Strategic Managemnt - Old World wine producers Essay

Strategic Managemnt - Old World wine producers - Essay Example Wineries in some of these countries are curbed by several rules relating to production, labelling and so on. These wineries are also fragmented and treat each other as competitors. The NW countries are Chile, South Africa, Australia, New Zealand (NZ), and North America. Wines from these countries compared with the best in the world during blind tests (New World Wine 2007). Exports from these countries grew by 25.5% in the last 20 years. Since 1990 export revenues for the three countries Australia, the United States and Chile increased five fold in revenue and three fold in volume. (Wine 101 2002) Of these three countries Australia is leading the surge. Australia's success has been attributed to its ability to develop high quality products using innovative techniques, to address various price points and its capacity to be cost effective in a complex market (Wine 101 2002). That is impressive performance considering that formal commercial manufacture was started only in 1960s. The most widely grown vines are: Chardonnay, Shiraz, Cabernet Sauvignon, Semillon, Colombard and Merlot. (The New World Grape Varieties n.d). In South Africa red wines have replaced much of the white wines and the industry has improved its marketing arm to cope with the changed market. The most widely planted quality black grape variety is Cabernet Sauvignon (The New World Grape Varieties n.d). ... The vintners of America grow every vine ever heard of. NW wineries were successful for a variety of reasons. They make great wine and their labelling is simple. Their climates seem to be more suited than the climates of the OW (Echikson et al. 2001). Their production techniques are modern. They are better able to adapt to market dynamics. All this translated to an 'aggressive approach to entering new markets, and their branding' (Cazin 2004). NW wineries leveraged their greater financial strength to allocate higher marketing budgets with the primary aim of winning larger market share. In the process these wineries built recognizable brands. When there is a concern in the economy, people are afraid to buy Chteau No Name and they come back to the names and the brands they can trust says R. Michael Mondavi (Schaefer 2006). The NZ Wine Industry Although wine-making dates back to colonial times, it was only in the 1970s that viticulture was given any sort of significance. During the 1970s Montana in Marlborough began 3 production of wines which were labelled based on vintage and varietals, the same way the Australian wines were being labelled. The first NZ wines were so successful that large tracts of land were brought under vines. This resulted in a glut. Often the over-production was of the wrong variety. Then in 1984 the government paid growers to pull vines. This setback was only temporary. The last three decades have seen rapid growth in the NZ wine industry. The primary reason for this growth has been the increasing demand for high quality wines. Leading NZ's bouquet was Sauvignon Blanc. The Sauvignon Blanc from the Marlborough region was touted as the best in the world. Marlborough was just one of the ten grape growing