the world. The barrier to entry is relatively higher in the New World than in the Old World. Referring to the market data on the level of concentration in 1998, people can see a few players dominate the markets in Australia and the U.S. while the level of concentration is quite low in Europe. Therefore, the rivalry in Old World is intense there.

Since the late 1960’s, California wine-maker Robert Mondavi has been perceived by its stakeholders as one of the world’s most innovative and high-quality producers of fine wine. It is therefore not surprising that the company has endured great financial success; in fact, it has secured an impressive annual growth in earnings per share of ~28% over the last 8 years. Recently however, there have been many external forces that may serve to threaten the long-term profitability of the firm: sales have been decreasing over the last 6 months due to a staggering economy, Australian imports are on the rise, shrinking the size of the pie for domestic firms, and there has been an industry wide trend to consolidate; existing firms are merging and

The dynamics of the global wine industry are better understood through a brief history of wine as well as an overview of the wine making process. Some countries have longer historical and cultural ties with wine then others and that can affect the quality and perception of the product in the eyes of the consumer. Also, the conditions in which the wine grapes are raised and the processes used to make the wine can create a superior wine and therefore a competitive advantage.

The expansion of wine production is a result of expansive technological advancements which have made it possible to grow wines in inappropriate locations. For example, wines are genetically enhanced in most new world countries in order for them to survive a deficiency in the environment which may include high temperatures or a lack of rainfall. Irrigation systems area prime example that have assisted iin the wine industry of Australia.

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

The New World wine producers including Australia, Argentina, Chile, South Africa, and the United States have several strategic advantages over their Old World competitors. Most significant is how each of the wine producers in New World competitive economies are free to innovate, creating disruption and value creation that are redefining centuries-old processes. In the best-selling book The Innovator's Dilemma (Christensen, 2007) Dr. Clayton Christensen of Harvard University discusses how new market entrants, unencumbered by decades or in some cases centuries of government intervention and high cost structures, can quickly overtake a market and establish market dominance. The role of disruptive innovation in redefining value chains is a core message of his research and book (Christensen, 2007). This is exactly the same dynamic occurring between the New World and Old World wine producers. At the center of the New World win producing nations' competitive advantage is the freedom and immediate economic benefits of innovation.

Bonny Doon currently has an enviable position in the 1990’s Californian wine-producing industry. The company has successfully differentiated itself from its competition and achieved a first mover advantage in terms of selling “undervalued” wines. However, due to increased rivalry and a changing and increasingly challenging market,

MontGras, a medium-size Chilean winery, has to formulate an export strategy. It has to decide whether to emphasize the U.S. or U.K. markets, which also offer different positioning and pricing proposals. It has twice failed to penetrate the U.S. market, because distributor relationships fell through, and is deciding between two new potential partners. In the United Kingdom, it is offered participation in a supermarket promotion that will boost volumes but at the expense of price maintenance.

Wine consumers hardly think about price when it comes to buying. For the lower grad cheaper wines, the power of the buyer is greater; but when in comes to premium brands of wine, the power of the buyer is low.

The pricing for the products themselves are harder to approximate. There are many factors that go into deciding the price for a certain type of wine, with a certain name, from a certain company, containing a certain type of grape, that was processed a certain way. Many wine companies throughout the US have a high end wine and a low end wine. This allows the company to enter the market at all angels. Especially with the down turn of the economy, many companies have had to

Making wine is nothing else but a touch of passion, love and few drops of magic. From the first view, wine industry seems very artistic and secret at the same time. There is no doubt that hearing that Robert Mondavi Corporation is going to layoff 4% of its workforce ring the bell to the investors, at the same type the stock price dropping down dramatically makes an impression that the company is going through difficult period as the senior management is upon completing the reconfiguring future strategy. The big decision is whether to get back to original vision, and focus on the domestic market, which bring a 90% of revenues or continue diversification and keep on pursuing the vision of

The reason being is because the wine industry has changed significantly over the past twenty years. The