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Robert Mondavi and the Wine Industry
1. The industry structure in the Old World is significantly different than the New World. First, the Old World has a very low concentration ratio, while the diversity of competitors is high. Along with other factors the Old Worlds industry rivalry is very high. In contrast the industry rivalry is relatively low because of the extremely high concentration ratio and the low diversity of competitors. The New World is made up of large publicly held firms in comparison to the small private owned vineyards in the Old World that historically have produced for their own consumption. Another difference is between the suppliers in both industries. The suppliers in the Old World are one in the same with the producers because most wine producers are able to purchase their own land for grape production because of the low cost of land and low cost of labor. The producers in the New World either have to spend large sums to purchase land and hire out expensive harvesters or they have outsourced their grapes from other farms. Most producers in the New World tend to rely on outsourcing their grapes giving their suppliers a lot of power because of the necessity of grapes for the end product. The threat of entry in the Old World is relatively high in comparison to extremely high capital requirements in the New world making threat of entry low. Finally, the main difference between the industries of the New World and the Old World is the wine producers mandated distribution system. The Old World has few restraints and tends to distribute their products to off premise retailers throughout Europe and even abroad. In comparison, many producers in th ...