NAPIER UNIVERSITY

Assignment

On

Restaurant Management

“HT32020”

Assignment “A”

Topic:-

The written report is required to be handed in at the end of week 9. It is marked out of
100 and weighted to 50% final module mark contribution.
The following topic:

“Sales of European wines are being overtaken by new world ones. Discuss why this is
the case and how the balance can be readdressed.”

Type: - Report

Word count: -

Local Tutor: - Mr.S.Banerjee.

Module Tutor: - Mr. Gordon Rule.

Matriculation Number: - N08015092

Name: - Aman Bhattacharya

Introduction

In the end of 18th century new world wine countries like Australia, America, New Zeland
and South Africa develop their wine business in the world wine global sector. Now they
are giving tough competition to the old wine countries. Day by day other countries are
striking into world wine market such as Canada, South and Central America, Chile and
India producing wines. These all are major threat for the European wine market.
European wine countries are tackling with them because the wines produced by the
European wine country are crispy in nature that is produced by the fermentation of wine
for three to five year. But New world wine famous for it young wine texture and taste,
even France can stand with their seven major vine producing region, that give best
quality of vine itself the same case with Spain , Italy, Portugal, Germany, United
Kingdom and other central European countries, Eastern European countries.

There is also vast difference in style, quality and flavors. New World Wine country
focused on their marketing because they produced large number of Wines in a year
where some of old world country has heavily on tradition and culture, resulting in
smaller but highly sophisticated wines. While comparing the price range, consumers
can find easily good quality New world wines in same price of Old world wine, the
biggest difference in New world wine are boldness, Fruitiness and higher alcohol levels
some of the highest rated Zinfandel (Napa valley, USA) measure 16% of alcohol. New
World wines also describe as Fashionable, accessories, where the look style fragrance
aligns with the market demands. And old world wines thrive on ageing slowly
manufacturing and releasing it traditional characteristics overtime (Rossouw, 2008).

Methodology

The research for Food wine and society done from relevant books and internet journals
which is help full for the assignment that give lot’s of information about the topic of
assignment. The report covers European wine market overtaken by new world country,
wine market import and export, demand for consumer market, and the response of old
world producers.
Why European wines Falling in international market?

After the entry of new world wines in the wine market, the French and other European
wine country badly affected by it. James (2006) state that French in crisis because
they are produce too much of wines and no ones is buying it because they know to
produce fine wine very well but they are not good at making cheap wines, where this
problem compounded by the failure by the authorities. Wine maker failing in their
attempts to make cheap wines, there are several reason behind it that include the sense
of entitlement of growers, lack of commercial force, the climate of France wine region
and the silence by the government to enclose market force.

AOC (Appellation d’origine controlee) are responsible for the preserving wine variety but
they fail to ensure the quality of wine. It assumes that regulation profit, site, pruning and
harvesting ensure a certain level of quality. Those do not evidenced by the fact that
relevance still produced lots of worst wine. Where the new world wine producer have
very strong effort to maintain quality.AOC fail striking for cheap wine and that is the part
of the reason that France has fail to produce successful brands, where the Australian
has been able to make cheap wine that taste ok and more successful from European
wines. The U.K wine market already overtaken by Australia, Chile, Argentina and south
Africa all have been able to produce cheap wines, they also make sorts of quantities to
match the demand of the market(James,2006).

Success of New World over the Old World

Labeling:- In European wines give detail on the label about the chateau grand Cru and
AOC, which is hard for the customers to understand and new world wine simply state
the year and grape type that can be easily identified(EUbuisness,2006).

Taste of Wine: - the taste of old world wines is more acidic, juicy and mature as
compared to a new world wines. Where as new world wine is young, less acidic, sweet
and fruity, therefore wider range of consumer (Amaral, 2007).

Climate :- The dry summers is particularly suited to viticulture and is found in

California, Chile, South Africa etc. cold climate country such as Alaska
current(USA),Humboldt current(Chile) and Benguela (RSA). The climacteric condition
affects the taste and the body of the wine. The grapes grown in these regions are very
light and less acidic. The wines made from these grapes are very light and of less
flavours as compare to old wine countries (Robinson, 2006pp9-12).

The old world wine hold such kind of position they create in the world market their
wines are matchless, stubborn flavour due to the unique interaction between soil,
Geography and climate(Arkell,1999pp12-13).

International wine Market & Exports

As per (Mercer, 2006) America replaces the French as the world biggest wine drinker
nation. Britain rise 5% in 2005 according to OVI (organization of vine and wines) United
State is the world second fastest growing wine market. French wine exporter fall back in
third place in volume after falling badly by 11% between 2002 to 2005, Italy dropped 1%
but few remain on top such as Spain wine export 47% with Australia and New zeland.
France is the second highest exporter in the United Kingdom.

The world wine exports are still dominated by the old world producer with only three
countries France, Italy and Spain which account for 60 % of the world volumes export in
the year of 2003 (Morosi,2008).see diagram(1:1&1:2)

As per the report of 2006 Europe remains world biggest wine producer that include
France, Italy, Spain, Germany and Portugal, make 50%of global output but the new
world wine producer are reduce the strength its market share. The European business
noticed that while the Europe has increased its export by 20% over last 15 years,
where new world wine increased 19 time higher than Europe that give lots of pressure
on European wine producer in the solid fail in consumption on the continents,
presenting them with a smaller market as well as increasing completion
(EUbusiness,2006).

In the year of 2004 global wine market consumption was 23.8 billion liter compared with
production 29 billion liters, resulting in surplus of around 20 million hectoliters. Where
the western European market still dominated by the global wine market in 2003,
accounting for 51% of sales in term of volume, few of the new world country among the
fastest growing markets(see fig 1:3).such as Australia and China are becoming important
because the new world focused on the International market to sell their products (Pike
& melewar,2006).

Fig:-1:3

Source: - (Pike & melewar, 2006).

Forecasting for America overtake Italy as world biggest wine drinker

“International wine and sprit, released a new report on 13 January 2009. America may
overtake Italy as biggest wine drinker. The report announced by Boudreaux France
based vine expo wine body and presented at news conference in Paris”

The America would overtake Italy to become the world biggest consumer by 2017.in
2007 Italy overtake France, for buying 299 million cases. The forecast the United State
consumer would buy a total of 313 million cases in 2012. America are already spent
more on wine than any other nation. In the year 2007, they have invested nearly $22
billion for purchasing wine. Whereas Russia, spent almost twice in between 2003-2007
and they are likely to reach nearly $6.5 billion by 2012, where other European wines
produced half of it (Barchfield, 2009).

Demand for Wine Market

New world producer are competitively racing to meet new world demand. Basic
differences between Old and New producer are:-

 The difference between New and Old world producers appears to be the
willingness of New World suppliers to produce market driven product that
matches consumer demand using capital intensive production techniques.

 New world producer did not focus on their small sub regions.

 Where old world wine such as France and Italy will have its good wines, they are
losing because of their obstinacy towards their market demand.

(Mooney, 2006).

One of the major problem French and other European country are they do not take
interest for marketing their product. When a French wine producer get an AOC branding
they think it is sufficient to produce wine marketable and many producer did not bother
about future wine market, where the new world wine producers working in the market
environment and they understand the market need of consumers(Mooney,2006).

Strategies to effectively compete with New world Wine?

There are few strategies to compete with new world countries and to regain the market
share that is lost to new world it is necessary to develop few strategies which will help
the old world countries.

Strategy No.1

 Premium and Standard Wine Market

As old world wine face problem to stop their competitor to develop market, at least non
production country such as United Kingdom but the finest market has remain dominated
by French and less amount from Spain and Italian producers.

For this they have to stick to what they were doing to build upon their sub regions and
the local customers have good judgments to their local wines (Morosi,2008).

Strategy No.2

 Creation of an accessible brand

French wine producer and the other European wine producers should adopt Australian
and American method of production and branding for international market. It is an
important factor for success of new world producer (Morosi, 2008).

Strategy No.3

 The Global wine Company(acquisitions and mergers)

If old world wine producer merge few small region, then they can easily compete with
new world countries and it is the easiest way to make fine wine in quality
process.AOC(Appellation d’origine controlee)in the French wine system of allocate and
both the geography and the quality of wines. That mean the French government should
merge all the small state so that through this merger it can give rise to brand globally
(Morosi, 2008).

The response of Old World Producer

To break through United Kingdom market, for this problem should have good
understanding of the market and its demand. In such a way that they attract youngster
and women those who are accessible consumers.

In the end of 1990 old world wine countries start their strategy for act restore the
problem of production and new world competitor. There should be good coordination
between producer and should create intercompany network, which will help to develop
more valid union (Campbell & Guibert, 2006).
Conclusion/Recommendation

There are huge problem in selling the wine by Europeans producing countries, if the
European wine producers did not takes this seriously, new world wine may overtake it
exiting market from old world wine international market. There are essential strategies
suggest by (Morosi.F, 2008) and (Campbell & Guibert, 2006) has explained that given
above to help old world countries should use to regain their market. But the main aim is
to compete and defeat New world wine producer and satisfy the consumer so that they
are back to old wine.

So European wine producing countries have to come together to compete with new
world wines countries to get back their market value that they are losing
Reference:-

• Arkell.J(1999) “New World Wine-The Complete Guide, Ward lock, London.

• Amaral.M (2007) “NEW WORLD WINES” Retrieved on 16-02-2009 From

http://wineworld.spaces.live.com/blog/cns!1F14BAF605D9801F!942.entry

• Barchfield.J (2009) “U.S. May Overtake Italy As World's Biggest Wine Drinkers”
Retrieved on 15-02-2009 From http://www.huffingtonpost.com/2009/01/13/us-
may-overtake-italy-as-_n_157562.html?show_comment_id=19764469

• Boehmer.A (2006) “Old vs New World White Wine Styles” Retrieved on 10-03-
2009 From http://newworldwine.suite101.com/article.cfm/whitewinestyles

• Campbell.G,Guibert.N (2006) “Old World strategies against New World

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contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/07010
80401.html

• Eubusiness (2006) “ European wine facing 'crisis' threat from New World tipples”
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http://www.eubusiness.com/Food/060622124114.2hi7qbq4

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Retrieved on 08-03-2009 From http://wineanorak.com/frenchwineincrisis.htm

• Mooney.J(2006) “World Wine Market” Retrieved on 08-03-2009 From

https://portfolio.du.edu/portfolio/getportfoliofile?fiuid=29432.

• Morosi.F (2008) “World Wine Market” Retrieved on 17-03-2009 From

http://bizcovering.com/international-business-and-trade/world-wine-market/
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• Pike.W,Melewar.T(2006) “The demise of independent wine production in France:

a marketing challenge?” Retrieved on 02-02-2009 From
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• Robinson.J(2006) “Exploring the world of wines and Spirits, wine and sprit
education Trust ,39-45 Bermondsey street ,London.

Rossouw.H(2008)”Who’s winning the Old World vs. New World wine battle?”, Retrieved
on 14-02-2009 From http://blog.winecountry.co.za/who%E2%80%99s-
winning-the-old-world-vs-new-world-wine-battle/
Bibliography:-

• Alabaster.N, Goode.J (2009) “The old world versus new world debate” Retrieved
on 18-02-2009 From www.wineanorak.com/newold.htm

• European commission (2009) “European wine to get body back” Retrieved on 21-
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• Europa(2007) “Towards a sustainable wine sector” Retrieved on 21-02-2009

From http://europa.eu/scadplus/leg/en/lvb/l66047.htm

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01-2009 From http://www.emeraldinsight.com/Insight/viewPDF.jsp?
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Appendix

Fig:-1:1

Source: - (Morosi, 2008).

Fig:-1:2
Source: - (Morosi, 2008).

European wine Market