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Old World vs New World

Old World vs New World

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Published by Keith Voges

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Published by: Keith Voges on Aug 22, 2010
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Introduction
Old World strategies against New Worldcompetition in a globalising wine industry
Gwyn Campbell
 Department of History, McGill University, Montreal, Canada, and 
Nathalie Guibert
 Avignon University, Avignon, France
Abstract
Purpose
– This introductory paper aims to place the contributions to this special issue within thecontext of the recent impact of globalisation on the wine industry, characterised by rapidly growingand evolving international markets, the expansion of New World wines on international markets, andthe response of Old World rivals to New World competition.
Design/methodology/approach
– This paper examines the new competitive environment in thewine industry created by globalisation and outlines the way in which the authors of the papers in thisspecial issue have contributed to an understanding of that environment.
Findings
– This paper reflects a renewed academic interest in winemaking, one of the most dynamicand rapidly developing agricultural sectors.
Originality/value
– The paper hightlights how the authors of the papers in this special issue havecontributed to an understanding of this new competitive environment.
Keywords
Wines, Globalization, International marketing, Marketing strategy
Paper type
Research paper
This special issue of the
BFJ 
comprises a number of papers on economics andmanagement, initially presented at the first international interdisciplinary conference on“Wine in the World: History, Management and Trade” organised by PRATIC[1] at theUniversity of Avignon (France) in spring 2004. These papers reflect a renewed academicinterest in winemaking, one of the most dynamic and rapidly developing agriculturalsectors. Viticulture, long the focus of research into new techniques and technologies, hasrecently attracted academic interest from a variety of disciplines, including economicsand management sciences due essentially to the globalisation of the wine industry overthe last decade or so, the accompanying rise in the value and profits of wines, and therapid emergence of new competitors on the international market (see Table I).This introductory essay examines the new competitive environment in the wineindustry created by globalisation and outlines the way in which the authors of thepapers in this special edition have contributed to an understanding of thatenvironment.
The wine industry today: a global battleground
Although Old World countries have retained their position as top producers of wine,they have been increasingly concerned by a widening gap between production anddomestic consumption of wine (see Table II).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0007-070X.htm
Old Worldstrategies
233
British Food JournalVol. 108 No. 4, 2006pp. 233-242
q
Emerald Group Publishing Limited0007-070XDOI 10.1108/00070700610657092
 
Per capita wine consumption in Italy halved from about 104 litres in 1975 to about 50litres in 2003 and in France fell from 103 litres in 1980 to 56 litres in 2003. Falling wineconsumption is in part due to competition from beer and soft drinks, notably amongstthe young, and in France also to tighter drink and drive legislation, and restrictions onadvertising wine (USDA, 2005). In France in 2002 bottled wine sales in supermarketsdropped 2.5 per cent, and volumes sold to the food service sector (traditionalrestaurants, cafeterias and company restaurants) by 2 per cent, although quality winessales continues to grow slowly. It is estimated that by 2010, French wine consumptionwill have declined by a full 25 per cent compared to 1999 (Gauthier, 2003) (seeTables III-V).By contrast, domestic wine consumption in New World wine producing countries isgrowing. In Australia, for example, per capita wine consumption increased from 18.8litres in 1997 to almost 20 litres in 2002, while in the USA and Chile it has been growingat lower rates: in Chile from 16 litres in 1997 to 17 litres in 2003, while consumption inthe USA stood at 12 litres per capita in 2003 (USDA, 2005).
Country 2002 Rank 1986-1990 RankFrance 50,000 1 64,641 2Italy 44,604 2 65,715 1Spain 36,639 3 33,519 3USA 20,300 4 18,167 5Argentina 12,695 5 19,914 4China 11,200 7 2,734 16Australia 11,509 6 4,285 12Germany 9,885 8 10,012 7South Africa 7,189 9 7,742 9Portugal 6,651 10 8,455 8Chile 5,623 11 4,135 14Romania 5,461 12 7,133 10Russia 4,060 13 na naHungary 3,564 14 10,974 10
Source:
International Organisation of Vine and Wine (2003)
Table I.
Twelve top wineProducers, 2002 and theirposition in 1986-1990 – (in 000s ha)Country 1991-1995 1997 1998 1999 2000 2001 2002Italy Wine production 60,768 50,894 54,188 56,454 51,620 52,293 44,804Wine consumption 35,122 30,855 31,840 31,563 30,800 30,150 27,709Percent difference 42 39 41 44 40 42 38France Wine production 52,886 53,561 52,671 60,535 57,541 53,389 50,000Wine consumption 37,310 35,500 36,330 35,400 34,500 33,916 33,580Percent difference 29 34 31 42 40 36 33Spain Wine production 26,438 33,218 31,175 33,723 41,692 30,500 36,639Wine consumption 17,402 14,589 14,793 14,249 14,046 14,238 13,960Percent difference 42 56 53 58 66 53 62
Source:
International Organisation of Vine and Wine (2003)
Table II.
Difference betweenproduction andconsumption of wine inmain Old Worldproducing countries,1991-1995 and 1997-2002(in 000s hl)
BFJ108,4
234
 
The export imperative
Falling domestic consumption has underlined for Old World producers the importanceof export markets (see Table VI).Of particular importance for Old World producers are external wine marketscharacterised by a growth in both wine consumption and wine imports. These includeessentially non-wine producing countries like Britain and The Netherlands, but alsothe USA (USDA, 2005) and Germany – traditionally a white wine producer and themain export market for Italian wines (Perini, 2003) (see Table VII).
1985 1995 2000 2004% change1985-2004
Old World 
France 1,063 927 917 847
2
 20 
Italy 1,103 927 908 837
2
 24
Spain 1,593 1,196 1,174 1,149
2
 28  New World 
Australia 64 73 140 164
157 
New Zealand 6 8 12 18
202 
Chile 106 54 104 111
USA 334 305 413 382
14
Argentina 295 210 209 202
2
32 
South Africa 110 103 117 126
15 
Source:
Gordon (2005, p. 52)
Table III.
Vineyard-bearing areas,1985-2004 (in ’000shectares)1998/19991999/20002000/20012001/20022002/20032003/20042004/2005forecastPercentchange (%)France 54,271 62,935 59,741 55,338 51,850 47,519 58,533 23Italy 57,913 58,955 54,088 51,912 46,000 46,650 49,500 6Spain 34,741 37,809 45,572 33,850 38,186 47,300 44,000
2
7
Source:
Brans (2004a)
Table IV.
Old World wineproduction1998/1999-2004/2005(in ’000s hl)2002-20032003-20042004-20052005-20062006-20072007-20082008-20092009-2010Area under vine 140 146 153 159 163 167 171 176Production:red 804 1,093 1,050 1,039 1,058 1,077 1,096 1,115white 519 683 727 744 783 821 859 897Exports:quantity 508 581 679 778 880 980 1,082 1,181value 2,502 2,606 2,791 3,013 3,251 3,560 3,879 4,260
Source:
Gordon (2005, p. 54)
Table V.
Australia: medium-termprojected growth in wineproduction and export(area in ’000s ha;production in kt; exportsin ML; real value in A$m)
Old Worldstrategies
235

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