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The Old World retains its competitive advantage due to heritage and tradition associated with its wine. Champagne for instance, coming only from the specific Champagne region, is not being produced in sufficient quantity to meet demand thus allowing the wine Chateaux in those regions to overprice their products. This is, however, a very rare case. Furthermore, in France alone, there are 466 different certified wine labels creating a producer environment so fragmented that France’s largest global wine supplier, Pernod Ricard, stays away from its home wine because it labels it as “hopeless” for producers.
On the other hand, the New World is gaining a significant lead coming from companies that specialize in economies of scale or on brand marketing. For this reason we have chosen to profile the leading wine producers in these same areas, focusing on wine sold in the United States, which is the fastest growing consumer market. We have chosen to profile three companies that demonstrate some of the different approaches to competing in the wine industry.
Constellation Wines was chosen because it is the largest global supplier of wine. Pernod Ricard was chosen because it is the leading wine supplier in the Old World yet its strategy lies in expanding towards New World labels and leaving the very fragmented Old World to the myriad of suppliers that already exist. Yellow Tail wine labels was chosen because it demonstrates how a product that has been historically associated with intrinsic value coming from ingredients and production process can gain extrinsic value as a brand instead. Finally, Chateau Mouton Rothschild profiles how estates with rich histories enjoy significant competitive advantage purely from hisory which allow them to be classified as truly premium, best in the world wines.
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Consellation Brands Inc.
Constellation Wines is the largest wine producer in the world by volume. It is headquartered in New York but markets and sells many different types of wines all around the world. Constellation Wines is made up of 65 brands in the United States alone. It operates global individual brand-owning companies that maintain their own production, home market selling, and marketing organizations. |
Pernod Ricard
Pernod Ricard is a global leader in the production and distribution of wines and spirits. It owns some of the most prestigious brands in its operating category. Like many large alcoholic beverage companies, divisions are given independence in brand strategies and operations. It produces and markets wines from Australia, New Zealand, Spain and Argentina. In this sense it has done a good job of tapping into the New World before its major competitors allowing it to jump ahead to establish brands from these countries. Interestingly enough, although headquartred in France, Pernod Ricard does not produce French wine because the French wine industry is so fragmented that Pernod's Director General calls it "hopeless" for producers.
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| Casella Wines Pty. Ltd.
Owner and distributor of one of the fastest gowing brands in the entire history of branding: the Yellow Tail Wine label. Yellow Tail is currenlty the number one imported brand in the US market, which is the world's fastest growing consumer market. It is criticized by wine conoisseurs as the antithesis of good wine due to its very chemical smell and very obvious fruity taste coming from the use of too much sugar. Due, precisely to its fruity taste, however, it has been very successful at luring consumers with little or no wine expertise into the wine industry.
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Chateau Mouton Rothschild
Chateau Mouton Rothschild is one of the oldest most presitgious wine labels in the world. Today, the great granddaughter of Nathaniel de Rothschild owns the estate. Today, the wine from the region specific to this estate, Paulliac is one of the world's most sought after wines by the true wine conoisseurs. Bottles of this wine average $300 but they can go into thousands of dollars when auctioned off. |
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