Case : Global Wine War 2015: New world versus old Team – Synergists

Name Roll No
Monika Gupta P39080
Shakshi Khandelwal P39100
Akshay Sen P39064
Himanshu Baranwal P39074
Samar Bahadur P39101
Deepak Pal P39070

Analysis:

This case tells the story of the wine industry, how wine from peasant’s drink became a mark of
prestige among the nobility. It started from Rome and soon spread across the region. Within no
time it became a prestigious drink and got acknowledged widely across the world. Old world
wine producers include Italy, France, Spain and Germany. The industries growing cultural and
economic importance attracted political attention, and thus laws and regulations were introduced
in these countries to control aspects of winemaking. This was further hurdled by land
fragmentation and acted as an entry barrier for other wine producers in the country, especially for
unsophisticated palates. There was also no incentive for the grape suppliers and it was sold on
basis of weight rather than quality.

Transportation, shipping and communication technology made it easier for the new world
globalized. They identified target markets and introduced mid valued wines with the help of their
inexpensive land usage and lowered labour cost along with the use of mechanical equipment’s.
In addition to its reduction in price in packaging and marketing, they created value which created
a sense of satisfaction in consumers.

Thus market of expensive wine from the old world countries saw declining demand.
Traditionalists were always of the view that new worlds wine catered only to the simple palate
and has compromised the quality of the wine but here they failed to realize that they were getting
trapped into Theodore Levitt's Marketing Myopia with the belief of single mindset on product
quality. And then Judgment of Paris came that shocked the old winemakers and shattered their
belief system of generating best class wine. This judgment made them realized that they were
incompetent in the global market.

Due to changing preferences in drinking in France, Italy and Spain the demand declined in the
21st century whereas countries like the UK, Us and China were identified as a booming market
for wine consumption. Also due to the violation of regulation and low quality produced in these
countries, people lost faith whereas the new world producers made branding as core marketing
skill. Due to excess supply of low priced wines being produced, new world producers were still
facing brand image problems.

There were local wine producers in China that made very poor quality wine which was
unsuitable in sugar and acidity levels. Hence, despite the poor brand image new world producers
took advantage of China's attractive wine market and also took care of their fruity tasting wine
demands. With their attempts to inform people about wines by public wine tasting and training
they created communication channels in the target market. The trade relation between Australia
and China gave an impetus to wine import by relaxing import duties whereas France still had
high duties and could not reduce the price. Moreover, due to the economic slowdown in China,
the demand changed to mid-priced wines which opened the new dynamics in mid-level premium
segment wines. To meet the challenges France used customer value triad to counter their losing
share by changing regulatory norms and allocating funds to improve marketability and
technology. Meanwhile, Australia focused on improving its image and started investing in
premium segmented wines which reflected its motive of the invention. It was evident that
Australia used 4P components of marketing – price reduction, promotion, place, product. France
could no longer ride on its image to ensure top prices for its fine wine so it started promoting its
mid-level wines. But still, France is facing very tough competition from Australia and other new
world countries in the large, growing and fast-changing Chinese markets.