Global Wine War 2009

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.

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.

How did the development of the large states and Empires promote wine as a drink of choice?

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 Robert Mondavi Winery became one of America’s most innovative, high-quality winemakers in the late 1960s and early 1970s. There are over 1 million wine producers worldwide and no winery accounted for more than 1% of global retail sales. Because of this and the fact that there are many substitutes, there is an issue to try to gain economies of scale and become a leader in the wine market. Wine tends to stay it its local region, which makes it harder to compete with its substitutes. In the strategic analysis portion of this case analysis, we discuss Porter’s Five Forces and how they affect the Robert Mondavi Winery. We conclude that in order for the winery to stay

Smaller firms such as the family run operations in Europe may not be able to realize these same cost efficiencies. Furthermore, grapes represent 50 to 70% of a winemakers COGS, thus the competition for sourcing high quality grape growers is quite high. Just as Mondavi does for 75% of its purchases, most premium wine makers enter into long-term contracts with growers to not only ensure that their demand is met but also to make sure that they receive grapes that are consistent in quality.

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.

Making wine is nothing else but a touch of passion, love and few drops of magic. From the first view, wine industry seems very artistic and secret at the same time. There is no doubt that hearing that Robert Mondavi Corporation is going to layoff 4% of its workforce ring the bell to the investors, at the same type the stock price dropping down dramatically makes an impression that the company is going through difficult period as the senior management is upon completing the reconfiguring future strategy. The big decision is whether to get back to original vision, and focus on the domestic market, which bring a 90% of revenues or continue diversification and keep on pursuing the vision of

| 1. Losing new customer who first try the wine because they will know more about wine by advertisement. 2. Forgotten brand 3. Extra cost on hire employees in marketing plan and equipment

1.Discuss critically the competitive advantages of New World wine producers and contrast these against their Old World competitors.

Through heavily exporting to U.K and U.S, MontGras segmented and exposed to some of the top wine consumers in the world

Fashion retailing is extremely competitive industry, where customers’ preferences shift very fast. Therefore, it is crucial for every company in the industry to develop critical success factors. Critical success factors for Next plc are customer perceived brand image, individual design and style and Internet-based shopping from home. A customer perceived brand image is the main success factor of the company’s business.

Bieler, Kristen Wolfe (2006), “Behind the [ yellow tail ]® Phenomenon: How It Happened and What’s Next?” Beverage Media Group, February, pdf download.

Factor conditions could be divided into two resources as home grown resources and highly specialised resources. As Michael Porter described, the home grown resources are important and in the case of Tunisia includes the natural resource of a climate well suited to wine growing, plenty of sunshine, fertile soil as well as limited pollution which all aid the industry of grape planting. Political and historical factors through Tunisia’s history such as the romans, French occupation which resulted in over 600 caves being created for wine aging and a recent flourish in the Tunisian wine industry after the 1980’s has left Tunisia with a number of cooperatives and engineers all with specialist skills in wine production where modern techniques are being used creating innovation, technical progress and competitive advantage.

The most important necessary inputs for the production of wine are grapes, bottles and labor. Concerning the grapes, there is an outstanding difference between the traditional wine producing countries for example in Europe (the south of France, Spain, Italy and Southeastern Europe) and big wine factories that operate as oligopolies like in the US and Australia. Due to the bond to traditions and the higher demand for quality in Europe most of the wineries here still stick to the original way of producing wine, including the growth of the grapes on the land around the winery, a so called vertical integration (which is often considered by producers where the supplier's price is too high or the offer is insufficient, in our case this trend results rather in traditional and cultural values than in financial ones). This eliminates the percentage of dependence on agricultural suppliers significantly, whereas concerning a big wine company the negotiation power of the supplier is quite high. These wine companies tend to have a low sensitivity towards the price they are charged, as grapes are a crucial component of wine production. However, in both cases the price of the grapes is always