Abstract
During the last few decades, the global wine industry has grown by leaps and bounds to emerge as a $90 billion market. Scientific discoveries such as pasteurization and the cork-stopper invention have revolutionized the production of wine by easing restrictions on transport of wine, thus enabling the market to open up.
The enforcement of national regulations and classification schemes pertaining to wines came close on the heels of this distribution revolution. Since wine could be exported, competition was open. Hence, occidental wine brands had to adopt differentiation tools to foster competitive advantages, such as French 400 AOCs or ‘Appellation d'origine controlee' (translates as ‘controlled designation of origin').
With the market opening up to newcomers, traditional wine makers began to feel the threat. New entrants including Australia, the United States, Chile and South Africa developed their own know-how. Apart from enjoying weather suitable for growing vineyards, these countries had numerous land resources. Above all, New World producers had no restrictions when experimenting with new technologies as they were not compelled to protect a specific brand unlike its Western counterparts. Thus, the New World innovated in marketing and packaging, and formulated new techniques and systems to increase the yield including witness drip irrigation, canopy management, aspersion, soil slotting and mechanical harvesting.
As regards the value chain management, New World wine growers adopted a vertical integration of management control. Thus, producers could respond to global quest for quality, no longer for ‘terroir' (denoting the unique geological and geographic characteristics of the land imparted by the wine produced in that specific land). Wine making was turned into a precise science, by systematizing production and phasing out the element of unpredictability from the production equation. Moreover, wine production was made more cost effective.
