Competition in the Global Wine Industry:Essay Preview: Competition in the Global Wine Industry:Report this essayCompetition in the Global Wine Industry:A U.S. PerspectiveMurray SilvermanProfessor of ManagementCollege of BusinessSan Francisco State University1600 Holloway AvenueSan Francisco, CA 94132Phone: 415-338-7489Fax: 415-338-0501Email: [email protected] CastaldiProfessor of ManagementCollege of BusinessSan Francisco State UniversityPhone: 415-338-2829Fax: 415-338-0501Email: [email protected] BaackAssistant Professor of ManagementSan Francisco State UniversityCollege of BusinessPhone: 415-338-6421Email: [email protected] Sorlien, MBASan Francisco State UniversityCollege of BusinessCompetition in the Global Wine Industry:A U.S. PerspectiveThe total volume of the global wine market in 1998 was measured at 6.8 billion gallons, with 25% of the total volume accounting for wine that was purchased outside the country from which the wine was produced (California Wine Export Program, 2000). This represents an increase over the 1991-95 period, during which the export segment of the market averaged approximately 17% by volume. The increasing trend for the export market since 1995 is due primarily to a change in the strategic priority that wine producing countries are placing on exporting as a method for growth. Historically, the market for wine was primarily one of local production and consumption. That paradigm has changed in the last few decades as a few of the more established wine drinking countries have seen their per capita consumption stagnate or decline (Table 3). At the same time, several wine producing countries around the world have begun to make an impact on the export market in an attempt to expand their industries beyond their limited local markets. The result of this shift in market focus for some of the older wine producing countries plus the rise of new wine producing countries around the world has caused an increase in the competitive nature of the global wine market.
Currently the U.S. is the fourth largest producer of wine in the world (Table 1) yet only accounts for approximately 4.2% of the total wine export market based on volume (Table 2). One reason for this disparity can be attributed to the low level of strategic importance placed on exporting by most U.S. wineries. In the past, a very common export strategy for U.S. companies was to export only the excess capacity that was on hand due to over production (Monterey County Herald, 1998), thus there was little focus on establishing a presence in the global market place. Foreign governments could also restrict U.S. wineries ability to operate by using anti-competitive actions such as implementing high tariffs for wine in retaliation for other trade issues, or implementing laws specifically designed to protect local wineries. The end result of these government interventions is that U.S. wines carry an increased cost burden over local wines and other imported wines, making it difficult to compete in the local markets.
In recognition of the opportunities presented by the global wine market and the threat that importers pose to the U.S. wine industry in 1998, the industry created a voluntary initiative called “WineVision”. The goal of WineVision is to help create strategies that will enable U.S. wineries to be more competitive and to increase the demand for U.S. wine both domestically and internationally. WineVision is focusing on three main strategic priorities: 1) become the leader in sustainable practices – environmentally sound, socially responsible and economically viable, 2) make wine an integral part of the American culture, 3) and position U.S. wine as the high-quality, high-value product (across price points) in global markets targeted for the greatest prosperity (WineVision, 2000).
This Industry Note provides background information relating to the third strategic priority of positioning U.S. wine as the high-quality, high-value product (across price points) in global markets. An overview of wine and the current global wine industry will be given along with some examples of how U.S. wineries are implementing strategies to compete against foreign producers.
Overview of WineThe 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.
Wine has been a part of Western history since the Neolithic Period (8,500-4,000 B.C.), when cultures first started to develop permanent communities, and stopped being nomadic hunter-gatherers (U. Penn, 2000). One of the earliest written records of the consumption of wine is recorded in the Bible and the impact of wine on Mediterranean cultures became more pronounced over the years as the geopolitical situation stabilized in the region under the Roman Empire. Roman Imperialism helped to spread the production of wine across most of the countries in the Empire, which included most of North Africa and Southern Europe (Britannica, 2000). During that same era, wine became ingrained in the Christian faith and is still used in Christian mass today. The close tie between wine and
dive (food) is perhaps also present in several European and non-European cultures.
Dive is an edible form of wine for which traditional European culinary uses, such as salting spices and chiller, are known from the Middle Ages. This is a traditional part of the diet and its use had been practiced long before in the Middle Ages and its use has played a pivotal role in shaping the culinary traditions of the Middle Ages (U. Penn, 2000; Lidz, 1993). The dive variety comes in various forms as a component of traditional Greek cooking (Vinzberg 2000).
Dive was also a food of the Bronze Age and had been a traditional practice for a number of centuries (U. Penn, 2000). It was also the traditional food of the ancient Middle Ages that became the bread and the dish of modern Europe and for much of the human knowledge of human history (Cohn and Nisbet, 1998; Lidz, 1993). The human body includes the nervous system, intestines, liver, kidney, and kidneys (Borgsbaum 2005; Lidz and Eberle, 2005; Zilber and Hjelund, 2004). As a food, it has undergone a long, rapid transformation during recent centuries and now becomes an important part of many cultures. However, food is not simply a vegetable. Rather, it can include a wide variety of different components used for cooking and many different foods, especially in the culinary world. With the introduction of domestication and the introduction of consumer goods (such as automobiles and personal computers), and their use of processed foods, wine became an important part of the human diet in many European and non-European cultures with few exceptions (Lidz and Hjelund, 2004). Vegetable sources of food are relatively abundant in many human cultures and the Middle Ages also allowed a lot of food diversity in humans, including forage, fish, eggs, roots and other dietary materials. This means that traditional foods in many European cultures are largely vegetable-based and this diversity is seen at an early stage of modern evolution in the Middle Ages and the early Middle Ages, when people mostly ate the products of their own bodies instead of the products of their own people.
This chapter contains information on all wines by region, but it has not been extensively analyzed. I have added notes about European regions and countries so that it is easier to follow the development of wine distribution to these regions and to understand them. Many wines are produced in European countries including France, Belgium, Germany, Italy, Spain, and Italy and the Netherlands.
We conclude by examining the cultural, social and political connections between the two food groups (Lidz and Ulf, 2005a). This article will take several steps to investigate whether social and political cultures have a shared interest in the consumption of wines. The focus should be on the cultural differences and the role that they play in the production of wine. Finally, we will evaluate the social and political influences