Adeline Alonso Ugaglia, Jean-Marie Cardebat, Alessandro Corsi, Adeline Alonso Ugaglia, Jean-Marie Cardebat, Alessandro Corsi
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The Palgrave Handbook of Wine Industry Economics
Adeline Alonso Ugaglia, Jean-Marie Cardebat, Alessandro Corsi, Adeline Alonso Ugaglia, Jean-Marie Cardebat, Alessandro Corsi
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About This Book
This Palgrave Handbook offers the first international comparative study into the efficiency of the industrial organization of the global wine industry. Looking at several important vineyards of the main wine countries, the contributors analyze differences in implementation and articulation of three key stages: grape production, wine making and distribution (marketing, selling and logistics). By examining regulations, organization theory, industry organizational efficiency and vertical integration, up to date strategies in the sector are presented and appraised. Which models are most efficient? What are the most relevant factors for optimal performance? How do reputation and governance impact the industry? Should different models co-exist within the wine countries for global success?
This comprehensive volume is essential reading for students, researchers and professionals in the wine industry.
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Adeline Alonso Ugaglia, Jean-Marie Cardebat and Alessandro Corsi (eds.)The Palgrave Handbook of Wine Industry Economicshttps://doi.org/10.1007/978-3-319-98633-3_1
Begin Abstract
1. Introduction
Adeline Alonso Ugaglia1, Jean-Marie Cardebat2, 3 and Alessandro Corsi4
(1)
Bordeaux Sciences Agro, University of Bordeaux, Gradignan, France
The Palgrave Handbook of Wine Industry Economics examines varying models of wine industry in different countries and their relevance. The wine industry can be seen as a microcosm of globalization nowadays. It faces the same evolution as other industries in the 1990s: emergence of New producing and consuming countries and rising competition. Over the last 15 years, the international wine market has changed. New competitors appeared on the international scene and joined the top wine producers and exporters. The relatively new hierarchy of wine-producing countries could remain similar for the ten next years, but a process of convergence seems to be under way.
1.1 A Global Panorama of Trade Flows from Leading to Emerging Countries
In recent years, growth in world trade has accelerated and competition has increased. The financial and economiccrisis had a deep impact on the world wine industry, both in the producing countries and in the consumermarkets. The wine market has to face a globalization process like all the other sectors, following the same phases. Initially concentrated in a small number of countries, the wine trade has opened up to the world, bringing in new competitors. In the process of globalization, it is not only the goods that are traded but also the factors of production. The internationalization of the market therefore also affects direct investment abroad and labor.
But if the globalization of the sector is today very advanced, we can wonder how it will evolve and what the consequences for the wine industries are worldwide. What forms could the future panorama of world trade take? Several scenarios have to be considered.
Globalization comes with phases of emergence of new countries beginning to participate in the exchanges. The wine sector is no exception to this dynamic. After the growth of wine trade within a club limited to a few developed countries, a second phase of emergence has seen the New World countries take over. The leaders of the Old World are competing with the outsiders of this New World, mainly in terms of price competitiveness. A third phase of emergence is at work. It mainly concerns China, whose vineyard is one of the largest in the world. The question is to identify when its exports will compete with those from other producing countries.
1.1.1 First Phase: Trade Growth Between the Developed Countries
Since the 1990s, two remarkable facts have to be noticed concerning the international wine trade. First, the strong growth in trade, since global wine exports have globally doubled between 1995 and 2015. Growth is even more pronounced in value than in volume (see Fig. 1.1), reflecting a rise in the average quality of wine exchanged on the market. This increase in trade highlights the globalization of the sector. We can note that global trade has been growing rapidly and steadily since the mid-1950s and faced a significant decline in 2009 for the first time since the beginning of the decade followed by a rebound in the following years.
Fig. 1.1
The growth of world wine exports 1995–2017 (volumes in thousands of hL). (Source: OIV stats, http://www.oiv.int/fr/bases-de-donnees-et-statistiques)
Second, the high concentration of trade among six countries is the other feature of wine trade (see Table 1.1). The three largest exporters are traditionally Spain, Italy, and France. In 1995, they accounted for 80% of total exports in volume, just over 66% in 2017. These exports are largely directed to three major consumer countries: the United States, the United Kingdom, and Germany. These countries concentrated 80% of imports in volume in 1995, about 54% in 2017. The international wine trade thus remains very concentrated despite a trend decrease of this degree of concentration.
Table 1.1
The top ten wine importers and exporters in 2017
Importers
Exporters
Country
Volume
Value
Euro/liter
Country
Volume
Value
Euro/liter
Germany
15.2
2469
1.62
Spain
22.1
2814
1.27
United Kingdom
13.2
3452
2.62
Italy
21.4
5873
2.74
United States
11.8
5190
4.40
France
15.4
8989
5.84
France
7.6
812
1.07
Chile
9.8
1741
1.78
China
7.5
2458
3.28
Australia
8
1727
2.16
Russia
4.5
878
1.95
South Africa
4.5
583
1.3
Netherlands
4.4
1139
2.59
Germany
3.8
926
2.44
Canada
4.1
1653
4.03
United States
3.3
1280
3.88
Belgium
3.1
897
2.89
Portugal
3
752
2.51
Japan
2.6
1388
5.34
New Zealand
2.5
1054
4.22
Note: Volumes are in million hectoliters and values in million Euros
Source: OIV stats, http://www.oiv.int/fr/bases-de-donnees-et-statistiques
The disparities in value and volume reflect the positions of the competitors in the wine market. Table 1.1 shows that Spain dominates exports in volume, whereas in value France is in a clear leadership position. These two countries made different strategic choices. Spain has a very aggressive strategy in terms of price on the international market, while France, unable to compete in terms of price, prefers a non-price competitiveness, especially focused on quality, the country, and the region of origin remaining a very important vector of image when a consumer purchases a wine. Italy is halfway between these two competitors in terms of strategic positioning, though it is increasingly moving toward a focus on quality.
The Spanish and French positioning, quite focused on the low or high end, can pose some problems. Of course, a very large diversity of producers exists in all countries, in Spain and France in particular, occupying all segments of the range. It is therefore advisable to remain cautious with the generalizations. Nevertheless, in Spain, the trap would be to devalue the image of the products with prices too low and thus prevent somevineyards to be upgraded. The production of bulk wine at a very low price, which is then exported to countries bottling and marketin...
