Industry Characteristics: According to The Global Drinks Market: Essay Example

shift from red wine to more premium wines.

The market itself is expanding in all segments like retail and wholesale, and the production capacity is also increasing in proportion. The major change in the market is expected to be due to the present trend of globalization trend. The companies are hence tending towards mergers and acquisitions to take advantage of the newer markets and consumers. This is due to the very localized nature of the market and the difficulty in knowing the local network and also consumer preferences.

5 Forces Analysis of Competition

• Industry Rivalry: In terms of industry rivalry the industry is highly fragmented and so while the entry is not a big issue the market share becomes a problem.
• Threat of New Entrants: The fragmented market also makes fplace for the possibility of other newer entrants to enter into the market.
• Threat of Substitute Products: While people who consume wine essentially know about the unique tastes, yet the presence of other alcoholic beverages available makes for a whole new area of competition, where the companies have to compete with other competitors as well as other alcohol based products.
• Bargaining Power of Suppliers: The fragmented nature of the industry means no standard cost. This means that the manufacturers are almost entirely dependant on the wine-suppliers to get their products into the market and so price-margin calls for extensive bargaining.
• Bargaining Power of Buyers: Consumers too can easily switch from one buyer to another in which case the sellers have the additional burden of keeping their buyers happy in terms of price while taking care
  

of their profit margins.