Wine industry

1. 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. Porterfs 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. (Porterfs 5 forces), what
strategy should an established player follow?
- Increase demand by enhanced marketing campaign
Keywords
- chance to win by improving either quality or price
- bargaining power of distributors and major retailers (costco, sam's 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