Puzzle Piece of the Italian Penninsula of Sicily

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.

Some of the largest New World producers were the United States, Australia, Chile and Argentina. The largest of the Old World producers were France, Italy and Spain. The world’s top 10 wine exporters accounted for more than 90 per cent of the value of international wine trade. Of those top 10, half were in western Europe, and the other half were New World suppliers, led by

Azienda Vinicola Italiana produced and bottled wines. The company did not buy grapes but rather bought either mosto or bulk wine. They have seen that this policy had the disadvantage that the firm could not assure itself of a consistently high-quality product. Moreover, the administrative manager wished to re-organize the firm in order to exploit its productive capacity to the utmost and, above all, to increase the net profit, which the owners did not consider satisfactory.

Today as the world around us continues to age more and more people have an interest for premium wines. As Australia’s economy continues to boom some industries have taken a major hit over the last decade including Australia’s wine industry even though it continues to produce some of the best wines in the world. The report will look into the history of Australian wine and look at where things have gone wrong. The reports key findings will reveal a relatively unknown winery in the town of Orange, called Belgravia that produces some outstanding wines. The results that have been presented have been researched on various Internet resources, newspaper articles and journals. The writer has also contributed to the report with his

California is home to the largest wine industry within the U.S., the California Wine Industry annually accounts for 93% of wine production throughout the entire U.S. California is the fourth largest wine producer in the world (Fruit of the Vine 1). The reason California is able to produce an abundance of wine is due to the fact that California does not have severely cold winters, however California does have hot and dry summers, which provide the various regions within the California Wine Industry ideal growing conditions (An Introduction to California Wine 8-9). These ideal weather conditions have allowed the California Wine Industry to yield a prodigious amount of revenue. The wine industry has also supplied California with an abundance of jobs; there are 150 possible jobs within the California Wine Industry. The wine industry has assisted California boast a large state economic impact. Although the state economic impact is large, it is still continuously growing due to the drought that has sparked new technological advancements for the California Wine Industry. The California Wine Industry has financially supported the state immensely, which has helped California still remain the “Golden Land of Opportunity.”

Unsurprisingly, the Europeans dominate global wine consumption. The French consumed nearly 54L/person in 2006, followed by the Italian’s with 47.2L/person/year. In total, the French consume 3.3 billion litres of wine per year, or 14% of the world total, followed by Italy with 2.7 billion litres.

Wine which was considered a simple and a limited drink became an industry of its own generating millions in profit and having a huge consumer base with different tastes and aspirations. The changes as well as the differences in the age groups who are becoming the major markets for wine producers have created visible and different market trends that cannot be ignored. These trends also affect the global market, as well as economies of many Counties that rely on the wine industry for profit.

Since the 1990’s, Spain has entered the global market to claim its position as a high-quality value wine producer (www.winesfromspain.com). Spain’s rich wine history together with it’s relatively new global market entry and cost leadership strategy makes an interesting blend of old world and new world characteristics.

The report will analyse and expose the various factors that contribute to determine the price point of wine factors including the labour cost to grow grapes and produce wine, the size and reputation of the vineyard and the exclusivity and scarcity of the wine. Studies have shown that the global wine market is divided into four quality segments or categories known as basic premium, popular premium, super premium and ultra premium. Input costs for single vineyards have been divided into five categories known as direct, labour, mechanisation, and maintenance and general costs. Hedonic pricing and statistical analysis review qualities of wine that induce to price differentiation Studies have shown that different regions

Section one argues that traditional grape and wine production favored small scale integrated production. From the mid nineteenth century producers had to adapt to three major exogenous events: the integration of national and international markets, the appearance of new vine diseases and production shortages that these provoked, and the major advances in the knowledge of fermentation and the development of wine making equipment that produced economies of scale and which allowed cheap table wines to be produced in hot climates. These changes encouraged an expansion of production in hot climates in the New World and a shift in the locus of production of cheap table wines from Europe’s centre to the periphery. Thus while the four Midi departments and Algeria produced the equivalent of less than 15 per cent of France’s domestic wine consumption in the 1820s, this figure had reached 50 per cent by 1910. Other regions, such as La Mancha in Spain or Puglia in Italy experienced similar changes, although at later dates. By the turn of the twentieth century, a combination of higher yields and increase in adulteration flooded wine

Given wine’s history, the market for wine is almost truly global. However there is disparity within the “development” of the consumers within different segments of the market, the segments being largely geographically defined. This development is often tied to disposable income, whereby those with higher disposable incomes have the available resources (time and money) to become educated in how to choose a “quality” wine. The biggest markets, particularly as export markets from Australia, are the U.K., U.S.A., Germany and Japan (Australian Wine Industry Association, courtesy of Exhibit 2 of the case study).

* Wine industry is currently growing well in the market since the last decade. However, the quality factor in wine has become the main issue

The Irish wine market has experienced tremendous growth over the past 15 to 20 years, with an almost five fold increase in the consumption of wine from 1.7 million cases in 1990 to 8.2 million cases in 2007 (WDB, 2008). DIGI (2010) reported a 6.9% decline in wine consumption (by volume in 2009), however this decline took place in a year when the overall alcohol market contracted by about 10% due to “poor national economic performance” (DIGI, 2010, p. 6). Despite the recent drop in consumption over the past year, the 450% growth in the Irish wine market since 1990, and the shifts in demand and preference result in the Irish wine market becoming an important target market for wine brands.

There are nearly 70 countries producing wines all around the world. These producers divide into “Old Wine” (e.g. France, Italy) and “New Wine” (e.g. U.S, Australia) (). The former has more than 1000

Azienda Vinicola Italiana produced and bottled wines. The company did not buy grapes but rather bought either mosto or bulk wine. They have seen that this policy had the disadvantage that the firm could not assure itself of a consistently high-quality product. Moreover, the administrative manager wished to re-organize the firm in order to exploit its productive capacity to the utmost and, above all, to increase the net profit, which the owners did not consider satisfactory.