Essay About High Cost Of Labour And Casella Wines

Casella Wines – Export Success
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1.Identify its international markets
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US and North America identified
Distribution network – 44 states.
Size – initially estimated 20-30 thousand cartons to 100 thousand cartons, reality was 20 to 200 thousand.
Annual sales $3 million.
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Some regional supermarkets hoping to expand to majors.
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Mainland Europe
Some beginning sales.
2.Describe and analyse the reason for its international expansion
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Increase sales/find new markets – domestic market oversupplied
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Minimise competitive risk
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Economies of scale
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Cushioning economic cycle
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Comparative advantage
High cost of labour and land in US.
3.Explaing the influences on this business in the global market
Political
Tensions between free trade and protection
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Globalisation seeing removal of barriers
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Eg. Quotas, tariffs, subsidies – statistics
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Exports of wine have increased from 3% of sales to 52% of sales in 2002. this equals $2.3 billion dollars or 414 million litres
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US greatest source of export growth
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Australias export policy has led to major reforms in the Australian wine industry
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Rationalisation of wine production leading to overall efficiency giving them cost advantages over their competitors and reshaping of distribution lines.

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4th largest wine exported in the world with 5% of global market
International organisations and treaties
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1994 Uruguay multilateral agreement (WTO)
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Agreement to reduce protection on agricultural products (wines/grapes) by 36% by 2000
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UK has the largest export market of wine
Trade agreements
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US and Australia have strong trade relations and trade agreements
War in the Middle East
Weak economic conditions
Social
Consumer tastes
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Global markets have been increasingly integrated
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Growing