Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:8.0pt; mso-para-margin-left:0cm; line-height:107%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri",sans-serif; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-ansi-language:EN-US; mso-fareast-language:EN-US;} The global luxury wines and spirits market is highly competitive. The key industry players have adopted several strategies such as expansions, product launches, and acquisitions to strengthen their market positions. Most companies in the market are focused on expanding operations across regions, augmenting their capabilities, and building strong partner relations.
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This graph indicates the market share of key manufacturers in the global luxury wines and spirits market. LVMH Moët Hennessy Louis Vuitton S.E. accounted for the highest market share of 41.6%. The company has a wide range of wines and spirits and luxurious segment include brands such as Dom Pérignon and Krug. Considering the premium offerings in wines and scotch whiskies as well as extensive footprints in the regions of Europe, North America, and Asia including countries such as France, the US, and Japan, LVMH has been given the largest market share till 2017.
Diageo plc holds a decent 14.6% share in the luxury wines and spirits market as the company is seen to have high global footprints with numerous premium offerings in the luxury segment. Brands such as John Walker and DeLeón have created a perception of a premium brand in the minds of consumers. The old and rare collection of John Walker such as Johnnie Walker Directors Blend 2011 and Johnnie Walker Directors Blend 2009 are expected to uplift the brand image through its premium taste. On the basis of global footprint, the company has widely distributed its products in the regions of Europe, the Americas, Asia-Pacific, Africa, and also Caribbean. Analysing these factors, Diageo plc is expected to grow significantly in the luxury wines and spirits market during the forecast period.
With strong research and development, diverse product portfolio, and extensive geographic reach, Pernod Ricard SA has occupied a market share of 11.4% in the global luxury wines and spirits market. Through brands such as Ballantine's 30, Chivas Regal 18, and Perrier-Jouët Belle Epoque, the company has gained enormous appreciations in terms of quality and taste, thereby boosting the global luxury wines and spirits market.
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Though the global luxury wines and spirits market is a lucrative market, it has several entry barriers that are restricting the entry of new entrants in the market. The production of luxury wines and spirits requires high investment and the time required to commercialize the product after sufficient aging is also long. Thus, it takes time and huge capital to establish a place in the global market. In addition, production and commercialization of luxury wines and spirits requires licensing from regulatory authorities which is also creating barriers for the new entrants. Moreover, the stiff competition among the existing market players has also restricted the entry of nouveau players in the global luxury wines and spirits market.
Hence, the threat of new entrants in the global luxury wines & spirits market is expected to be low.
Threat of Substitutes
Luxury wines and spirits are alcoholic beverages that are categorized under the luxury products category. In the current market scenario, there are no substitutes available in the market that can act as an alternative to luxury wines and spirits. This offers a low threat of substitute to the luxury wines and spirits in the global market.
Hence, the threat of substitutes in the global Luxury Wines & Spirits market is expected to be low.
Bargaining Power of Buyers
Luxury wines and spirits are luxury products that are consumed by a specific group of customers. They undergo value addition in terms of quality, packaging, taste, shelf-life, and others. Market players focus on adding value to the final product which raises the product cost and thus becomes a luxury for the general population. This offers a low bargaining power to the buyers. However, the presence of several market players in the global luxury wines and spirits market offers a variety of options for the customers to choose from. This lowers the switching cost and thus provides a high bargaining power to the buyers. Taking into consideration all the aforementioned determinants the bargaining power of buyers is moderate in the global luxury wines and spirits market.
Hence, the bargaining power of buyers in the global luxury wines & spirits market is expected to be moderate.
Bargaining Power of Suppliers
The major raw material of luxury wines & spirits is grapes, as wine accounts for nearly 70% of the global market. The other major raw materials required to produce luxury wines and spirits are fruits, vegetables, cereal grains, and yeast. Market players procure these raw materials from farmers and yeast suppliers. However, a majority of the players have their own vineyards and thus do not rely on farmers for their raw material needs. This offers a low bargaining power to the suppliers.
Hence, the bargaining power of suppliers in the global luxury wines & spirits market is expected to be low.
Competitive Rivalry
The global luxury wines & spirits market is fragmented with the presence of several regional and global vendors. There is a high level of competition among market players. The market players are competing against each other based on product quality, price, packaging, and product innovation. Even though the global luxury wines and spirits market is a lucrative market, the market players have a limited customer base. Thus, the market players compete against each other to attract customers from the limited customer base.
Hence, the competitive rivalry in the global luxury wines & spirits market is expected to be high.
