1. How did the French become the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop to support their exports? Where were they vulnerable? Historically, wine grew to be very important for the French culturally as well as economically, becoming a staple item on every French table. As a result, by the mid-18th century, wine became France’s second largest export and 1.5 million grower families were making their living off of its production. This tradition of enjoying wine regularly made the demand for wine extremely strong in France (almost 120 litres per capita before 1960), which was one of the most important factors in developing the French wine industry and eventually exporting and competing globally. The French, along with other traditional wine producing countries, were the first to start exporting wine globally, putting them in a comfortable and established position as opposed to New World producers, thus giving perception of higher quality and expertise to French wine. As the wine industry prospered in France, it gained importance politically, which lead to rules and rankings of wine set out by the government. This helped the consumers navigate through the complex French wine market, which was favourable to sales. In addition, this strong political involvement in the agricultural sector would also later provide subsidies for French wine producers, allowing them to export wine at a lower price and keeping them competitive. The French, with a long history of wine making, were able to develop an expertise in this industry, which was renowned worldwide. The strong domestic demand (until the 1960s) developed the French industry to the point that it was the most important competitor in the global market. One aspect of the French wine industry that could act as a competitive advantage as well as a weakness is the fragmentation and diversification of the French wine producers.