Wine Production Practice In European Union Falls Under

The winery industry can be categorized into red and white wine segments. The red wine segment, measured by tonnage of varietals crushed, has grown at a compounded annual rate of 4.7% for 10 years from 1989 to 1998, and a year over year growth rate of 8.2% from 1998 to 1999. Judging by the strong growth rate experienced in the red wine segment, it is reasonable to conclude that the red wine segment is in the growth phase of the life cycle model. In addition, production of red wine varietals which are relatively unknown such as syrah and sangiovese nearly doubled in a year from 1998 to 1999. The white wine segment, however, is at the mature phase of its life cycle as the segment shrunk slightly by 0.42% from 1998 to 1999. Overall, the industry is still at the growth stage lead by growth in the red wine segment.

Wine production is a major industry in Australia that is vital to the nation’s economy. In Australia, wine is subject to two taxes. Wine is subject to the Goods and Services Tax as well as the Wine Equalisation Tax. The Wine Equalisation tax is a values-based tax that is placed on all wine that is consumed in Australia (Wine Equalisation Tax, 2015). It applies to all grape wine and grape wine products that have a minimum alcoholic volume of 1.15% (Wine Equalisation Tax, 2015). Furthermore, it affects wine manufacturers, wholesalers, and importers (Goods and Services Tax, 2015). Though it may seem odd to implement an additional tax to a specific group of products, the wine industry has been subject this type of tax since 1930.

For example, the Appellation d’Origin Controllée (AOC) law in France. Italy followed France and also introduced laws and regulations. Producers supported these laws and regulations, they saw this as an opportunity to differentiate their wine and raising the entry barriers. In a later stage other regions in France were given the, usual lower ranked Vin Delimités de Qualite Superieure (VDQS) and the, even lower ranked Vin de Pays, inexpensive but very drinkable wines for French tables and increasingly for exports. Although this movement was quite rigid, due to a belief that quality was linked to terroir.

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.

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.

Wine has been a popular beverage for many years amongst different societies. The process of winemaking is one of the most complex and detailed processes, where every step is meticulous towards ensuring the best quality wine is produced. However, different phenomena are able to affect the wine even after it is bottled and stored.

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.

Normally wine is started in the fall when the ripe grapes arc harvested. It is not ready to be tasted until at least the following May-the origin of the young, and often very harsh, ‘May Wine.’ This time sequence coincides with the typical school year and thus provides an ideal opportunity to have a continuing demonstration. As the year passes and the course progresses, continued reference can be made to the various stages of the wine production….

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

Vincor does market wine alternatives itself, as a way of dealing with substitute demand. Vincor makes cider and has a wine kit business division (Spagnols) that gives Vincor some product diversification. Partly because of the ease of competition and as part of the differentiation and protection of the Canadian wine industry, Vintners Quality Alliance (VQA), a quality assurance program that identifies Canadian premium grape content, assists in making start-up more difficult for those wishing to emulate Canadian wine brands. The dollars spent on marketing and brand loyalty play a large part in protecting market share and there are certain absolute cost advantages that contribute to establishing some barriers to new competition. Ultimately, there is little cost to the consumer when considering switching brands. Experimentation in wine drinking is often a characteristic of the wine drinking market and thus can contribute to promoting new substitute entry into the market.

The problem that the company must address refers to determining if it is better to develop distribution and marketing strategies controlled by the company, or to allow the distribution of the products to be performed by the merchants. This is a difficult decision to make because of its implications. The fact that the company's wine products are distributed by merchants has its advantages. These merchants know the market very well, they know buyers, and they know how to attract them. The networking of these merchants seems to be important in efficiently distributing wine products. But the collaboration with such distributors also leads to increased costs in the case of Chateau Margaux. In case the company decides to control its distribution chain, the costs can be reduced. However, this can have certain disadvantages. Therefore, the company's managers must determine what the company should do about its distribution process and marketing strategy.

The United States wine industry is a 12 billion dollar industry and is composed of 7,000 wineries and around 1,800 different companies. The three major companies within the industry are Constellation brands, E&J Gallo, and The Wine Group Inc. The industry has made its way through the economic crisis at a better rate than some of the other U.S industries however in order for them to continue to see any type of growth it is important that they acknowledge their issues and find ways in which they can rectify them. The majority of the issues among the industry are problems that cannot be directly controlled by individual wine companies. Therefore it is imperative that wineries find away to use these issues to their

Producer to state-licensed wholesaler, state-licensed wholesaler to a state-licensed retailer, and state-licensed retailer is the only one allowed to sell directly to the consumer.

In the most recent years, domestic sales of wine has declined constantly. The wine consumption is becoming more occasional. This is partially due to an aggressive anti-alcohol campaign and driving restrictions set by the local government, but also facilitated by a lack of marketing strategy: the wine market is loosing touch with the youth (the average age of wine drinker is gone up from 35 to 55) and young people are getting more keen to beer or alcohol pops.

Nowadays, in the “Old World” countries of Europe, where the bulk of the volume is still produced, this is of great concern. However, consumers, especially younger drinkers, prefer the high quality wine from famous brands which are imported into Europe by the “New World” player, and the growth rate is at average10% per