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The Internationalization Strategies Opportunities and Challenges in the Global Wine Industry

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The wine industry has been highly fragmented which is evident from the fact that the 15 leading wine producers were based in eight different countries. Consolidation in the industry has been taking place since 2005. Internationalization and Product Life Cycle theory states that once a new product matures in the domestic market and reaches the standardization level, it expands overseas as it seeks new markets. This theory assumes that innovation takes place in the parent company’s country but recent research suggests that innovation is driven by globalization and is dispersed within multinationals. Britain has always been a very attractive market for wines and France has been the main supplier but New World wine producing countries like Australia, through aggressive sales campaign could overtake France in the white wine market in Britain (Campbell &amp. Guibert, 2006).

According to the Uppsala model internationalization starts with the least and gradually expands into more psychically distant countries. This is a paradox since starting internationalization in psychically close countries can be detrimental to performance. Australia for instance exported to Britain, which demonstrates that distance is not important in internationalization. There are other factors that stimulate the process of internationalization. The Euromonitor states that consumption trends have changed due to lower prices and wider availability of wine, increased consumer knowledge and sophisticated marketing techniques have led to the expansion of the wine industry. Augmentation in the supply chain, as well as health factors, has added to the expansion of global sales of wine.

The business environment is constantly changing and the internationalization patterns change with it. Australia is able to supply good quality wine at relatively low prices. Import tariffs have reduced in a number of key markets and an increasing number of&nbsp.super markets have contributed to the global sales of wine.