The Price Point Of Wine

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.

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 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.

There are a number of external influences on the procurement management processes in the wine industry; key is the price of

Wine consumers hardly think about price when it comes to buying. For the lower grad cheaper wines, the power of the buyer is greater; but when in comes to premium brands of wine, the power of the buyer is low.

The premium wine segment is quite concentrated with high barriers to entry making mergers and acquisitions a strong and prevalent growth strategy. With industry analysts forecasting the demand for premium wine to grow at 8% to 10% per year, many former non-rivals are now becoming a threat. Jug wine producers are entering the premium market and beer and spirit producers

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.

The following analysis will use Porter's 5 Forces Model to identify the market power. The grape growers are the suppliers, the winemakers are the sellers and the consumer is the buyer. This discussion could also include the suppliers of raw materials for bottling the wine, the shipping companies used to carry the wine to the point of sale and also the supermarket, liquor store and restaurant owners where wine is often purchased by the consumer.

The report first delivers a background of market attractiveness and uncontrollable macro-economic factors relevant to market entry such as the political and economic climate, socio-cultural, legal, environmental and technological factors that may effect and influence the international marketing practices of the organisation in entering the Chinese Wine Market.

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

Since our goal is to make model to give reference to the 3 categories, we can re-defined the categories into 3 other than 7 and in this way, we expected to gain more reasonable results and give wine sellers more accurate models to support their decisions to purchase wines from the wine makers.

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

This paper will outline an executive summary of a marketing strategy of a new wine brand to a targeted audience that will incorporate the buyers motivation, psychographics, and demographics. A description of the overall marketing strategy will include advertising, customer relationship manager and a Public Relations campaign. Finally, a an overall strategy to position the brand against the competition will be outlined.

The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition