International Business Analysis: Wine Market Dynamics and Strategies

This assignment analyzes the international wine market, focusing on the competition between old and new world wines. It examines the competitive advantages and disadvantages of each, considering factors like reputation, technology, and market strategies. The assignment discusses the impact of the AOC system on French wines, exploring whether the French government should withdraw the policies. It also evaluates the implications of adopting the AOC system in the US. Furthermore, it analyzes the specialization of bottle shops and large retailers in relation to old and new world wines, respectively, based on factors like pricing and variety. The analysis references several sources to support its arguments.

Running Head: INTERNATIONAL BUSINESS 1
International Business
Name
Institution

INTERNATIONAL BUSINESS 2
Answer 1
There is a stiff competition in the wine market with the old and new world trying all the best to
get a share of the market. Both have competitive advantages and disadvantages due to different
factors like experience, new advancements and location as well. The old world has some
competitive advantages that they have earned over the centuries of wine production like the
strong reputation of their products (Mahoney, 2001). The AOC system promotes their quality
and sophisticated wines, and due to the high domestic consumption, they make the most top
sales. However, they are disadvantaged in such a way that they do not create a variety of tastes
nor use the new technological tools and thereby lag behind regarding their economies of scale.
The AOC system is also a liability in some cases as it makes their vineyards more vulnerable to
unfavorable weather conditions while new consumers have a hard time identifying their products
due to sophistication and lack of market knowledge (Jin, 2009).
The new world vineyards, on the other hand, have the advantage of new technology which
reduces the cost of labor as well as improving quality of their wines. They have also managed to
mix different varieties to their consumers and adopted marketing strategies like branding which
enables for easier identification of their products by consumers (Anderson, 2004). There are
however some disadvantages like their recent presence in the market which cannot be compared
with the experience that French wineries have gained over the centuries (Mahoney, 2001). They
also tend to focus more on differentiation and branding and less on quality which reduces their
prices in the market.

INTERNATIONAL BUSINESS 3
Answer 2
French wines can demand a premium price in the market because they were the primary
producers up to the 1980s hence they had built a reputation for their products. Their wines were
and are still very popular in the market for their remarkable quality. The AOC system in France
is also a great contributor as they assess the quality of their wines by investigating the conditions
of their different vineyards and hence giving confidence and protection to the consumers.
Answer 3
Yes, I think the French government should withdraw their AOC policies for a while since they
negatively impact on the production. The nation will now be able to produce different varieties
and tastes of wine and due to their high reputation accommodate the global market with a greater
percentage. They will also be able to take advantage of the technological advancements and
exercise the freedom of branding and advertisement to make more economies of scale.
Answer 4
No, adopting the whole AOC system for the US government will mean that there will be a
restriction the varieties of wines produced which is the greatest marketing strategy for the nation.
If they are to ensure for quality, then they can only pass their products through testers to get the
highest for their consumers (Landrault, 2001). Their advertisements and branding makes the
market already aware of their quality products and hence increase their sales.
Answer 5
Bottle shops would specialize in old world wines because they buy in small quantities due to
their higher prices. Since they want to expand their businesses, then it would be more efficient to

INTERNATIONAL BUSINESS 4
get the best qualities that are well known in the market (Mahoney, 2001). The big retailer, on the
other hand, would deal with the new world wines because they buy many differentiated products
and in bulk to give variety to their consumers. They would prefer to buy in bulks at a smaller
price and hence spend less in the exportations and even get discounts if possible. When you visit
a large retail store dealing with wines, they usually have varieties which are probably from the
new world.

INTERNATIONAL BUSINESS 5
References
Anderson, K. (. (2004). The world's wine markets: Globalization at work. Edward Elgar
Publishing.
Jin, B. &. (2009). Wine industry residues. . Biotechnology for agro-industrial residues
utilisation, , 293-311.
Landrault, N. P. (2001). Antioxidant capacities and phenolics levels of French wines from
different varieties and vintages. . Journal of Agricultural and Food chemistry , 49(7), 3341-3348.
Mahoney, D. T. (2001). International Business: a managerial perspective. . Pearson Education
Australia.