History of the French Wine Industry
During the eighteenth century, France was developing the vine-making business and was one of the first countries of the Old World that introduced the wine culture to the rest of Europe and the lands outside it. Bartlett & Mara (2016) claimed that French “grape growing supported 1.5 million families and an equal number in wine-related businesses. Wine became France’s second-largest export”. With the growing interest and demand for wine, they realized the need to help consumers with the process of decision-making. They created the wine classification system that included five vineyards divided into five quality groups from the lowest to the highest. That action helped consumers “negotiate the complexity of a fragmented market. This marketing tool gained wide recognition,” according to Bartlett & Mara (2016).
France had a time-based advantage since it was one of the first movers in that business, and there were very few countries to compete within the market. Their vulnerability was that French winemakers were utterly unaware of severe competitors from the New World. They did not do the research, and only because of the phylloxera attack on the harvest did they face reality.
New World countries experimented with the grape, trying to improve the flavor, implementing new technologies, constantly breaking the market rules, and increasing the amount of grape alongside the quality. Since France was under the AOC regulations, they could not use the reverse osmosis technology actively used in the New World and make the wine with a rich taste and deep color. That is how Bartlett & Mara (2016) describe the development of the business in the New World: “With widely available inexpensive land, they developed more extensive vineyards that lowered labor costs by allowing the use of equipment, such as mechanical harvesters and pruners” Moreover, the difference in cost comparison strengthens the position of new world countries in the market. According to Bartlett & Mara (2016), “Reflecting the cost discrepancies, in 2010, the price of Australian entry-level wine in Europe was around €2 a bottle, while the French vins de pays was above €3”.
In addition, Australians started to ship their wine in a plastic package, which was more convenient, lower cost, and space-consuming for customers’ refrigerators. Most importantly, the countries from the New World made sure to be aware of the market needs for the ratio of price and quality, regular import and respectable brands Bartlett & Mara (2016).
My suggestion to the industry head would be to invest in marketing and developing a solid strategy. Although the population will consume the wine, the importer will not get brand recognition. His supply might get invisible among the other sorts and brands of wine that people unknowingly consume. France should work hard to create and promote strong brand names recognizable among the new customer segment to enhance its place in the Chinese market. Furthermore, France has to consider the preferences of the Chinese population because they were more likely to choose “the lighter, fruitier wines of the new world than the tannic reds of the old” Bartlett & Mara (2016). Due to the numerous taxes and fees, wine in China is more expensive than in European countries, so it would be better to target only high sorts of wine or otherwise ruin the image.
The main lesson that I have learned is the significance of a strong market strategy. It does not matter how excellent or qualitative the product is until it does not align with customers’ needs. In the first place, the industry head should research and identify the requirements of the particular customer segment and what solution to the problem company has to offer them. Therefore, entrepreneurs and business people have to check for updates and changes in the market and be aware of the competitors. The world is changing rapidly, and the crucial task for business people is to stay flexible and develop an ability to adapt to the constantly changing rules.
Bartlett, C., A., Mara S. (2016). Global Wine War 2015: New World Versus Old. (2017). Harvard Business School.