Report

Name: Juan José Dávila Rodríguez Student´s number:

2731964
Course title: Teacher´s name:
Doing business in America Delia Kareny Cárdenas Treviño
Module: Activity: Assignment 6
3.
Date: 10/15/18
Bibliography:
 Ayala, R. (2018). Competitiveness analysis of the Chilean wine sector as
a role model for the Peruvian case. Retrieved from
https://www.academia.edu/1970613/Competitiveness_analysis_of_the_C
hilean_wine_sector_as_a_role_model_for_the_Peruvian_case?
auto=download
 Gilbert, S. (2018). Mexico's exciting new wine trail: Valle de Guadalupe.
Retrieved from https://www.theguardian.com/travel/2014/jan/31/mexico-
wine-trail-valle-de-guadaloupe-baja-california
 Sánchez Zepeda, L., & Mungaray Lagarda, A. (2018). Vino de calidad:
Base de desarrollo endógeno en el Valle de Guadalupe, Baja California.
Retrieved from http://www.scielo.org.mx/scielo.php?
script=sci_arttext&pid=S0187-73722010000200004

Objective: To draw industry improvements from well-established clusters in other countries,

in order to become more competitive in the own region.
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Procedure:
1. Review Rafael Miranda’s paper “Competitiveness analysis of the Chilean wine
sector as a role model for the Peruvian case”. Focus on section IV, page 57. Take
note of the variables listed.
2. Read Katy McLaughlin’s article “Vino Mexico!” in The Wall Street Journal. Analyze
how the variables from the paper about Peru apply to the Mexican wine industry.
3. Read Sarah Gilbert’s article "Mexico's exciting new wine trail: Valle de
Guadalupe" in The Guardian. What should Mexico do to take its wine industry to the
next level based on the Peruvian experience?
4. Write an essay (800 words long) where you:
 Analyze the factors from Peru’s case that can be applied to the Mexican
industry.
 Propose a strategy (with numerical analysis) to add value to the Mexican
wine industry
 Use and cite information from the three sources listed.

Results:
1. Review Rafael Miranda’s paper “Competitiveness analysis of the Chilean wine
sector as a role model for the Peruvian case”. Focus on section IV, page 57. Take
note of the variables listed.
2. Read Katy McLaughlin’s article “Vino Mexico!” in The Wall Street Journal. Analyze
how the variables from the paper about Peru apply to the Mexican wine industry.
3. Read Sarah Gilbert’s article "Mexico's exciting new wine trail: Valle de
Guadalupe" in The Guardian. What should Mexico do to take its wine industry to the
next level based on the Peruvian experience?
4. Write an essay (800 words long) where you:
 Analyze the factors from Peru’s case that can be applied to the Mexican
industry.
 Propose a strategy (with numerical analysis) to add value to the Mexican
wine industry
 Use and cite information from the three sources listed.

The potential of Mexico in Valle de Gudalupe

Mexico as a country itself has seen in overall a big expand on its markets getting used
to often get deals with foreign companies to have industries settled up around the
country. A big part of these deals it’s possible through the Foreign Investment the
country is having and the Agreements the country also has with other countries.

One special case is the case of Valle de Guadalupe where around 90% of wines are
produced from all over Mexico. Its zone includes 10,000 hectares of cultivation, with an
approximate of 72 wineries in its different valleys.

If we compare the growth of the investment of Valle de Guadalupe has gotten through
past years we could see production is similar to the wine of Chile which has a massive
production and it’s exported to Europe and other parts of the world.

Foreign Investment had a lot of impact in Chilean economy specifically on its wine. As
the investments came on an early stage of the industry it helped the country develop a
quick strong industry with the help of innovation and the latest technology of this sector.

Another important thing to say about the Chilean example is that their opening in
market to goods and service through several Agreements with more than 10 countries
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involved in the different Trade Agreements they have. And through this we have the
overall logistic performance of Chile in which they encourage the export level,
completed by several support policies such as the improvement of logistics like roads,
ports, trains, etc. This will eventually reduce the cost of exports getting them into a
more competitive and efficient level of service. Within this level of service comes the
quality of the exporting, in which Chile has the rank 39 in the Logistics Performance
Index.

Chilean government on itself also has marketing for its wine products as it’s healthier
than any other alcoholic beverage. This promoting makes the internal market be part of
their success through the years, as even the same Chileans consume their national
products.

Taking this in context in essential to see how Valle de Guadalupe can get involved into
this kind of global marketing if things are done right. An essential feature of the
Mexican wine market is the high propensity to import However, despite the high
percentage of imported wine in national consumption the growth of domestic wine
production in the period considered and that of exports illustrate the expansion of the
domestic market and from Baja California.

The consumption of wine in Mexico is very low. In 2000-2003 it stood at 265,000

hectoliters a year, with a minority market share for Mexican winemakers of 35 percent.
These two thirds of foreign origin are mainly from Spain, Chile and France. The low per
capita consumption is explained by the preference of other beverages and, above all,
by the deep-rooted habit among the population of accompanying the meals with
carbonated soft drinks instead of wine.

In Mexico, the wine culture is scarce. Popularly wine is classified as a luxury product,
perhaps because its main consumers belong to segments of the population with
medium-high income and with a higher level of schooling.

To counteract the competitiveness problems, the winemakers of Baja California have

bet since the late 1980s to modernize their plantations and facilities and innovation of
production processes towards the production of quality wines to increase the presence
in the national market and foreigners.

The Mexican wine market is characterized by intense competition. Mexico imports wine
from most of the major producing countries, which is a disadvantage for Mexican
winemakers who do not receive any type of subsidies or government tariff protection.
The preference of the consumer for imported wines due to its lower cost reduces the
domestic market of Mexican wine, leaving as the only alternative the search for
external markets and high income through quality.

The business, socioeconomic, technological and cultural conditions of the Valle de

Guadalupe are favorable for the current winemakers and wine entrepreneurs deepen
their productive and administrative organization as a group. This will allow them a
greater influence in their economies as a whole, being able to lead a new development
process based on a better use of their resources; it would also enable them to integrate
increasingly with other activities in a framework of economic and environmental
sustainability.

The companies that work in the Valley are 77% small and medium companies and
have an annual production of less than 50,000 thousand boxes of wine and generate
an estimated 1,500 temporary jobs in the harvest season, or harvest. The remaining
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23% are large companies, with a total of 1,000 workers or more during the period of the
pinch, and with an annual production of more than 50,000 cases of wine.

In the national market 12.7 million bottles are sold, while in the international market 780
thousand. This generates an economic income of 42 million dollars and provides 11
million dollars in direct taxes. It should be noted that the wine producing houses in the
region have received more than 300 international awards. However, based on the
Chilean growth there are a couple of things that Valle de Guadalupe could implement
to make its expansion into another level of competiveness. Like the conciliation of the
economic performance and the friendly business environment that is currently within
the region. The encouragement of participation of foreign firms in the wine industry
shall be very important for the region and it shall help to develop even more efficient
levels of production.