MGT 618
“The Growing Trade in Growing Grapes”
Barry Bland
California Intercontinental University
MGT 618: International Business
Introduction
The wine industry is suggested to be one of the first industries and it is important to
mankind. Evidence suggest that wine making goes as far back as 6000 B.C.E. Archaeologist
found pictograms or symbols from 3000 B.C.E. showed ancient Egyptians drinking wine during
celebrations. According to the Bible, at a wedding ceremony in Cana, it was recorded that Jesus
Christ of Nazareth, turned water into wine. The wine industry is nothing compared to its humble
beginnings. It estimated that 26 billion liters of wine is produced yearly. Approximately 18.5
million acres of land worldwide is dedicated towards growing grapes. Around 60% of the wines
produced annually comes from the European Union (EU). Majority of the vineyards in the
European Union (EU) are in France, Italy, and Spain. The other major players in the
manufacturing of wine in the world are the Argentina, Australia, and the United States of
America. Sustainability plays an integral role in the wine because it is an agricultural product.
The environmental consequences of producing wine is one the major huddles of the Old-World
wine producers. Water scarcity, energy costs, climate change, and chemical exposure are some
of the issues facing the wine industry across the board (Capitello et. Al., 2019). The intent of this
paper is to discuss the Old-World wine makers and the New-world makers as it relates to global
marketplace competition, premium pricing, competitive advantages and disadvantages, economic
of scale, adoption of AOC by U.S. firms, “Bottle Shops”, multistore firms, Old-World and New-
World wine retailers, and last but not the list – firm-based theory of international trade.
, Global Marketplace Competition
For many years, France was the number one producer of wine in the world. France uses
old techniques they have mastered for centuries with their repetoire for quality and superiority.
However, all that changed in 1980, and other non-European growers like the U.S. joined France
and the other European growers in the art of making, which took the industry to another level.
“The mystique of French wine was in part attributable to the belief by oenophiles (a fancy word
for wine experts) that terroir and the character of the grape itself contributed to the creation of
unique characteristics for each vineyard’s wine” (Griffin and Pustay, 2015).
Both Old World vineyards and New World vineyards compete in the global marketplace.
The Old-World wine makers did not do their homework well. They assumed that
consumers will always like their wine by default but to their surprise, all that changed in three
decades. Times are changing, more people have accessibility to cheaper wines coming from
California in comparison with the expensive wine coming out of Europe, especially from France.
For instance, in 1976 wine contest conducted in Paris, titled “Judgement of Paris”, organized by
British wine makers. The judges at the wine tasting contest were blindfolded, surprisingly all the
judges voted in favor of California, citing that the wine was superior to European wine,
specifically French wines. The hopes of the French wine producers were crushed. “Nonetheless,
French wines command a price premium in the export market, averaging more than $6.00 a liter
compared to only $3.00 for wines from Australia, Argentina, Chile, or the United States” (Griffin
and Pustay, 2015).
French Wine Premium Price
With even the stiff competition on the horizon, French wines are still considered as the
best wines in the market, thanks to the attention to detail adopted by wine growers in nineteenth
century. The terroir (the French countryside with its natural landscapes (soil, climate, water,
topography) in which French wine is produced, and most importantly French wines unique
“The Growing Trade in Growing Grapes”
Barry Bland
California Intercontinental University
MGT 618: International Business
Introduction
The wine industry is suggested to be one of the first industries and it is important to
mankind. Evidence suggest that wine making goes as far back as 6000 B.C.E. Archaeologist
found pictograms or symbols from 3000 B.C.E. showed ancient Egyptians drinking wine during
celebrations. According to the Bible, at a wedding ceremony in Cana, it was recorded that Jesus
Christ of Nazareth, turned water into wine. The wine industry is nothing compared to its humble
beginnings. It estimated that 26 billion liters of wine is produced yearly. Approximately 18.5
million acres of land worldwide is dedicated towards growing grapes. Around 60% of the wines
produced annually comes from the European Union (EU). Majority of the vineyards in the
European Union (EU) are in France, Italy, and Spain. The other major players in the
manufacturing of wine in the world are the Argentina, Australia, and the United States of
America. Sustainability plays an integral role in the wine because it is an agricultural product.
The environmental consequences of producing wine is one the major huddles of the Old-World
wine producers. Water scarcity, energy costs, climate change, and chemical exposure are some
of the issues facing the wine industry across the board (Capitello et. Al., 2019). The intent of this
paper is to discuss the Old-World wine makers and the New-world makers as it relates to global
marketplace competition, premium pricing, competitive advantages and disadvantages, economic
of scale, adoption of AOC by U.S. firms, “Bottle Shops”, multistore firms, Old-World and New-
World wine retailers, and last but not the list – firm-based theory of international trade.
, Global Marketplace Competition
For many years, France was the number one producer of wine in the world. France uses
old techniques they have mastered for centuries with their repetoire for quality and superiority.
However, all that changed in 1980, and other non-European growers like the U.S. joined France
and the other European growers in the art of making, which took the industry to another level.
“The mystique of French wine was in part attributable to the belief by oenophiles (a fancy word
for wine experts) that terroir and the character of the grape itself contributed to the creation of
unique characteristics for each vineyard’s wine” (Griffin and Pustay, 2015).
Both Old World vineyards and New World vineyards compete in the global marketplace.
The Old-World wine makers did not do their homework well. They assumed that
consumers will always like their wine by default but to their surprise, all that changed in three
decades. Times are changing, more people have accessibility to cheaper wines coming from
California in comparison with the expensive wine coming out of Europe, especially from France.
For instance, in 1976 wine contest conducted in Paris, titled “Judgement of Paris”, organized by
British wine makers. The judges at the wine tasting contest were blindfolded, surprisingly all the
judges voted in favor of California, citing that the wine was superior to European wine,
specifically French wines. The hopes of the French wine producers were crushed. “Nonetheless,
French wines command a price premium in the export market, averaging more than $6.00 a liter
compared to only $3.00 for wines from Australia, Argentina, Chile, or the United States” (Griffin
and Pustay, 2015).
French Wine Premium Price
With even the stiff competition on the horizon, French wines are still considered as the
best wines in the market, thanks to the attention to detail adopted by wine growers in nineteenth
century. The terroir (the French countryside with its natural landscapes (soil, climate, water,
topography) in which French wine is produced, and most importantly French wines unique
