Saturday, May 1, 2010

How do you like your wine capped? Cork or plastic?

From WSJ: Show Stopper: How Plastic Popped the Cork Monopoly

A terrific example of "creative destruction" at work, in the wine cork business, of all places.  Creative destruction is a necessary component for innovation and the continued development of new products.  We must be willing to let go of goods that have been rendered less useful (NOT necessarily useless) though technological advancement and/or changes in consumer preferences. Seems as though there is a challenge to a centuries old "tradition"...
""The story of how Nomacorc and other stopper upstarts broke the centuries-old cork monopoly is a lesson in how innovation, timing and hustle combined to exploit an opening in a once airtight market. It shows that any dominant industry can be vulnerable to competition, especially if it grows complacent about its position.""

 It is a market-oriented cleansing process that is not without costs, however, such as the workers in the out-innovated businesses who lose their jobs. Creative destruction also serves to keep the attention of the dominant industry.  They cannot become complacent or a competitor/upstart will chip away at their market dominance. 
""Unknown to most American wine drinkers, the plant's owner, Nomacorc LLC, has quietly revolutionized the 400-year-old wine-cork industry. Since the 1600s, wine has been bottled almost exclusively with natural cork, a porous material that literally grows on trees in Portugal, Spain and other Mediterranean lands. But over the past 10 years, an estimated 20% of the bottle stopper market has been replaced by a new technology—plastic corks that cost between 2 and 20 cents apiece. More than one in 10 full-sized wine bottles sold worldwide now come with a Nomacorc plug, while another 9% or so come from other plastic cork makers. Screw caps took another 11% of the market.  "We infuriated the cork industry," says Marc Noel, Nomacorc's chairman.""
I don't drink wine (or any other alcoholic beverage) so I don't really have an opinion, but I am sure the debate rages among oenophiles (is that the right word?)...But I do love Creative Destruction---gives me warm fuzzies. Such as I would imagine wine would... :)

Related story on the world-wide wine glut..
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