most societies, wine can be found as a component of celebration or religious ceremony, but in today's

world wine has been put into a new arena- a battlefield of tradition and innovation, where old world
conservatives clash with new world revolutionaries. The difficulty of producers to achieve "branding"
and to establish themselves in a modern, global market has caused the two conflicting worlds to
adjust their practices. Wine-makers and new industry players alike find themselves challenged not
only by each other but also by the ever-evolving market they find themselves in.
In the following paper group ten collectively presents the research and case analysis of the article,
Global Wine War 2009: New World versus Old, written by Christopher Bartlett. This paper will
present the goals and constraints of the new world Australian wine industry breaking into the United
States, along with our competitive analysis. We will show you the hurdles that this new world industry
faces in a competitive environment and outline their strengths and weaknesses. After identifying the
central problems, we will present alternative strategies that the Australian industry can use and the
best alternative to take. Finally, we will present a way to implement the best alternative decision.
Viticulture, or the cultivation of grapes, spread throughout the Mediterranean region under the Roman
Empire and as wine drinking grew in popularity, was soon used in liturgical services, as monasteries
started planting their own vineyards. In the Middle Ages, European nobility began planting vineyards
and competing with each other over the quality of their wines, this was the first niche market for
premium wines. As time went on, winemakers became more sophisticated and mass production of
glass bottles, the use of cork stoppers, and pasteurization revolutionized the industry. This sparked
greater stability and longevity, increased vine plantings and expanded production became normal,
distribution to foreign markets followed, and a global market for wine was born. With the birth of this
global market, Old World players, such as France and Germany had government restrictions and
classifications as a way of differentiating their products and raising barriers to entry. These restrictions
eventually hindered the Old World countries, as they found themselves constrained by restrictive
industry regulations. Without restrictions, New World players, such as the United States, Chile, and
Australia, began revolutionizing the wine industry, and challenged the more established Old World
producers and the Global Wine War for market share had begun.
With the restrictions being lifted, Australia entered the arena with fists held high. They took a new
approach to a primordial strategy. As a new generation of wine drinkers emerged into society, so too
did a new approach to the taste and preference of wines. Australian wine companies found it easier
than expected to enter the world market. The Old World idea of wine had somewhat been lost in the
change, resulting in an open market for New World producers, in this case Australia, to gain at least
some share of the market. Australia found a niche, which other producers had yet to encounter.
Instead of focusing their marketing strategies on the Old World idea of premium wines, they catered
toward the wants and needs of the newly developed wine consumers. Consistency in season became
Australias focus. The wine practices of the Old World put them at a disadvantage for the new age
wine drinker. Inconsistencies are common in the prehistoric operations, which rely heavily on the
climate and other outside factors, which cause variation in vintage. Research has shown that the new
age of consumers gravitate more towards a wine that is consistent in all seasons. Australia embraced
this concept and introduced [yellowtail], which quickly emerged as a leader in this growing market.
The technology of the New World producers also put them at an advantage in the market. New World
wine makers developed processes that allowed fermentation and aging to occur in huge, computercontrolled, stainless steel tanks rather than in traditional oak barrels. To provide oak flavor, some
added oak chips while aging their popular priced wines(Bartlett). By implementing these innovative
techniques, New World wine companies were able to drastically cut their cost, allowing them to focus
on the basic wine segment. Australian wines noticed that the United States wine market had a hole in
it that they could fill. This cavity created an opening into the middle wine segment, due to the United
States focus on upper and lower segments of wine. [yellowtail] stepped in and successfully filled this
gap. Soon after entering the market [yellowtail] was selling 10 million cases of wine a year throughout
the world (Bartlett). As Old World producers struggle to keep their customs alive and well, new world
companies, like those that produce [yellowtail], seem to have broken the barrier of entry into the wine

market by catering to consumers instead of traditions. Australia also seems to be winning in the battle
with its New World counterpart, the United States. The U.S. once held the leadership position among
the New World wine markets, but seems to have lost it when Australia came into the picture. The
Australian wine producers seem to have an advantage when it comes to cost production, which has
become a major contribution to its success.
Industry structure is very different around the world. Therefore, producers entering the wine industry
need to compete differently depending on which market they choose to focus on. The buying power of
the consumer is a major factor to consider when organizing a marketing strategy. For instance, Old
World consumers have a higher buyer power because they are more sophisticated and price
sensitive. Since, New World consumers did not have extensive product knowledge, they were easily
influenced by branding strategies, causing a great reduction in their buyer power. Due to Australias
understanding of how to sell to consumers, they have been more successful in breaking into the
United States market than the Old World producers. The consumers of today are not the wine
connoisseurs of yesterday, although modern consumers have greater power, due to the fact that wine
is a fairly basic product and can be easily obtained. For the suppliers to have their product the most
preferred, they have to keep well priced and attractively marketed. [yellowtail] was extremely
successful in taking a mid-price range wine and filling a high demand. Australian producers still have
the ability to maintain market power due to the fact that their product is in high demand around the
world, and especially in the two largest wine importing countries that produce wine of their own, the
United States and the United Kingdom. However, to hold on to this power in the New World, they must
continue to produce attractive wines at mid-range prices. The US has the potential satisfy the
American need for wine at a lower cost to the consumer. {export61.com; wineaustralia}

Australias break through in the market did not happen over night. Many events took place, which
enabled them to creatively market and organize a new face for the wine industry. Traditional
producers, such as the French, followed certain production principles which were established under
the Appellation d Origin Controllee (AOC) in 1935. These laws defined regional boundaries and set
strict standards for vineyards. Italy had a similar system, named Denominazione di Origne Controllate
(DOC). These contained established practices, which needed to be followed in the wine industry. New
World countries such as the U.S., Australia, Chile and Argentina started to set up wine vineyards in
the 18th century. These countries decided to use a blue ocean strategy. They broke many traditions of
wine production and did things that were against the AOC regulations. The innovation brought by the
New World has changed the wine industry and has become a wake-up call for traditional wine
makers. The Judgement of Paris, which consisted of the French and United States wine competing
against each other, gave great encouragement to the New World countries. The American wines
where top rated and this gave them the confidence of pursuing their blue ocean strategy while
entering the market. They became the leaders into a new strategy of producing, marketing, and
selling wine, which many countries followed suite in, especially Australia.
Australia started experimenting with controlled drip irrigation, which allowed them to expand under
marginal land and reducing vintage variability. Irrigation was not permitted by AOC regulations, which
the French strictly followed in the wine production. Several New World producers also developed
processes that allowed fermentation and aging to occur in large, computer controlled, stainless steel
tanks instead of the tradition oak barrels. This was another practice, which was condemned by Old
World countries. Most of the new world practices were criticized by the Old World because they were
thought to be removing the poetry of wine. Australian producers developed the wine-in-a-box
package. This reduced shipping costs and also was more convenient for consumers to store in their
refrigerators. Australians also replaced the cork stoppers with screw caps. One of the main purposes
was based on economic, but also on the fact that most of the delicate white wines where susceptible
to spoiling if corks were deficient.
The first vines were brought to Australia by a fleet carrying convicts and settlers to the unknown world

from Britain. Since this time people have had problems and successes establishing their vineyards
and ultimately the wine industry for Australia. As the global market for wine continues to grow,
Australian wine makers have become accustomed to success and have set many goals for
themselves and the industry. One such goal, established in 1996, is the industrys Strategy 2025
plan, which has detailed a total commitment to innovation and style as its means of becoming the
worlds most influential and profitable supplier of branded wines by 2025. It emphasized volume
growth to 2002, value growth to 2015, and achieving global preeminence for Australian wine by 2025.
Ten years later, grape production had doubled and exports had risen by 530%, making Australia the
number four wine exporter (Bartlett, 2009). By 2006, however, most of Strategy 2025s goals had
been met. After a successful decade, the Australian Wine and Brandy Corporation linked up with the
industry-led Winemakers Federation of Australia to develop new goals to support the continued
growth of the industry. One goal was named Directions to 2025, and documented how the industry
planned on implementing the second stage to the Strategy 2025 plan. On the platform of Wine
Australia, Directions to 2025 was made to support four sub-brands, each aimed at a different
consumer group. Brand champions, covering accessible premium brand wines; Generation Next
would emphasize innovation, important to young consumers who associated wine with social
occasions; Regional Heroes, developing an association between Australian regions and wine
varieties; and Landmark Australia, supporting high profile aspirational wines and world-class
reputation.
Along with Australias goals and accomplishments, came many hardships and constraints. The British
heritage in Australia along with the hot climate made beer the alcoholic beverage of choice, with Old
World immigrants mainly consuming wine. There was also the problem of global oversupply which
was becoming worse as signs of saturation appeared in several major export markets. Australias
wine export value was growing at less than half the rate of volume sales to its largest export market,
the UK. The oversupply problem caused New World industries to aggressively lower prices, which in
turn smeared their image. Australian wine was also facing image and price problems in the US
market. The constraint of overproduction since 2000 led Australian producers to aggressively reduce
prices in all of its export markets. Although, this led to a rise in export sales, it established an image of
Australian wines being cheap and cheerful (Bartlett, 2009). Weather caused another constraint for
the Australian wine industry. Droughts led to cost increases for water at the same time that global
energy prices were high, and the cheerful image that had been created became problematic when
these factors caused a major increase in production costs. Australian producers realized that
regardless of their greater efficiency, other New World industries, like Argentina and Chile, were
producing at lower costs and Australias competitive position in the US market was being seriously
challenged.
There are many alternative solutions to Australias critical problems of overproduction and under
consumption and there are many things the Australian wine industry can try to do in order to let the
demand side catch up with the supply. The government could use subsidies and bailouts to
encourage wine makers to shut down production in order to slow supply. Wine makers could get rid of
vines and open their land up to alternative agricultural products. They could combine small producers
in Australia, which will reduce the amount of brands flooding the market and will create a few large
brands that will have more influence in the market. Now that the market is not flooded with countless
brands, consumers will find it easier to latch on to the larger, more trusted brands. These large brands
can now appeal to consumers from high cost market all the way down to the low cost market by
creating hierarchy in the quality/price of the wines they produce.
Any of the previously mentioned alternatives, as well as many others, are available to the wine
industry, although most are easier said than done. One of the major factors that will come into play for
the Australian wine industry is the emerging new market of Asia. The Winemakers Federation of
Australia, the Australian Wine and Brandy Corporation, and the Grape and Wine Research and
Development Corporation released a statement to the entire wine industry of Australia, in it they
offered some alternative solutions that the industry should consider in order to solve these problems
in their wine market. Among their proposed alternatives was a way to tap into the new Asian market.
They said that there is a growing number of people in the Asian market with growing affluence and

their preference in wine is shifting towards a market that Australia can take advantage of. According to
their statement, one of the strategies they can use to capture market share in this market is to
emphasize on educating and promoting their wines to this new group of customers. With a built in
competitive advantage over their competitors due to their proximity to this emerging market Australia
has a very good chance of capturing this market if they can get their brands in the forefront early.

An alternative strategy is to modify the fermentation process so that products

other than less ethanol is produced from some of the grape sugars: in other
words, persuade wine yeast to make less alcohol. Some yeast strains that have
lower fermentation efficiencies have been identified but such yeasts typically
alter the sensory properties of wine or are prone to other fermentation
difficulties. Researchers at The Australian Wine Research Institute (AWRI) are
attempting to generate novel Saccharomyces cerevisiae wine yeast strains to
redirect sugar metabolism to make less ethanol, whilst retaining the ability to
make high quality wine.
Two approaches are being used to achieve this end. One uses traditional
breeding and selection techniques that will generate low-ethanol wine yeast
variants and once developed these will be suitable for immediate adoption by
the wine sector. The second approach involves the generation of Genetically
Modified (GM) research yeasts that divert sugar metabolism away from ethanol
production. While GM yeasts are not used or trialled for commercial production in
Australia at this time, knowledge gained from this work can be used to better
inform researchers what is possible in wine yeasts, and help develop improved
strategies for generating suitable wine yeasts using traditional breeding
approaches in a targeted manner.
Packaging and design can also engage a customer, increasing the likelihood of
positive purchase. The key is for the product to appeal to the main prompting
considerations for purchase (or, cues). Consumer research consistently confirms
the following cues as key to positive purchase. The hierarchy of cue priority
may change according to market; consumer group (high or low involved); type of
purchase; location of purchase and/or occasion.
Until recently, wine packaging wasnt a key consideration in the on-trade, as
wines are traditionally selected from a wine menu or list without the customer
ever seeing the bottle. However the rise of national chains, gastro-pubs and the
concept of wines by-the-glass has increased the visibility of wine and therefore
also the importance of packaging. Customers now see the label before they buy!
The bottle will often be displayed at the bar or merchandised around the venue,
by posters or tent cards on tables, showing images of the bottle. Also, house
wines or BOB (Buyers-Own-Brand) allow restaurants to promote their own
product, increasing turnover and profit.
Some would argue that the advent of screw caps and crown seals, as an
alternative to traditional cork, has resulted in a loss of romance or sense of
theatre in the restaurant environment when looking at how wine is served. As
Ronan Sayburn, chef sommelier of Gordon Ramsay Restaurants aptly
commented: This supposes that the most important thing a sommelier can do is
take a cork out of a bottle it isnt. The most important thing a sommelier can do
is to positively engage and enhance a customers dining experience.
Its all about the image we want to project, which sector we want to sell the wine
in, we want the label to be something that a consumer or trade buyer will

remember. We also upgraded the packaging of cartons and capsules I believe

that the first impression is important how things look in a warehouse and in
peoples cellars etc.
The partners of Wine Solutions Australia are seasoned veterans of the wine
industry who share an obsession for wine and respect for the boutique wine
producer. Because we believe Australia produces some of the finest wine in the
world, in 2002, we formed a personal and entrepreneurial wine company to
support the dedicated, boutique family wine producers throughout Australia. By
covering the key regions, we have assembled a portfolio that offers some of the
finest, unique wines Australia has to offer.
Our mission is to discover, develop and introduce unique, high quality wines
produced by family run wineries and share them with South Australia. We respect
that each small winery is different and our approach to growing each wine brand
is tailored to suit the strengths of each of our winery partners.
Our goal is to champion the hard work of the small producer and share in
building brands to their greatest potential. In doing so, we aim to inspire a sense
of discovery in new tastes and enhance the reputation of the wines and
producers in our portfolio.