Porter’s 5 forces

Bargaining power of suppliers = HIGH 4/5

New worlds | Old world | Low | Medium | Value chain control | Frangmented |
There is a low threat from suppliers of grapes as these have little bargaining power apart from those supplying Merlot and Verdelho who have more clout due to some shortage of these varieties. Over-planting of red wine grapes has given wineries scope to obtain higher quality product at a competitive price.

* One of the “core critical resources”: access to good grap fruit is key. Suppliers are sometimes switching quickly from one to another * Vintage could jeopardize for various reasons.

Bargaining power of buyers (customers) = VERY HIGH 5/5

New world | Old world | High | Low switching costDemand < OfferIncreasing power of wholesalers and retailers |
The threat from buyers is high as securing distribution in a crowded market is difficult, especially when the distribution channels in major overseas markets are largely dominated by supermarket and major liquor chains.

* No switching cost * Numerous players, numerous wine * At final customer level * Change in consumer habits and needs: * “Industry was becoming increasingly fashion-driven” Australian wine was becoming a “hot trend” * At distribution channel: * Increasing power of wine wholesalers and retailers (less fragmented, rationalization and consolidation). * Looking for set of key partners to source large quantity of wines and worldwide.

Threats of new entrants = LIMITED 2/5 New world | Old world | High | Low | Few regulationsLow changing costsStrict capital demands | Saturated markets(AOC, lands, regulations) |
There is a likely threat from new entrants, especially from large global liquor giants such as Diageo and Allied Domecq of the UK and LVMH and Pernod Ricard of France, who