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Changes that Allowed the New World Market to Take Portions of France’s Wine Market

The French history, food custom, and experience, France was a quality winemaker and for a long time flourished in the sector under this competitive advantage. However, towards the end of the 20th Century, drastic changes happened that allowed New World countries to share in France’s market. There was the opening of new markets, the usual production processes were replaced by new industry environments, and the maturity of markets. This paper discusses how these changes allowed challengers in the new world to infiltrate markets enjoyed by France.

Initially, countries like the United States and Australia did not have a huge market because they had traditional liquors of their own. After the war, however, demand in America and Australia grew and the availability of resources in terms of extensive and inexpensive land that allowed large scale production of grapes meant a response was easy. New World producers challenged the production norms practiced in Europe by having on-site labs in these estates among other innovations. This led to cost discrepancies that placed popular European wines at a disadvantage (Bartlett & McAra, 2016). The marketing was also different in the New World with companies controlling the entire value chain, unlike Europe where there were fragmented producers and rigid government regulations.

The other reason New World producers were able to take a share of the market from France was the change in Demand in mature markets. Demand declined in France and Italy with a new generation shifting preference and the initial market which included a group that was aging reduced consumption because of health concerns. The rise in fashion also shifted consumption patterns with urban consumers going for quality, brand origin, grape variety and so on. Because New World Producers controlled distribution from the fields to the retailer they possessed greater distribution power than old producers. Transport economics also shifted in favor of New World producers. Because of numerous producers, the European industry could not afford branding strategies while New World producers developed robust branding skills in their home markets before shifting them to the export market becoming very successful in that platform as well.

References

Bartlett, C. A., & McAra, S. (2016). Global Wine War 2015: New World Versus Old.