Global Wine Wars free essay sample

Market Analysis: Global Wine Wars-New World Challenges Old Global Wine Wars: New World Challenges Old This case describes the global development of wine industry, and how new world wine players occupied the global market share from old world wine producer gradually. It is very interesting that author selected the Britain as the sample stage for the battle between the new world wine campaign and the traditional campaign. Nowadays, in the â€Å"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 â€Å"New World† player, and the growth rate is at average10% per annum over the last decade. In new wine world, Chile has dominated the South American wine world and Argentina is facing this challenge of losing the number one position in South America, and is impacted much on market share dramatically. We will write a custom essay sample on Global Wine Wars or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Maybe the structure of new world wine industry could be renewed. The competition seems to be more fiercely. Increasing number of producers enhances their capacity to cater to the marketing demand. However, the growth of demand today cannot catch up with the increase of wine production. EC predicts that there will be as much as 15% of Europe’s wine production surplus to requirement in the future 5 years. This case focuses on the wine battle in Britain. The UK is the largest importer of wine (by value) in the world and a high per capita consumption of wine, but more and more wine consumed in Britain is imported from other countries, because it is usually hard to grow the good grape to produce wine in Britain due to the local unsuitable weather. But the British wine market is fragment, and top three players occupy the 17% of market share. Political. The new players who want to enter the British market       are affected by government regulation of wine and high import       duties applicable. Even high import duties and taxed to be       paid, but whatever new world wine or traditional wine would       rather to open the British due to the popular wine market. Economy. The Britain is a developed country, with the world’s       sixth largest economy by nominal GDP and the seventh largest       by purchasing power parity. Today, Britain tends to develop       to service and energy industry from manufacture. The quantities       of wine produced locally are very limited compared to the       volumes consumed. The Britain wine market generated total       revenues of $20 billion in 2008, and annual average growth       rate of 2. 1% for the period from 2004 to 2008. CAGR forecasts       that the performance of the market will decelerate with the       rate of 0. 6% for the next five years from 2009-2013 accompanying       with the downturn economy. Moreover, the volume of market       drop down dramatically in 2008 due to the bad economy, here       is a chart about the change of market volume from 2004-2008. {draw:frame} Demographic. Wine is consumed by 60. 8% of the total UK adult       population. As the research from CAGR in 2008, more than 81%       British like drinking still wine, following by fortified       wine (9. 4%) and champagne (7. 2%), and only less than 2% people       consumed sparkling wine. Culture. In the UK, the population has long traditions of       wine drinking. Historically wine was not embedded in the       culinary culture of most other social groups as there were       no local/regional production-beer and dicer-being the       dominant beverages. However, as wine consumption has now       become embedded into the culture of many UK adults. From the external analysis, the choice to invest more in the Britain is the correct global expansion strategies for the old world and the new world wine players. However, there is a big different performance between two campaigns. Old world wine players lose their market share gradually, while the new world wine players gain the market share bigger and bigger annually. It is forecasted that the new world wine players will finally replace the old world wine position among the customers, although the old world wine has the first moving in advantage. Why and what could lead this kind result? SWOT can tell everything about it. (Table below)   From the SWOT analysis, it is obviously to have more downturns for the â€Å"old world† than the â€Å"new world†, and it appears that the â€Å"old world† should reform their philosophy for global marketing strategies. The â€Å"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 â€Å"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 â€Å"old world† players can cooperate with local companies in marketing section, or outsource to them completely. This method for the â€Å"old world† could not only avoid the weakness of marketing but also continue to focus on the tradition. In this case, I can see that whatever the advantages are, companies should continue improving their skills and strategies to adapt the requirements from customers and market. Like new world wine player, the companies need to focus on research on marketing firstly, and then make distinct policy to various levels of consumers. At the same time, the new entrant has to own their unique way to gain market share and learn the traditional skill from the maturity companies. Australia is a very good example for this concept. Specialized brand built is a key to open the British market, which minimized the barrier of recognition, and the centralized company structure is the foundation of succeed, which could reduce the cost for operation and strategies. The only risk for this battle is that producer could overemphasize the brand and price and lost the tradition that quality is number one. I think the current wine association can adjust their manual to avoid this situation. However, whatever the final winner is, the beneficiaries are always consumers. The wine battle could bring low cost wine, various brand, good quality and service. Moreover, the most important is customer could taste many kind of wine to spend their life comfortably, although it cannot be imagined several centuries ago. Questions: Is the old wine players rebound from the bottom to fight with       the â€Å"new world† easily? Is it possible to combine the â€Å"old world† and â€Å"new world† to       become new type operation model, which distinct from the       old and the new? References: _Alta Smith and Brad Smith. (Sep. 2007). â€Å"Old world wines in the new world†. _   Restaurant hospitality. (Nov. 2007). â€Å"New trends in international wines†. Corey M. Reardon. (Oct. 2006). â€Å"The changing World of Wine†. Robert D. Tollison. (Apr. 2007). â€Å" old wine, new wine†. Industry profile. (July 2009). â€Å"Wine in United Kingdom†.