Exploring Blue Ocean Innovation in the Wine Industry

Abstract

The wine industry is intensely competitive and characterized by significant churn rates as businesses struggle to remain commercially viable. These adverse market forces typically denote a “red ocean”, a situation where competing producers are required to trade on price, and bottom-line profits are increasingly whittled away in the competitive battle to survive (see Kim and Mauborgne 2005). Given this scenario, this chapter explores the justification for market innovation, and presents a slate of so-called “blue ocean” innovations recently observed in the wine industries of New Zealand and South Africa. Each innovation is positioned within a particular innovation “pathway”, including, for example, the search for alternative industries, buyer groups, synchronous products and services, and emerging trends. Showcased from New Zealand is the development of an innovative wine buyers’ club, and the sale of varietal-specific grape juice. Included from South Africa is the development of a unique coffee flavoured pinotage, a rooibos tea flavoured merlot, the use of clay pots as a replacement of oak barrels, and the production of wine flavoured ice-lollies. The chapter concludes by proposing a typology of wine innovation, positioning the cited innovations across a continuum that spans commodities, brands, services and experiences.