ABSTRACT
According to the neo-classical paradigm, prices in a purely competitive milieu are shaped and ultimately determined by what could best be described in a simple equation: price equals processed and unprocessed materials costs, labour costs, overheads, miscellaneous expenditures, plus profit. In such an idealised competitive economy, prices will tend to be pushed down to a level where the profit component approaches zero. With the onset of the global economic recession from the late 1970s, price leadership revealed the symptoms of cracking up in several alcoholic beverage markets. The Franco-Italian wine war exemplifies some of the characteristics of a price war which highlights certain of the conflicting economic forces with their attendant political overtones. Pricing techniques are vital components of the corporate marketing engine. Yet, the full potential of these techniques would never be realised without the close meshing of alcoholic beverage TNCs and the institutions of finance capital.
