During the last few decades, the global wine industry has grown by leaps and bounds to emerge as a $90 billion market. Scientific discoveries such as pasteurization and the cork-stopper invention have revolutionized the production of wine by easing restrictions on transport of wine, thus enabling the market to open up.
The enforcement of national regulations and classification schemes pertaining to wines came close on the heels of this distribution revolution. Since wine could be exported, competition was open. Hence, occidental wine brands had to adopt differentiation tools to foster competitive advantages, such as French 400 AOCs or Appellation d'origine controlee' (translates as controlled designation of origin').
With the market opening up to newcomers, traditional wine makers began to feel the threat. New entrants including Australia, the United States, Chile and South Africa developed their own know-how. Apart from enjoying weather suitable for growing vineyards, these countries had numerous land resources. Above all, New World producers had no restrictions when experimenting with new technologies as they were not compelled to protect a specific brand unlike its Western counterparts. Thus, the New World innovated in marketing and packaging, and formulated new techniques and systems to increase the yield including witness drip irrigation, canopy management, aspersion, soil slotting and mechanical harvesting.
As regards the value chain management, New World wine growers adopted a vertical integration of management control. Thus, producers could respond to global quest for quality, no longer for terroir' (denoting the unique geological and geographic characteristics of the land imparted by the wine produced in that specific land). Wine making was turned into a precise science, by systematizing production and phasing out the element of unpredictability from the production equation. Moreover, wine production was made more cost effective.
[...] Moreover, wine was made more cost effective. As a way of consequence, the Judgment of Paris, in 1976, consecrated the soaring success of Californian wines. Nevertheless, if this quality shift coped with a declining demand, the market soared again in the 80s, thanks to the French paradox. Old world could not adapt fast enough to this change in demand: tight local regulations entailed over productions the European Commission had to compensate. New entrants' bargaining power enabled them to have an aggressive pricing and enough flexibility to respond to the changing demand, and consistent orders. [...]
[...] Global wine wars: New Challenges Question1: What changes in the global industry structure and competitive dynamics have happened during the last decades? Categorize them Question Identify global wine sectors strategic segments and explain how they have been and are impacted by the industry evolution. Question Identify global wine sectors strategic groups and explain how they have been and are impacted by the industry evolution. Question Assess the industry attractiveness now and in the near future using relevant conceptual tools. Question What advice would you offer to the French Minister of Agriculture? [...]
[...] Thanks to this possibility, it can follow the evolution of the Demand which quickly evolved. Moreover, the new world wine uses innovative Marketing and Packaging techniques to convey an attractive and new message for consumers. Thus, the consumers of old world's wine can fine new wines to buy. The old wine world will suffer from a lot of threats of substitution. Buyer power: As we said, the old wine world uses new techniques of Marketing and Packaging. This is a way of creating a product differentiation. In addition, the size of buyers is important. [...]
[...] For instance, Asia has the largest wine importing countries. Buyers also have a lot of possibilities to be informed about suppliers. Indeed, with the internet and all the articles about wine firms, they are able to bargain as they know what the prices and qualities are. Threat of entry: Some governments try to protect their wine producers by implementing rules. For example, France uses the AOC (Appellation d'Origine Contrôlée) as a governmental and legal barrier. Moreover, some firms try to control all the operation from the vineyard to the retailer. [...]
[...] Besides, for basic wine category, the producers should not suffer from hard regulations. In order to be price and quantity competitive, the wine producers should be able to use the same tools and technologies that Australian ones. For the other categories of wines, subsidies to people innovating are a good idea as well. However, the regulations should stay quite strict to keep the French quality. We can stay in the tradition while in the same time, adding small changes making it competitive for the days running. [...]
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