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The California Wine Cluster

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deniz ayaydın

on 4 May 2011

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Transcript of The California Wine Cluster

presented by:
emre emin ekin
deniz berfin ayaydın

Agenda Definition of Cluster
California & Its Economy
California Wine Cluster
Porter’s Diamond Model

Cluster? "geographic concentrations of interconnected companies and
institutions in a particular field" (Porter, 1998)
The California Wine Cluster Most populous
Third largest state by land
Largest economy in U.S.
13% of U.S. GDP
11% of U.S. exports aerospace biotechnology computer hardware and software tourism agriculture A significant player in the global wine industry with approximately 740 wineries
Ranks fourth after France, Italy and Spain
90% of U.S. wine production
Quality and consistency on par with or exceeding any in the world
In 1700s, Spanish missionaries - sacramental wines
In 1830s, first commercial vineyard
In 1860, phylloxera - an insect that fed on vine roots
In 1870, the opening of the Viticulture and Enology Department at the University of California at Davis
In 1889, French invitation to compete in the World’s Fair
From 1920 to 1934, prohibition - a legal ban on alcoholic drinks
In 1960, renewed interest in wine
Quantitative analysis and new techniques
U.C. Davis - several new technologies such as mechanical harvesting, drip irrigation, and field grafting
In 1976, international reputation - winning a Paris competition
In 1970s, development of promoting industries in California
In 1979, Wine Spectator - leading wine publication
In 1970s and 1980s, rising consumer demand and production of higher quality wines
After peaking in 1986, 20% decline over the next 5 years
By 1998, growing demand and subsequently supply problem
CURRENT SITUATION In 2009, decrease in sales of Californian wineries for the first time in 16 years
A decrease in sales abroad
Under-demand due to price sensitivity
History Diamond Framework Terroir
Best combination of soil, climate, sunlight, topography, and water for wine grapes
Highways and ports in close proximity
Capital markets in the Bay Area
Labor force Sophisticated local demand
New California cuisine
Tourism Grape Grower's Side
Wine Processing Facilities
Marketing-Advertising and PR
Financial Institutions
Academic Institutions
Trade Associations Entrepreneurial activity
Low entry barriers
Cooperation through trade associations
Intense rivalry around branding
California Wine Cluster Competitors Rankings Per capita wine consumption:
France 3rd
Italy 5th
Australia 28th
Chile 40th
US 57th Exports:
France 1st (30%)
Italy 2nd (19.1%)
Australia 4th ( 7.1%)
Chile 5th (5.4%)
US 7th (3.4%) Imports:
Germany 1st
UK 2nd
France 3rd
US 4th Major Competitors Wine is a commonly consumed beverage
Quality conscious consumers
High income spending on wine French wines have the highest unit prices
Main markets: UK, US and Germany Long-established apprenticeship programs
The discipline is like an art that is handed down over generations The role of government:
regulating quality standards
safeguarding the French tradition of appellations or quality grades Lower quality and less expensive wines
Overall consumption has been fluctuating
Imports have very little impact in the market
Increasingly polarized between traditional focus and targeting global arena Major importers:
Germany, US, UK an Switzerland Cost-competitive producer of high-quality wines
Heavy investment in innovations in viniculture and technology
Well-respected research network Main markets: US, UK, Canada and China
Export value per gallon has exceeded both the US and Chile Role of government:
Providing funds for export promotion Consumer preference: Inexpensive and highly acidic wines
Chile's biggest markets: US, UK and Canada
Lower land and labor costs attract foreing companies Thank you for your attention

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