Question:
What changes in the global wine industry structure and competitive dynamics allowed challengers from New World countries to take market share from France and other traditional producers in the late twentieth century?
Answer:
One of the major reason why new world countries took a huge market share is the innovation throughout the value chain and supply chain. They had all the important factors that were required for global dominance like the right kind of people and expertise, commitment, and technology. The new world participants anticipated the market dynamics well and developed a winning strategy accordingly by influencing consumer demands and building a strategy for sustainable growth. The climate and the soil helped the grapes growing rather nicely and with the consumption of wine growing, the wind demand increased quite quickly in the United States, Australia and other new world countries. Moreover, the production norms also supported the new world countries. Due to the economic boom, the wine from the New World not only become widely available but was also cheaper than the wine from the France and other traditional producers. This increased demand lead to the growth of the extensive vineyard and the new world growers experimented with the new technology to further improve their production, reduce costs and improve efficiency. For example, drip irrigation used in Australia helped expansion of grape fields into marginal land. Moreover, the huge wine yards also allowed the use of more sophisticated and large equipment. The innovation was also used in wine culture like the New World producers maximized the sugar content in the grapes and the flavor of grapes was also improved in the process.
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