Just Two Words: Plastic Corks; Reinventing an Old World Industry and Breaking The Cork Monopoly
ZEBULON, N.C. WALL STREET JOURNAL - "In a nondescript factory in this small, wooded town, 10 giant machines worked around the clock last year to churn out 1.4 billion plastic corks, enough to circle the earth 1.33 times if laid end-to-end. Unknown to most American wine drinkers, the plant's owner, Nomacorc, 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But over the past 10 years, an estimated 20% of the bottle stopper market has been replaced by a new technology—plastic corks that cost between 2 and 20 cents apiece (see chart above). 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.
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."
MP: Great example of: a) creative destruction, b) how market competition is often the best form of regulating monopolies, c) how even long-standing monopolies and dominant firms are eventually challenged by innovation, competition and young upstarts, d) American ingenuity and entrepreneurship, and e) why U.S. manufacturing is alive and well and entering a new cycle of growth.
HT: Gene Hayward