Analysis of the World Wine Market Essay

The combination of these factors made ​​the old world countries lower their market shares, the per capita consumption, while new competitors were created mainly in the New World countries that have managed to respond faster the consumer needs.

How did the French become the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop to support their exports? Where were they vulnerable?

“The great beer abandonment: America’s young drinkers are drinking wine and hard alcohol instead”. In recent years, many young adults’ ages 18-29 years old are not drinking as much beer as the same age group twenty years ago. In 1992 over seventy percent of this age said that beer was their beverage of choice. That number has now drop to forty percent. The percentage of hard alcohol preference has risen from thirteen percent to thirty percent. While wine preference has also increased from fifteen percent to twenty three percent. Young adult are not the only one whose preference has changed. The United States, has been drinking less and less beer for the past decade. Nationwide, beer consumption fell by nearly 9 percent between 2002 and 2012. Majority of decline is due to the preference of young drinker. People ages 30-49 only decline about three percent, while people ages 50 plus have remain the same. It is odd to see a decline in beer with the emergence of craft beer. For years it has gaining market share but many believe that it has hit its peak. "While we 're not there yet, we 're definitely approaching bubble territory," said Spiros Malandrakis, Alcoholic Drinks Analyst at Euromonitor International. What could be the reason for the decline?

Historically, the French had been the dominant competitor in the global wine industry due to the low effect of the five forces of competition. The main barriers to entry that kept the threat of competitors low for the French were incumbency advantages, unequal access to distribution channels and restrictive government policies. This first barrier, incumbency advantages, can be explained by the domestic French Wine Industry in the late 18th to mid 19th century that was already supporting 1.5 million families for both the growing of grapes and other wine-related businesses. France already had a domestic market for the growth and cultivation of vineyards that was able to provide French producers with a steady supply of agricultural inputs.

Wine it is a fundamental component of many Australian’s day to day life, being closely related with both business and pleasure. Whether it be a quiet drink on a Friday night to a career in wine manufacturing, wine affects the lives of many daily. Not only does wine affect the individuals of Australia, it forms a lucrative industry, employing 28000 people in both winemaking and grape growing (2006 Census of Australia), with Australia being ranked consistently as one of the top ten wine producers in the world. Wine production is a growing industry, with exports totalling $2.87 billion in 2006-2007 an increase of 4.4 percent over the previous year. Annually, Australia produces 1.4 billion litres of wine (Australian Government, 2010).

1. French wine makers continue to lose global market share due to the entrance of new competitors from Australia and other “New World” wine makers. French wine makers face an existential threat should they concede the U.K export market.

2. What changes in the global industry structure and competitive dynamics led France and other traditional producers to lose market share to challengers from Australia, United States, and

Louis Vuitton is considered under the luxury goods industry. The luxury goods industry is a high profitable industry with low outside threat. There are only few large players in the industry and they server to the wealthiest people in the world. The luxury companies have high power to control the price so they have ability to grow sustainably.

France has a high level of economic development. The CIA World Factbook (2012) characterizes the French economy as "transitioning from an economy that featured extensive government ownership and intervention to one that relies more on market mechanisms" but cautions that the effects of the Eurozone crisis are dampening progress of the French economy. France has a GDP of $2.2 trillion, making it the 9th-largest economy in the world. The GDP per capita is around $35,000, which ranks 35th in the world, comparable with Japan and the United Kingdom, but trailing several other major industrialized nations including the US. France has a strong industrial sector but today is largely a 21st-century service economy.

Wine which was considered a simple and a limited drink became an industry of its own generating millions in profit and having a huge consumer base with different tastes and aspirations. The changes as well as the differences in the age groups who are becoming the major markets for wine producers have created visible and different market trends that cannot be ignored. These trends also affect the global market, as well as economies of many Counties that rely on the wine industry for profit.

France is attractive because it could be used as a strategic base to access the entire European Union because a manufacturer located in any EU country is considered a local supplier for all other EU countries.

Red wine is becoming more and more popular in China nowadays, no matter in leisure, entertainment or business sectors. But the Chinese know only few well-known brands in Europe, the market is still in a developing process, in order to have a larger market, Chinese should lead more high-end brands into the market so that

Conclusion: Overall, the global luxury goods industry still has high potential to growth sustainably in the future. Since the market of this industry is worldwide, companies’ revenues will not largely affected by a single country or region. The important thing is to keep the balance of expansion between different countries. Companies should also be carful about increasing production effectiveness while retain the heritage value of the brands.

Luxury product sales boost in the emerging marketing like China, which has extraordinary growth and strong potential consumers for the development of luxury goods in the China market. With gradually lower and lower increase of revenue in the European countries, Louis Vuitton (abridged as LV in the following sections) commits itself to set up more stores in China. However, LV is faced with the problems of declining profits in China, which urges it to adjust its entry strategy into the China market. In this case, this report will focus on distinguishing the factors that influence LV’s development in China and

7 What role have the wine buyers (end users and others in the supply chain) played in contributing to the fall in demand for cork as a closure?