Robert Mondavi and the Wine Industry
ROBERT MONDAVI AND THE WINE INDUSTRY CASE ANALYSIS by Alberto Vicentelli
Global wine industry structure. How and why is this structure changing?
Production and consumption of wine was mostly localized until the early 1990’s. Wine producers in different countries were traditionally isolated from each other, and most of the world’s wine drinkers consumed either local wines or imports from nearby producers. Winemakers had minimal cross-border interaction and followed local traditions.
The wine industry is divided geographically in two areas:
The Old World countries, defined as those within Europe, have a long, uninterrupted history of wine production and consumption. The four largest European producers, France, Italy, Spain, and Germany, account for more than half of global production and 40% of consumption.
New World countries are defined as those outside Europe. Five of the largest and most established New World producers are the United States, Argentina, Australia, South Africa, and Chile. These five countries comprise 23% of global production and 21% of consumption.
However, competitive positions and consumption patterns in Old and New World countries have changed radically and rapidly in recent years. For example, global wine exports as share of global production have increased from 15% to 25% percent over the 1990s. Decreasing tariffs, logistical cost reductions and the lowering of certain trade barriers have provided wine producers the opportunity to sell their products outside of their own region. This new international access is transforming the way wines are produced and consumed alike, and those countries best able to adapt to this wider and more competitive playing field will gain significant national competitive advantage. Moreover, there has been a significant increase in export orientation by both New and Old World producing countries. In 2001 five New World countries, Australia, Canada, Chile, New Zealand, and the US, joined forces
Global wine industry structure. How and why is this structure changing?
Production and consumption of wine was mostly localized until the early 1990’s. Wine producers in different countries were traditionally isolated from each other, and most of the world’s wine drinkers consumed either local wines or imports from nearby producers. Winemakers had minimal cross-border interaction and followed local traditions.
The wine industry is divided geographically in two areas:
The Old World countries, defined as those within Europe, have a long, uninterrupted history of wine production and consumption. The four largest European producers, France, Italy, Spain, and Germany, account for more than half of global production and 40% of consumption.
New World countries are defined as those outside Europe. Five of the largest and most established New World producers are the United States, Argentina, Australia, South Africa, and Chile. These five countries comprise 23% of global production and 21% of consumption.
However, competitive positions and consumption patterns in Old and New World countries have changed radically and rapidly in recent years. For example, global wine exports as share of global production have increased from 15% to 25% percent over the 1990s. Decreasing tariffs, logistical cost reductions and the lowering of certain trade barriers have provided wine producers the opportunity to sell their products outside of their own region. This new international access is transforming the way wines are produced and consumed alike, and those countries best able to adapt to this wider and more competitive playing field will gain significant national competitive advantage. Moreover, there has been a significant increase in export orientation by both New and Old World producing countries. In 2001 five New World countries, Australia, Canada, Chile, New Zealand, and the US, joined forces