Research Topics: Literature Review Example On Greek Wine Industry

Chapter 2 REVIEW OF RELATED LITERATURE  Current Situation of Greek Wine Industry In ancient time, the Greeks played a vital role in the development of wine culture all over Europe. During the last forty years, the industry of wines in Greece has struggled to regain its reputation. Today, armed with an ocean indigenous cultivars and the best climate for grape growing along with the abundance of brainpower and technologically advanced resources, the wines  of Greece now presents a new and exciting possibilities for all wine enthusiasts all over the world (2004). It is said that the industry of wines in Greece are looking forward to its greatest chances to showcase its improvements and progress over the past two decades. Indeed, the wine industry has become competitive in domestic sales and consumptions, but it remains to be seen if there will be a lasting benefit to the industry in the global market (2001).  Wine producers in Greece have been consistently taking cues from developments abroad. It is noted that the wine production in Greece can be considered to be the champions in terms of international grape varieties, organic farming, estate/domain production, minimally oak-aged red wines and maximally cold-fermented white wines and other wine production related activities. However, in spite of these characteristics, wine producers in Greece are still bothered by the fact that the premium and high quality Greek wines are still not recognizable in the global market.  (2004) believed that the general Greek wine industry has been trapped in a marketing vise. There is a problem in pricing and branding and other important marketing aspects.  (2004) stated: “Greek wines from international varieties are not lively sellers in retail stores abroad because of relatively high prices” (). In addition, the wines from native Greek varieties stand little opportunity of having their unfamiliar names catch on in international markets. Greek has been commonly linked as ancient and traditional being the cradle of wine as grapes were cultivated earlier in their region. Consequently, Greece introduced wine to the world, however, past historical events started to isolate winemaking (2000). It is only after two decades when Greek wine industries and its opportunities are beginning to foresee things anew.  Greek vineyards and its native grapes need to be opened to the global market and reveal its historical value in the modern market.  This wine country has a large potential once it fully enters the market as it fuses its local traditions and history as well as its fast modern and international appeal brought by its “up-to-date equipment and techniques – temperature-controlled fermentation, stainless steel tanks and French oak barrels”.  As Greek wine is fast under a revival, it presents a taste that is not encountered in fine red and white wines and this is the taste of a “legend or myth” as the  reported (2002). Undoubtedly, the Greek wine industry presents several opportunities that must be strategically planned in order to competitively place in the market.  Rich in opportunities it may seem, it will need an efficient and effective marketing and branding mechanism that will bring it to the consciousness of wine drinkers around the world especially in the High street.  Greek Wine has its own share of difficulties because it is still relatively unknown although rich in potentials and distinct in taste.  There is the language barrier and its volume production is limited (2004). The Greek wine industry, a relatively young and newcomer in the modern world wine industry, is in a crucial crossroad and every decision and effort made is significant in either moving it towards the market or outward it ( 2003).  Strategic marketing and competitive positioning will determine whether or not Greek wine is having a renaissance and see if the fate of this largely potent product will give it a considerable share in the global market.  It has to fight against the stereotypes of ancient traditional poor undrinkable wine and introduce the wonders of its fine wine developed through modern and up to date equipments and techniques (1991).  However, this is also the case for other wine producers who are possibly larger than the limitedly available Greek wine industry. The competition is very tight and stiff there would need to be an effective strategy for the next years in order to map and plan the road to follow.    Global Positioning The term “globalization” has acquired considerable emotive force. Some view it as a process that is beneficial—a key to future world economic development—and also inevitable and irreversible. Others regard it with hostility, even fear, believing that it increases inequality within and between nations, threatens employment and living standards and thwarts social progress. This brief offers an overview of some aspects of globalization and aims to identify ways in which countries can tap the gains of this process, while remaining realistic about its potential and its risks (1981). Globalization offers extensive opportunities for truly worldwide development but it is not progressing evenly. Some countries are becoming integrated into the global economy more quickly than others (1997). Markets promote efficiency through competition and the division of labor the specialization that allows people and economies to focus on what they do best. Global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports, and larger export markets. With these trends in the business arena, the emergence of global positioning among industries is being recognised. It is said that positioning begins with the customer. Customers think about products and companies in relation to other products and companies. What really matters is how existing and potential customers think about a company in relation to its competitors (Wilkie, 1990). Customers set up a hierarchy of values, wants, and needs based on empirical data, opinions, word-of-mouth references, and previous experiences with products and services. They use that information to make purchasing decisions. Market leadership can catch a consumer’s attention and can be an important factor for the customer to consider, but there is more than one leader in almost every market segment today. Most often several companies share the top position, one being the technical leader, one the market leader, and another is the pricing leader, and still another challenging upstart (2000). Many companies can establish unique positions in the marketplace for themselves, their products, and their services. The wine industries all over the world are now living in an interesting era. The process of change as of the old economy to the new global economy has created tremendous changes and development of the wine industries indifferent parts of the world ( 1996).   Part of the changes brought by the competition of these industries globally is the new economics, new market structure, new marketing strategy as well as the new technological structures of each and every industry within the marketing field. The global wine market is considered to be large and diverse with an ever increasing range of wine products which aim to satisfy the demands of the consumers in terms of health, image, individuality and uniqueness as well as the basic thirst and price needs. Wine products are said to have a unique position in the global market. It is the most suitable food accompaniment beverage; it has acknowledged the health aspects, image and status, engenders high consumer involvement, provides variety and has different level of flavour complexity. The natural features of wine, its positive image with lifestyles and its association with food and tourism industry are expected to stimulate modes sales growth from billion- billion in the year 2025. But strong growth will emerge in both commercial and premium segments at the expense of commodity wine beverages. Hence, in order to position it, winemaking countries must be able to use or implement an effective strategy to ensure that their wines will be positioned in the global market.   Wine Producing Countries 		    In the global wine industry, there are two known categories used for classifying wine making countries:  the New World Producers and the Old World Producers (2001). The largest and most recognised wine producing country under the first classification includes Australia, USA, Chile and Argentina while the latter consists of France and Italy.   USA 		    The US Wine industry is known to be the fourth largest winemaker in the world (See Table 1). However, US wine industry accounts for approximately 4.2% of the total wine export market in terms of volume (See Table 2). One of the causes of this discrepancy can be attributed to the inability of most of the US wineries to give importance on exporting. In the previous years, the common export strategy used by US companies was to export only those excess products (1998), which makes a little focus on creating a global position in the marketplace. In addition, the anti-competitive actions implemented by foreign government like imposing high tariffs for wine in retaliation for other issues in trades or formulating policies which are designed to protect local wineries have limit US wineries to enter foreign market. With the foreign government interventions, US wines carry an increased cost burden over domestic wines and other imported wines. 		    In order to solve such problem and to position itself in the global win market, the US wine industries has been able to create a voluntary initiative called “WineVision.  The main objective of WineVision is to enable US wine industries to establish a strategy which will make the industry be more competitive and to increase the demand for US wine both locally and internationally. This approach focuses on three main strategic priorities: to be the leader in the wine industry having sustainable practices in terms of environmental, social and economic factors, make wine as an integral part of the American society and culture and position the US wine industry as the high-quality and value wine across price points in different parts of the world for the greatest prosperity (2000). Table 1 World Wine Production (In millions of gallons)   Country 1996 1997 1998 Italy 1,551 1,343 1,430 France 1,506 1,414 1,390 Spain 818 876 800 US 498 580 539 Argentina 334 356 334 Germany 228 224 286 South Africa 230 232 215 Australia 177 162 195 Chile 100 120 144 Romania 202 176 132 Hungary 110 118 110 Yugoslavia 92 106 106 Rest of World 1296 1,195 1,150 World Total 7,142 6,902 6,831 		    Table 2 % Share of the World Wine Production, Wine Consumption, Share of World Wine Market and Share of Export Market 1998 (Based on Volume) Country* % Share of Production % Share of Consumption % Share of World Market % Share of Export Market World Export Market Rank Italy 21.0% 14.3% 20.8% 25.3% 1 France 20.4% 15.9% 20.3% 25.1% 2 Spain 11.7% 6.7% 10.6% 15.6% 3 USA 7.9% 9.3% 8.4% 4.2% 4 Argentina 4.9% 6.1% 6.4% 1.7% 10 Germany 4.2% 8.5% 4.1% 3.6% 5 Australia 2.9% 1.6% 2.3% 3.0% 8 Chile 2.1% 1.0% 2.0% 3.5% 6 Portugal 1.4% 2.2% 2.5% 3.4% 7 Others 23.5% 34.4% 22.6% 14.6%   Total 100.0% 100.0% 100.0% 100.0%   *sorted by % Share of Production S 1999   Australia 		    In Australia, grape vines were first introduced in 1788 by English immigrants. It is noted that the wine industry was born in 1860s when European immigrants has added the skilled labor force to establish the commercial infrastructure. In spite of the long history that Australia had at winemaking, wine industry in this region was stagnant and inactive until the 1960s during the times when several vital aspects emerged to transform the wine industry and the domestic market. Such factors enables Australia to develop more innovative approaches to make higher quality wine whole making the price still affordable. 		    The result of such strategy makes the wine industry have a competitive position both in the domestic and international market. Since the region has a very little domestic market having a population of only 17 million, the wine industries perceived that if the industry will continue to grow, it will be able to conquer the global market ( 1996)., 		    As the government of Australia, realized the potentials of the wine industry, they have consider formulating a provision that would severely tax wine in order to gain revenue. However, 		   having been able to anticipate such action, the wine industry has joined together with government officials to initiate a plan that would stop the government to pursue its plan. In this manner, the result was the creation of Strategy 2025 (1999). The agreement of the wineries and the government states that “as the wine industry continue to grow the government and hamper the growth of the wineries. Strategy 2025 is a business initiative which outlines how Australian wine industries will expand both in the domestic and international market. The vision is that by the year 2025, the wine industry of Australia will have .5 billion as annual sales and be recognised as the world’s most dominant and profitable supplier of branded wines. In addition, the goal of the Strategy 2025 is to make Australian wine industry as a pioneer in making wine as a universal first choice lifestyle beverage. The top market that Australian wine industries are targeting includes US, UK, Japan and Germany (1996). The top five that Australia shipped to in 1999 were the New Zealand, UK, Canada, Germany and USA. As the plan has been implemented, Australia had gained 3 million in the export market in UK, while Australian wines have a total sale of 0 million. The next three nations, Canada, New Zealand and Germany only accounted for million or 16.1% of the total sales ( 2000). Although, Japan was included as a target market, Japan has not made it in the list of top 5 countries that Australian wine industries exported to. Wine industries in Australia also plan to invest in the Asian tigers, seeing the potentialities of these regions in terms of populations and economies. As can be seen in Table 1 above, Australia ranked as the 8th largest wine maker in the world having a total output of 177 million gallons in 1996 and 195 million gallons in 1998. In addition, it had 3% of the total export market and was ranked 8th for 1998 (See Table 2). Chile 		    In Chile, the first vines were introduces in 16th century by a Spanish priest. Throughout the years, the cultivation in Chile slowly grew until the late19th century, in which wine began to be produced on a large scale. Because of the unstable political and economic condition of Chile, the wine industry has not been able to develop and take on a global scene. In 1979, Chile started to concentrate on the exporting of natural resources to strengthen its economy and competitive position in the world. 		    One of the important factors for making Chile a strong competitor in wine industry is the high Andean climate that it has. Andean climate is considered to be a good factor for producing high quality red wines. It is noted that the wines made in Chile has a higher quality compared to its neighbor countries like Argentina. In order to ensure that the quality of wines produced in Chile adheres to the standards, the government implemented the Denomination of Origin in 1996. The main goal of DO is to help the wine makers in maintaining the quality of wine to be exported. Denomination of Origin is a set of provisions which regulates the origin and variety of grape that will be used in winemaking. 		    Chile has four wine producing regions such as Aconcagua, Maule, Maipo and Rapel, which have appellations of origin and are being monitored and controlled by the ministry of Agriculture. The top five markets in which Chilean wines have been shipped to in 1999 includes UK, Denmark, Japan, USA and Canada. The UK has been noted to have the most revenue having 6 million, while USA accounted for 7 million.  On the other hand, the three remaining markets: Japan, Denmark and Canada accounted for million, million and million respectively or 27% of the top five regions revenue or sales (2000). 		    Chilean wine industry ranked 9 as the largest producer of wine all over the world (See Table 1 above). In 1996, Chile wines have a total output of 100 million gallons and in 1998 it has a total output of 144 million gallons. In spite of ranking only the 9th largest winemaker, the country had 3.5% of the total export market and ranked six in this category for 1998 (See Table 2 above). Argentina  		    Argentina has a long historical view in terms of wine like Chile. But, the quality of wine produced in Argentina was never as high as the wine of Chile because of the small area of land which is capable for producing high quality grapes.  In Argentina, the wine making has increased over the years. However, the wine made tends to be for local market only and not for export because of the low quality and the influence of the regulations imposed by the government. In order to enhance the quality of their wines, Argentina has established different organisation which aims on boosting the quality of the wines produced and to be able to position their wine in the international market. Such organisation includes the Original Denomination, Controlled Original Denomination (COD) and Guaranteed Controlled Original Denomination (GCOD).   		    The three institutions aim on regulating the production and labeling of the produced wine in Argentina so as to make a higher quality image in the global wine market. Nowadays, there are many international organisation which looks to Chile to create a joint venture, conversely, this is not the situation of Argentina. The four major wine producing areas in Argentina are Mendoza, San Juan, Rio Negro and La Rioja. The top market for the Argentinean wine includes UK, Paraguay, Bolivia, Chile, Germany, Japan, USA and Uruguay based on volume. The summation of the volumes for the eight countries was 58 million of liters (July 2000). An essential part of the volume, which is 45% of exports goes to other South American nations in which the low cost/price of the product, is a major factor. 		    It is noted that Argentina is the 5th largest wine producing country in the world (See Table 1 above), having a total output of 334 million gallons in 1996 and 1998. In spite of being the 5th largest wine producer, the country is still help at the 10th position in the total export in the global market as of 1998 (See Table 2). France 		    France is known as a long time world leader in terms of wine production because of the historical and cultural factors attributed with it. France is the 2nd largest producer of wine in terms of volume with an output of 1,506 million gallons and 1, 390 million gallons in 1996 and 1998 respectively (Table 1). 		    The French wine producers have been able to develop centuries ago, the Vins d’appellation d’origine controlee (AOC) system, so as to ensure that the wine produces will always have high quality. This system aims on regulating the area of the wine production, the method used for producing wine up to the storage process. In addition it also ensures that the wine made have minimum alcohol content. In France, there are many places in which quality grapes can be found and the dominant position of France in the global market reflects this. Some of the famous appellations known in French wine industry include Burgundy, Rhone, Bordeaux and champagne. Italy  		    Like France, Italy is also know for having a very old and established industry of wine which depends on the appellation method for controlling high quality of wines. The country was the largest wine producer in the global market (See Table 1), having a total output of 1,551 million gallons and 1,430 million gallons of wines in year 1996 and 1998 respectively. There are two main institutions which are responsible for controlling the quality of Italian wine produced and these include Denominazione di Origine Controllata and the Denominazione di Origine Controllata e Garantita. Denominazione di Origine Controllata e Garantita control system was established in recent years ensure the quality of wines made. It can be noted that New World Producers used more modern methods of wine production which results for a more consistent high quality of wines ( 1995). However, France and Italy tends to use the older methods of producing wine and make it a part of the wine culture. USA, Chile, Australia, France, Italy have the ability to ship unique and distinctive brands to compete at a wide level of price points. However, the wines produced by Argentina usually have a difficult time competing in the international premium market. The wines made in France have the capability of competing in the class of higher price and it is common to see French made wines that retail for over US0. On the other hand, the wines made in Italy tends to be considered more of an association of being good than to have it with meals, thus, do not tend to have a price as high as those French wines. However, the wines of Italy competes best in them mid to lover price categories.       Credit:ivythesis.typepad.com

REVIEW OF RELATED LITERATURE : Current Situation of Greek Wine Industry

Chapter 2 REVIEW OF RELATED LITERATURE Current Situation of Greek Wine Industry In ancient time, the Greeks played a vital role in t...