Wine Case
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Case: Crafting Winning Strategies in a Mature Market: The US Wine Industry in 2001
1. How attractive is this industry?
–> No (there are many downward pressures on price and margin)
– Market is already crowded (too many players in not so big market)
– More wineries entering the market (because of low barriers for entrants – low start up costs) (In U.S, increased from 600 to 2500 in the past 30 years)
– Demand for wine is low and it is not growing fast (only 10% of American drank wine regulary in 2001 –> average global sales growth is 1-2% per year since 1994)
– Many substitutes (e.g., beer, spirits)
2. Following the logic of competitive strategy(e.g. Porters 5 forces), should a company enter this industry and if yes, what should their strategy be?
3. Following the logic of competitive strategy (e.g. (Porters 5 forces), what strategy should an established player follow?
Create uncontested market space
Create and capture new demand
Break the value-cost trade-off
Align the whole system of a firms activities in pursuit of differentiation and low cost
4. Following the logic of competitive strategy (e.g. (Porters 5 forces), what strategy should an established player follow?
Create uncontested market space
Create and capture new demand
Break the value-cost trade-off
Align the whole system of a firms activities in pursuit of differentiation and low cost
– chance to win by improving either quality or price
– bargaining power of distributors and major retailers (costco, sams club, etc) are very high + they focus on low priced/high volumn sell of wine
– “economies of scale” works well in this industry –> No wonder why most winery focuses on low priced/high volumn sell