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Global Wine Wars Essay

1004 words - 5 pages

REINVENTING THE MARKETING MODEL:
New World producers revolutionized the packaging and marketing aspects of wine making. Americans and Australians greatly impacted wine packaging by replacing the Old World standard liter bottle with a half-gallon flagon in the U.S. and the innovative “wine-in-a-box” package in Australia. Australians have been praised for this idea because boxed wine not only saves on shipping costs but it has made storage easier for consumers. Australians have also begun to use screw on caps rather than the traditional corks on premium wines; this is to prevent spoiling due to deficient corks. On the marketing side, New World producers began to differentiate their ...view middle of the document...

This led to the EEC (European Economic Community) passing regulations making it illegal to name wines simply by their type. Eventually New World wine makers responded to the EEC’s challenge by labeling wines according to the grape variety being used.
“The judgment of Paris”, held on May 24, 1976, was a wine tasting contest comparing wines from France and California. Even while being held in Paris and being judged by nine French panelists, American wine triumphed. After French wine producers claimed the competition was rigged, a new judging was held just two years later, and once again American wines were triumphant. This was a huge turning point for New World producers as it not only raised public awareness of the quality of their wines but it undermined the views of more traditional wine connoisseurs. This gave new world producers confidence while traditional producers had to take their new challengers more seriously.
MATURING MARKETS, CHANGING DEMAND:
The wine industry was facing tough times in the final quarter of the 20th century; demand was on the decline and had dropped by 25% worldwide from 1976 to 1990. Countries with the highest consumption rates saw the most dramatic falls in demand. In the 1960s France and Italy had both consumed around 120 liters annually, but by the 1980s that had been cut in half. Key reasons for the decline were an older generation’s concern about health issues, a younger generation’s different drinking preferences, and more strict drunk-driving penalties. While traditional-producing countries were suffering, wine-importing countries especially the UK and Asia where demand was quickly on the rise. Asia’s largest wine-importing countries such as: China, Japan, and Taiwan were growing 12% annually through the 1990s.
Another trend which helped to offset the overall volume decline was a growing demand for higher-quality wines. According to industry analyst Rabobank there are five consumer segments of wine, Icon, Ultra-Premium, Super-Premium, Premium, and...

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