Product - Service Level Quality

Product/Service Level Quality

Some Old World wines with prestigious appellations have been guilty of inferior quality. This leads to a loss of consumer confidence. This can be attributed to their lack of control of the value chain. Multiple parties are involved in the grape growing, wine producing, distribution and retailing steps in the value chain. A problem in any one of these stages can lead to an inferior product. The New World producers control the entire value chain for their product, thus lowering the risk of poor quality.

Relationships with Customers

Branding of wines is not as widespread as with other products in Old World markets. There are numerous wine choices for the consumer. Government and industry efforts to classify wines have not been entirely successful because these classifications are not meant to be marketing information for the consumer, but cultural wine designations internal to countries like France. Consumers do not feel comfortable with their lack of knowledge about the fragmented Old World selections available. Consumer confidence has also been eroded by questionable business practices. Some Old World firms have sold inferior wines with prestigious labels. The Old World wine producers are also out of touch with the market. Their focus is production, not marketing. New World producers determine consumer requirements and respond in kind.

Supplier Power

Brand Reputation

Old World firms, especially in France and Italy, have owned the reputation of wine producers for the world. Save for some super premium and icon wines, they have no recognized "brand" of wine. The New World firms from the U.S., Australia, Argentina and South Africa have captured increasing market share through branding. The New World is closing the reputation gap. American wines bested their French counterparts in wine competitions such as the Judgment of Paris in 1976 that sparked the U.S. entry into the world market. Events such as these raise the profile of New World wines in the eyes of consumers. It also gives these wines new-found