Global wine wars 2009: New World Versus Old Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Increase in the grape production

The growth in wine industry is fundamentally related to the crop of the grapes globally, as every product requires raw material. In addition, the raw material of wine is grapes. The crop of the grapes is related to the climate of the countries and their agriculture infrastructure as the grape crop requires normal level of water, therefore it is can be cultivated in countries where there is shortage of water e.g., Iran. Secondly, the huge level of growth in grape crop in China, Australia and Brazil has increased by 125%, 90% and 28%. This has resulted reduction in the grapes price, thus reduction in the production costs of wine.

Changing demands

The demand conditions are also increasing parallel to the production of grapes. The demand in Russia, Canada, China and Greece has been increased by 74%, 45%, 39%, 38% in just four years from 2002-2006. This has created opportunities for the wine producers and has increased the market size, which has resulted increase in the entrants in the market.

The increase in the prohibition per capita level was also crucial in the demand increase; for example in Australia the level was increased from 2 liters per annum allowable in 1960 to 24 liters allowable in 2006 and in USA this was an increase of 8 liters.

Technology

Technology has also contributed to the growth of wine market, as in the past there were no pesticides for using grape crop and any chemicals to preserve the wine for long time for distribution purpose and increasing the bottling options has resulted increase in global trade of wine.

Question # 2 French dominancy in wine market

Grape crop

By the mid-18^th century in France, 1.5 million families used to grow grape and the wine was second largest export of France. Local high production of the grapes was a competitive advantage for the French producers, as the local grapes were cheap and fresh giving favorable production of wine.

Laws

AOC law: This was the law in 1935 providing recognition to the producer and it also defined regional boundaries and set rigid plus detailed standard for vineyards and wine makers. More than 300 AOC destinations were authorized.

VCQS law:This law was ranked lower as compared to AOC but with officially recognition and support of governments. These categories were rigid and there werealmost no movements across them. This was due to the belief that quality was linked to combination of soil, aspect, microclimate, rainfall and cultivation.

Question # 3: Changes in global industry structure an competitive dynamics

Following are the changes in global industry, which led France and other traditional producers to lose market share to challengers from Australia, United States and other New World countries in the late 20th Century:

War

World War 2 played a negative role in the French wine market and also in the demand of European countries.This resulted in an increase in the United States, Australia and other New World producers, which adversely affected the market share of the France.

Disaster in 19^th century

In the last quarter of the 19^th century, a deadly catastrophe occurred;a New World insect phylloxera devastated the French wine stock. As a result, the production level reduced significantly, and the level dropped from 500 million liters to only 2 million liters.

Increase in grape crop in other regions

The grape crop saw very high level of increase in the countries cultivating the grapes and this resulted in an increase in opportunities in wine making, especially in Australia there was high level of crop and the demand also diluted the wine market globally.

Question # 4 Advice to the French minister

The wine market in different countries, where there are small numbers of the wine producers, may be exploited by the France wine makers. This will help to increase their export and to expand in the market share. Secondly, the local wine makers should be given with extra independence related to the legal issues connected to the wine production. Extra attention should be given to the grape crop in the France in order to minimize the costs of wine to make it cheap and attractive for importers globally.

Question # 5: Factors impacting global wine growth

Grape crop:

This is vital in wine market as more cheap quality grapes means more growth in the wine makers.

Legal issues:

Many countries have lowered the rigidness in their laws related to the wine, and if this continues in the future, then there will be more wine making countries in the globe..........................

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