Global wine
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The old world wine industries are struggling to enter the US market due to several factors. They lack effective distribution channels and marketing skills to compete with major new world brands in supermarkets and high streets. Additionally, consumers' preferences and behaviors are shifting towards new world wines and substitute products. For the old world wines to succeed, they need to target the premium market by emphasizing their heritage and traditional production processes, while also innovating to adapt to changing customer demands.
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Global wine
- 1. GLOBAL WINE WAR 2009: NEW WORLD VERSUS OLD
- 2. BACKGROUND • Wine has been well known since Egyptians and Greeks • Under Roman Empire : Almost every town had its local vineyards and wine become a peasant’s beverages. • Christian era : Wine used for liturgical services • Middle ages : Wine as a mark of prestige and become a first niche market for premium wine • In early 19th vines being planted in rows, so that become more efficient. • Distribution : sold in bulk to merchant traders • Problems in distribution : poor roads, and complex toll and tax systems so shipping become expensive • Late 18th, mass production of glass bottles innovations, user of cork stoppers, and development of pasteurization. • Result : greater wine stability and longevity, distribution became the norm, expanded production, and global market was born.
- 3. SWOT Analysis of OLD World
- 4. SWOT Analysis of NEW World
- 5. PROBLEM IDENTIFICATION How come the old wine industries enter the US market?
- 6. Analysis OLD WINES • The New World nations has the distribution channel of wine in Europe, because they are able to innovate the value chain. This makes the local producer to distribute their products with the New World distribution. • The local wines are losing their customers, because the Old World could not understand their customer and they are not good at marketing. NEW WORLD • In Australia, overproduction damaged the price, and in US the cost is very high. Those things could impact on unstable wine production. • Many factors bring the demand decrease, such as substitute products, the government law, and the health issues. Also the New World producers need to fight against the Old World producers to keep their market.
- 7. Distribution The 3 main channels for retailing wine are: • Supermarkets - high volume, mainstream brands, convenience and competitive pricing • High Street - diverse selection of wines and a different category mix • Independent Specialists – more involved experience, exclusive or limited release product offering. The Old World wines could not compete on the supermarkets and high streets because the retailer need a fast-moving and famous brand to increase the sales, which was dominated by the New World wines. Also the Old World hampered by the lack of customer knowledge and marketing skills.
- 8. Exhibit 6 2001 Consumption Production Exports Import Country (Total hls 000s) France 34200 45400 15180 5370 Italy 28150 45900 18480 1750 Argentina 12200 15050 3260 140 Spain 14260 34700 15280 200 Germany 20380 10500 3450 14240 Australia 5960 14304 7980 340 United Kingdom 12760 - - 12910 United States 25125 20000 4240 8450
- 10. Analysis • As US, Australia, and many other wine producers compete with substitution product, the old world wine producers better get a higher target market to avoid directly competing with substitution products
- 11. Brand Power • 7 US wine brands: – Gallo – Robert Mondavi – Beringer – Sutter Home – Blossom Hill – Kendall Jackson – Inglenook • 6 Australian brands: – Yellowtail – Hardy’s – Jacob’s Creek – Lindemans – Wolf Blass – Penfolds Source: http://www.drinkspowerbrands.com
- 12. Solutions • By entering the premium price wine products
- 13. Solutions • Keeping the old production process and sell the heritage into US market
- 14. Analysis • No brand awareness means that every old world’s wine could has a value on their history because customers only care about the year of production, not the brand
- 15. LESSON LEARNED • The heritage could not be last forever, they still need to innovate if they want to keep exist on the market • Sociological influences on consumer behavior, for examples : - rituals in a culture - social class - generalization • Psychological influences on consumer behavior : - life style - motivation - perceptions - desire to (show) status
Editor's Notes
- Rituals in a Culture:In the old world, the consumption of wine only to noblemen who could afford expensive wine prices. Nowadays, the development of culture becomes more modern, everyone joined in accordance with the level of wine consumption and economic needs. For example:Family rituals, in the family there are ritual often done, such as mealtimes, mothers day, ect. In this event the use of wine consumption at this time began to change, using wines with low levels.Ritual Gift giving, in some countries there is ritual. One of the gift of choice was wine. The selection of wine is definitely adjusted to motivation, interests, economic levels, and the moment.Social class and life style: Almost every society can be viewed in terms of social class based on the characteristics appropriate to the culture.social class and life style greatly affects consumer behavior of its members. members of the same social class will tend to have values, beliefs and behavior of the same. some things that could be a factor classification of social status include: occupation, source of income, associations with others, the level of influence.For example :In the old world, only people with the social status of upper class who could enjoy the wine because the distribution process is costly. Nowadays, every class society could choose the wine they want, according to their abilities, because the development of wine industry that has created a variety of quality wines. Similarly, the lifestyle. People with high income but have a casual lifestyle that will have a different behavior in terms of wine consumption by people with a glamorous lifestyle.