Wine War

1169 Words Apr 12th, 2012 5 Pages
CASE REPORT: Global Wine Wars: New World Challenges Old
(Harvard Business School Case # 9-303-056) NMI

1. How did the French become the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop to support their exports? Where were they vulnerable?

French wine makers also face challenges that are not internal to the industry. For instance, France lost market share in the United States due to informal boycotts in the wake of the Iraq war. The rise of the euro against other currencies, such as the 30% increase relative to the dollar in the last few years, has put French wines at a comparative cost disadvantage. But consensus among experts is that the
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However, it quickly became apparent that the newcomers pose a serious threat to the traditional winemakers. The French were especially hurt when they began to lose their global market share as well as the coveted U.K. market to the Australians.

Allows analysis of the way in which newcomers can change the rules of competitive engagement in a global industry. How incumbents can respond, especially when constrained by regulation, tradition, embedded values, and a different set of capabilities than those demanded by the emerging market by changing consumer tastes and market structures.

The case contrasts the tradition-bound Old World wine industry with the market-oriented New World producers, the battle for the US market, the most desirable export target in 2009 due to its large, fast-growing, high priced market segments.

REINVENTING THE MARKETING MODEL: New World producers revolutionized the packaging and marketing aspects of wine making. Americans and Australians greatly impacted wine packaging by replacing the Old World standard liter bottle with a half-gallon flagon in the U.S. and the innovative “wine-in-a-box” package in Australia. Australians have been praised for this idea because boxed wine not only saves on shipping costs but it

has made storage easier for consumers. Australians have also begun to use screw on caps rather than the traditional corks on premium wines; this is to prevent spoiling due to deficient corks. On the

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