Global Wine War

The Old Market consumers are more sophisticated and price sensitive than those in the New World. The main sales channels

Wine production involves two parts of economic activity – viticulture and wine making in the winery. In the global context, wine production is dynamic due to the influence of globalization, technological advancements and extensive research. These have essentially influenced the nature, spatial patterns and the ecological dimensions of the wine industry.

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 scope of the innovation expertise that New World wine producers have is value-chain wide in scope, and in-depth enough to completely re-order manufacturing, fermentation, distribution channel, pricing, marketing and customer service (Cholette, 2009). New World wine producers

Therefore, France is a popular country for the making and producing of wine, and has the reputation as the Mother Country (“French Wine Culture”). Receiving this title did not happen overnight; France has been producing and manufacturing wine for a long period of time. Wine plays roles in many aspects of their society. For example, wine reflects their heritage, region of birth, social status, and their health (“France”). Wine resembles the differences between regions and their national pride (“France”). Not only does the region reflect their heritage but it also helps determine the name of the wine itself, as does the vineyard they are grown in (“French Wines”). Most vineyards are very large. They typically cover a good portion of the land, with the exception of the buildings that it is made in.

Wines, both red and white, have been a source of refreshment for over 8000 years. To date, a cave in Armenia is the only location of the oldest known winery ever discovered, circa 4100 B.C. And since that time, the people’s love of grapes and their savory, fermented liquids has never looked back. Over the centuries, there have been a handful of countries that have proven more climatically advantageous in producing exceptionally renowned wines. Today, Australia is acknowledged as one of the top 5 best wine producing countries in the world.

The industry is closely regulated (see 'Regulatory Factors ' section below). Wines, like other alcoholic beverages, must be distributed and sold through provincial liquor control board outlets. Some provinces permit wineries to sell their own wines in establishments which they operate. In Quebec, wine sold in grocery stores must be bottled in the province.

1. French wine makers continue to lose global market share due to the entrance of new competitors from Australia and other “New World” wine makers. French wine makers face an existential threat should they concede the U.K export market.

The local businesses tapping into more markets with the help of Globalization. The world is changing, we are living longer than before, capita income has gone up, advance in science and technology and change of poverty due to globalization taking part of our lives (Bildt). Employment and economic growth are recovering almost everywhere. “Since 1990, the share of people living in extreme poverty in the developing world has fallen from 47% to 14%, and child mortality -- a critical indicator -- has been halved” (Bildt). It all depends on what area you live that is changing because of the consumers believe certain countries make the best product.

These wineries would import large amounts of wine in bulk, and then bottle the wine in the US. This allowed the larger wineries to sell their wine at a considerably cheaper price, hurting the smaller domestic wineries. In 2011, the import market share in wine was roughly 26.5% [ (IBISWorld) ]. The amount of foreign wine entering the US has been on the rise ever since it was named the largest consumer of wine in the world. Foreign producers, who are experiencing a decline in business in their home country, are looking for new markets to sell their product. Countries such as Argentina, Chile, Australia and New Zealand are able to produce their wine at a lower cost than the US. The import of these wines has heated up the competition in the US creating benefits for the US wine consumer. The superior quality of the imported wines has also changed consumers thinking as far as how much should be spent on a good wine.

some oversimplification, we might describe these changes as a turn from a niche market to a mass market. This evolution is fostering changes in winemaking practices as well as in the conception of wine quality, which imply a departure from the traditions of the industry. Traditional winemaking practices and conceptions of ‘good wine’ were institutionalised in the denomination of origin regulations. These regulations embed each wine within a geographical locus of production, implying a dependence of production on natural contingencies. On the contrary, the exploitation of emergent market opportunities requires a finer control of production. This caused the diffusion of methods of winemaking that allow stabilisation of the quality of wines across time (vintages) and space, loosening the tie between grape and geographical area. Much of this change in production practices has been

a. With more companies starting to expand to others country markets, the competition was taking global dimensions:

From the SWOT analysis, it is obviously to have more downturns for the “old world” than the “new world”, and it appears that the “old world” should reform their philosophy for global marketing strategies. The “old world” should put the fragments of production together to reduce the operation cost and grow the speed of marketing response. Then, the big issue for them is broad brand, the “old world” need to do a lot on marketing research and create their more famous brand by market segment. The last is how to deal with the contradiction between tradition and quality. I think the best choice is joint venture or outsourcing. The “old world” players can cooperate with local companies in marketing section, or outsource to them completely. This method for the “old world” could not only avoid the weakness of marketing but also continue to focus on the tradition.

First of all, the development of the technology had made the world become a village, that means each country and their people are closer than ever before. (David A, 2013) Base on this opinion, the individual markets are not along isolated at all; globalization makes every individual market became a global market, every market can affect other markets. For instance, the U.S. subprime mortgage crisis can not only affect nearly countries like Mexico, Canada, but also affects the worldwide economy.

Throughout the twentieth century the behaviour of companies took new directions. Globalization and the consequent opening of the market made them