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Common Sense Advisory Blogs
Vintners and Brewers Face Globalization Head-On
Posted by Donald A. DePalma on September 28, 2005  in the following blogs: Global Marketing, Translation and Localization
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Two dozen wine industry executives surveyed by Robert Smiley, a professor at the Graduate School of Management at the University of California at Davis (UCD), said that their biggest issues in 5 years will be environmental challenges, global trade, wine marketing, the appearance of wine as a commodity, tax issues, wine style and vineyard pests. UCD’s provenance in the wine business is well known to oenophiles. It developed the Davis 20-point scale, a widely-used tasting metric that gauges color, clarity, aroma, bouquet, taste, flavor, finish, and its lasting impression.

First off, we’d like to apply for Prof. Smiley’s job. Interviewing wine executives, discussing the odd cuvée, getting a demo of the product, and having the academic summers off all strike us the kind of research we’d rather be doing. Sigh. For now we’ll be content with a field trip to our local package store (New England dialect for a store that sells alcoholic beverages) to do a little research into the globalization of beverages.

Anecdotal evidence from our local purveyor of spirits validates Prof. Smiley’s study. In years past, we could easily find American, French, German, and Italian wines. Then a decade ago the Chilean section opened up, joined in subsequent years by Australian, Argentine, Hungarian, and South African products. Our friends in Europe tell us that wine is being “localized” to national preferences — for example, the English favor cépages like chardonnay over the more complex wines that the French prefer.

Over in the beer aisle, we find that globalization runs amok. In the last couple of years Coors (US) and Molson (Canada) merged, InBev (Belgium) took over AmBev (Brazil), and SABMiller (South Africa) bought Pilsener Urquell (aka Prazdroj, the original pilsener from the Czech Republic). Products from just 5 brewers — InBev, Anheuser-Busch (US), SABMiller, Heineken (Netherlands), and Molson Coors — dominate the beer selection. These 5 account for a whopping 41% of the world market. The thing that terrifies every beer lover — product homogenization — looks likely as InBev maximizes its profitability.

In the final analysis, these vintners and brewers face the same issues as any other global business — the demands of operating in multiple markets, working within short timeframes, dealing with competitors in a matrixed international market, complying with legislation at home and abroad, managing complex product portfolios, and so on. The biggest challenge they face, though, is satisfying local palates while leveraging their global operations, product planning, and marketing.


 

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