This chapter investigates the critical competitive elements in the contemporary global wine industry. The authors describe these elements as “defining factors” considered key in international trade as they facilitate growth and sustainability within the context of the worldwide wine trade. They analyze published literature, apply desk and field research, and propose a framework that includes the findings from external and internal analyses to ascertain the potentially viable elements. A sample competitive grid and a global industry analysis inventory are presented. The results of this investigation contribute to the knowledge of management, marketing, finance, wine business globalization, wine business growth strategy, and international business. The results will also benefit the stakeholders in the global wine market, including producers, importers, exporters, traders, and researchers.
TopIntroduction
Competition exists among all business sectors worldwide and more than ever in the wine industry. Stakeholders in the global wine business trade compete at all levels and activities, from production to operation and distribution. Within the framework of wine market globalization, we define “competitiveness” as the capability to sustain trade and gain market dominance in the global environment and “globalization” as all economic activities in the global wine marketplace that allow stakeholders to export and import wines across the world. Studies on these topics have engaged scholars for decades.
According to OIV (2020), the worldwide vineyard surface continues to decline. Since 2000, it fell from 7.8 mha (million hectares) to 7.4 mha in 2019 and to 7.3 mha in 2020 (OIV, 2020), see Figure 1. Evolution of vineyard surface area years range 2000-2020. These statistics, however, do not include the hidden heterogenous wine areas development of less known global industry competitors like producers from England and Wales (Wilson, 2018) and Sweden (Henley, 2020) due to climatic variability in weather temperatures. Specifically, new entrants are strategically becoming more competitive in areas once considered impossible to grow grapes and make wine. Examples are producers of “high altitude wines” across the world (Mazzeo, 2021) or “cool climate” wines in Canada (Ackles, 2021), as well countries in the Southern hemisphere like Uruguay and wine production in ancient wine-producing areas like Armenia (Camillo & Kim, 2021; Camillo et al., 2021).
Figure 1. Vineyard surface area years range 2000-2020
New entrants, especially those from less developed economies, attempt to compete through export activities due to domestic market saturation or by exploiting dynamic pricing strategies to increase the new markets' penetrating pricing, rising revenues, and optimizing profits. Thus, export becomes a key decision in global competitiveness, as it contributes to the local economy by building foreign currency reserves and creating jobs otherwise not supported by the domestic wine market. To accomplish their goals, stakeholders in wine-producing countries compete by applying new strategies like applying innovative technologies. Consequently, strategizing with innovation in Artificial Intelligence (A.I.) like using drones in precision farming and continuous quality improvement (Smith, 2018; Carpenter & Humphreys, 2019; Pinguet, 2021). In addition, they apply yield optimization and marketing strategies and various strategies based on the highest quality and least quantity (Smart, 2019). Furthermore, wine-producing companies promote through their online based platforms the skills, experience, and capabilities of viticulturists and enologists since great wines are made from high-quality grapes and are finished in the bottle, using ancient science with modern techniques, some of which are described in the literature within the domain of “Farm to Table” (Iacono, 2013).
In the global wine industry, firms are considered competitive when they can sustain trade globally, producing quality wines at competitive prices yet delivering above-average returns. Simultaneously, they can attract sufficient sources of capital, land, labor, technology, and marketing management from other competing economic activities.