1. “GLOBAL WINE WAR 2009”
44B COMBINE SYNDICATE New World VS Old World

2. • In Egypt and Greek era, wine was
Background used as tributes to the dead
pharaohs and tempestuous Gods.
• In the Christian era, wine became
part liturgical services, monasteries
planted vines and built wineries.
• By the Middle Ages planting
vineyards as a mark of prestige (first
niche market for premium wine).
• Early 19th century  vines being
planted in rows and efficient
tending and one person to work
plot of 7 hectares.

3. Background (Wine Production)
• Most small farmers sold their grapes to the
local wine maker or vintner.
• Payment based on weight  little incentive to
pursue quality by reducing yield.

4. Background (Distribution & Marketing)
• Sold in bulk to merchant traders  blended and bottled
the product before distributing.
• Cross border shipping extremely expensive because (1)
poor roads, (2) complex toll and tax systems (3) pass
through 31 toll stations.
• Late 18th century  mass productions of glass bottles (cork
stoppers and pasteurization revolutionized).
• Increased vine plantings and expanded production
followed  global market was born.

5. • Because the industry developed, cultural and
economic life of the producing countries are
increasing too.
• In France, grape accounted for one-sixth of
France’s total trading revenue and the second
largest exporter.
• Laws and regulations control almost every aspect
of wine making.
• In Germany, scheme prescribed 65 classes of
quality with rules from ripeness to minimum sugar
content.
Background (Regulation & Classification)

6. • Producers often supported and even augmented them
as a way of differentiating their products and raising
entry barriers.
• It gained wide recognition, leading the government to
codify, and expand it in AOC (Appellation d’Origin
Controllee) laws (defined regional boundaries and set
detailed and quite rigid standards for vineyards and
wine makers).
• VDQS (Vins Delimites de Qualite Superieure)
inexpensive but very drinkable wines for French tables
and increasingly for export.
• Belief that quality was linked to terroir, but couldn’t
guarantee consistent quality.
Regulation & Classification (cont’d)

7. • Many vineyards and wine
makers had been set up in New
World countries since the 18th
century.
• In the 1960’s, consuming wine
had become a national culture in
Argentina (80 liters per capita)
and Chile (50 liters per capita).
• In the pre-World War II era, wine
was largely made by and sold to
European immigrant
communities in the U.S.
• In the postwar era, demand for
wine increased rapidly in the
Background U.S., Australia, and other New
World producers.
(Stirrings New World)

8. • In the postwar era;
– Consumption of wine per
annum in the U.S. grew
from 1 liter to 9 liters by
2006.
– Consumption of wine per
annum in Australia grew
from less than 2 liters in
1960 to 24 liters by 2006.
– This growth also gaining
demand for higher quality
of wines and domestic
demand that proved a
Stirrings New World boost for the young New
World wine industry.
(cont’d)

9. Exhibit 3
Wine Consumption Per Capita
(in Selected Countries 1966-2006)

10. Exhibit 4
World Grape Production By Country

11. Exhibit 5
World Wine Consumption :
By Country

12. COMPETITION ANALYSIS

13. OLD WORLD
• Old World producers : France,
Italy, Spain, etc.
• Middle ages  European
began planting vineyard as a
mark of prestige to served
their best quality wine at table
(1st niche market for premium
wine).
• Cooperative growers join the
trend
• Traded by negociants,
sophisticated one can handled
exports.

14. • Wine consumption in Old World
drops for about 50-60% from
1960’s to 2005.
• While Old World went down,
wine trend in New World goes
up.
• Wine industry’ growing  new
laws and regulations for
government  differentiation
their products & raising entry
barriers (competition with new
world)
• Has terriorz  not consistent
with is quality

15. • Old Worls is the trendsetter of
wine with its popular history
 branding itself.
• High quality – assured of wine
(no expirated date because it
has no chemical ingredients).
• Has a uniqueness taste as
differentiation of its product
• Low cost wine with high
quality
• Has entered US market share
and increase its exported wine
• Able to capture economic
advantages, Drive for
efficiency and consistency STRENGTH

16. • Could not sense the change in
consumer preference and martket
trends
• Traded by outsourced negociants, they
didnt do marketer role  lack of
marketing role
• Governments laws and regulation WE
control every aspect of wine industry AK
 limit their movement and growth NE
• Lack of innovasion and technology if
SS
its compare to New World’s digital
system
• Sold product exclusively (per bottle)
• Has a long-multilevel value chain with
many links which did not operate
efficiently

17. • Has complex regional
designations that promoted by
Old World producers 
consumers find it hard to
understand and penetrate.
• Couldnt plant new variety WE
vineyard to fullfill world’s AK
NE
demand SS
• Took long time to produce its
product  keep the
exclusiveness and quality
• High production cost

18. OPPORTUNITY
• Has entered US market share and increase its demand.
• Fast growth of exclusive lifestyle in the world

19. • Growth of New World
wine industry shows good
progress from year to year
(competitor).
• Many subtitues product
enter beverage industry 
give many optins to
THREAT consumer to satisfy their
needs and taste
• More and more laws and
regulations from
government can hamper
their innovation
• Fast growth of consumer’s
taste of wine

20. NEW WORLD • Vineyard and wine marker has
been set up in many new world
countries since the 18th century
• New world producer – America,
Australia, Chile
• In the Post era war demand for
wine increased rapidly in the us,
Australia, and other new world
producer
• In 2006 consumption per capita
increase from 1 liter  9 liter , 2
liter in 1960  24 liter by 2006
• Grow consumption coupled with
growing demand for high quality
wine  boost for the young new
world wine industry

21. Competitive Ways
• New world producer developed
industry environment different
from their European (old world)
• The economic impact of these
and other innovation became
clear in comparation of the cost.
• The French cost per tone of e
238 was 74% higher than the
Australian cost e 137
• South American grape cost were
lower  driving down the price
popular premium wine in Europe
e2 bottle

22. • Judgment of Paris, American
entries took top honors in both
red and white competition
• Publicity rise awareness that
the new world produce quality
wines, this is the momentum
for new world producer fight in
export sales
• There was changing in global
demand, where the traditional
producer have declining
demand 20 % drop worldwide
and there was growing in many
wine country (UK, Belgium,
Canada and Asia)

23. • The radical shift in demand proved
extremely changing to old world
producer
• Biggest problem was declining
demand at home and loss of share
in export market had caused a Competitive
structural wine surplus (European Analysis
wine lake)
• Crisis distillation program,
purchase surplus wine for
distillation into industrial alcohol

24. Competition
Market • Us as the most attractive
market in the world, has
grown its market faster than
any other major wine market
• Wine sold for e 5 ($7), 48%
market share, three time rate
for lower price segment
• Key driven for US market
growth was generation Y
• Wine import into US increased
by 185% between 1995 and
2006, 31% market share

25. • The price of wine segmented into Competition
super premium and ultra premium Market
due to high land cost and
prevailing global price/quality ratio
• Europe penetrate market in US by
different segmentation (super
premium/ luxury segment),
become number three in import by
volume
• Australia strategy 2025, reduce
price in all export market  boom
in export sales. Cheap and
cheerful, the image was
particularly problematic as cost
started to rise.

26. SWOT ANALYSIS
Strength Weakness
Learned the value of Image problems born of their
differentiating their products and willingness to lower prices
making them more appealing to aggressively in an area of excess
palates unaccustomed to wine. supply.
Able to sense changes in They had fallen behind prevailing
consumer preference and global price/ quality ratio
respond to shift in distribution
channels
Innovation with grape growing Use chemical ingredients, the
and winemaking technology product has limited expire
Low cost wine with high quality
Innovated in packaging ,
marketing and branding
Able to capture economic
advantages, Drive for efficiency
and consistency

27. SWOT ANALYSIS
Opportunity Threat
The capacity and regulation Emerging sign of saturation in
freedom to plant new varieties several major markets.
in new vineyards and could
respond
Declining demand at home and
a loss of share, Shifting demand
of mature market
Regulation, restriction from
government
Global oversupply wine
production
Change in wine consumer
culture
Competitor with high quality
brand and low cost penetrate
into the market

28. EXPORTS
In 2001, the greatest wine export were Italy (27%), Spain (23%)
and France (22%), there was problem declining demand at home,
culture change and there were recent growth of new market in UK,
Belgium, Canada and Asia

29. IMPORTS
In 2001 , the world largest wine importer were UK (37%), US (34%)
and Germany (20%). UK as the largest importer because the UK
offer more attractive market and in order to satisfy demand for its
country, as we can see UK didn’t Produce wine. The most attractive
market in the world was US, because the faster growth in wine
market.

30. NEW WORLD
OLD WORLD
Comparison Analysis

31. Comparison Analysis
(Production)
New World Old World
Producer began to experiment with Irrigation was strictly forbidden
grape growing and winemaking
technology
• Controlled drip irrigation allowed
expansion into marginal land and
reduced vintage variability
Cost of Production : cheap Cost of Production : expensive
Production • Riverina District (Australia) : €137 •Langedoc region (French) : €238
Many innovation into viniculture
• Night harvesting
• Experiment in fertilizer and pruning
methods

33. Comparison Analysis
(Marketing)
New World Old World
Price of premium wine : cheap Price of premium wine : expensive
•South American wine : €2 • France wine : > €3
Packaging in American : “Wine-in-a- Packaging in Europe : bottle of “Vin
box” package de table”
Marketing
Make differentiation of their product No differentiation in their product
• Ripple (US) Barossa Pearl (Australia)
Many consumer marketer brand join
(Coca Cola, Nestle, Pillsbury, Seagram)

34. Comparison Analysis
New World Old World
Distribution They control the full value chain and The wine maker only sell the wine
their name was on the final product to merchant trader, so they don’t
 the quality is controlled control the full value chain
Suitable land was widely available and Limited land and regulated by
less expensive government

35. New World Old World
Suitable land was widely available and Limited land and regulated by
Regulation less expensive government
There is on-site labs Reverse technology osmosis is
• Experimented with reverse “removing the poetry of wine”
technology osmosis
• Develop process that allowed It was a forbidden practice under
Technology
fermentation and aging to occur in AOC regulations
huge, computer-controlled,
stainless steel tanks
•Some company added oak chips
Comparison Analysis
(Regulation & Technology)

36. Suggestion

37. New World Old World
Still use effective high
technology so producers can Cut the supply chain without
Production compete with globalization decreasing their quality
era
Give consumer a basic
Improve marketing
ingredient to ensure why the
communication for premium
price of premium wine is
wine
cheap
Marketing
Good relationship with
Use interested packaging to
consumer to avoid lack of
get the target market
trust
Suggestion
Production & Marketing

38. New World Old World
Good relationship between
Control the urgent value wine maker and people
Distribution chain who control the value
chain
Use vertical technology
land to plant grapes
Plot the land use to plant
Regulation grapes Make a win-win solution
between producers and
government
Use effective technology to Use latest technology to
Technology reduce cost compete with New World
Make costumers Make innovations for each
CONCLUSION satisfaction division to still process without forgot the
care with them costs
Distrubution - Regulation - Technology

39. THANK YOU