Global Wine Wars: New World Versus Old Case Study Example

1. How were the French able to dominate the worldwide wine trade for centuries?
France has a suitable climate for growing grapes, and over time wine making has become an important part of the French culture and economy. High internal demand led to the development of the whole industry. In Europe, only Italy and Spain had matching wine production capabilities. At the time, wine making in countries of the New World only began, and the demand for it was low since the drink was popular only among European immigrants. The New World producers could not export it to the European countries, as the transportation for such long distances was costly. Moreover, the packaging available then could not prevent wine spoiling. Therefore, at that time France dominated the worldwide wine trade since the trade itself was mostly limited to intra-Europe trade. Later, the dominance continued because of the French winemaker’s high-quality standards and reputation.
2. In the face of this two-century history of dominance in the world wine trade, how were the new world producers (and particularly the Australians) able to expand their market share so rapidly in the 1990s?
The New World producers did not have to follow strict rules of wine making and, therefore, were able to develop much more efficient techniques. One company usually had much more land to grow grapes and could have the economy of scale. Unlike French producers, such companies controlled all stages of the value chain and had more bargaining power. It all made the wine produced in the New World much cheaper but did not affect its taste. The New World companies widely used marketing techniques and constantly researched what the consumers wanted while the French producers were unaware of the current trends. Australian wine makers established their own brands and classifications that adequately reflected the quality of the wine, making it easier for customers to choose.
3. How should the French respond to their situation?
The French should employ new production techniques to lower their costs and unite to achieve more bargaining powers. They also should modify their classifications as the Australians did. The French classification reflects the region where the wine was made while there are many producers in that land. Consumers know little about the unique taste of wine made in a particular region, but they do recognize grape varieties. The French producers have to convince consumers that the high price of the French wine truly reflects its value.