Competitive Strategies for Wine Cooperatives in the German Wine Industry

Abstract

The wine industry is significantly affected by globalization and changes in consumption habits and shifts in lifestyle, which lead to changes in the market environment and intensity of competition in the wine markets. Overall, wine cooperatives have a market share of more than 40 % in Europe. In Germany, they account for around one third of the total wine production. The decreasing number of wine cooperatives and their members leads to the assumption that wine cooperatives have difficulties adapting to the different market environment and though, need to select and implement competitive strategies. The aim of this paper is to identify and develop competitive strategies for wine cooperatives in the German wine industry. Therefore, the external forces affecting competitive rivalry in the wine industry are being evaluated for wine cooperatives in Germany. A qualitative approach has been applied including in-depth interviews with managing directors and chairmen of the board (n=15). Data were transcribed verbatim and content analysed. Results showed that the intensity of rivalry among existing competitors is high. Bargaining power of wine cooperatives towards buyers and suppliers strongly depends on their size. However, generally the bargaining power of retailers is high, although this depends on the retail channel (discounters, food retail, specialized retail, specialized wholesale, gastronomy). Five main strategy dimensions emerged: (1) the cost leadership and cost focus strategy, (2) the differentiation and differentiation focus strategy, (3) collaboration among producers, (4) offering additional services, and (5) options for improved membership relations and increased youth involvement.

Competitive parity in chain management – factors that influence the long-term compliance with product and quality criteria along the chain

“…Chain management is necessary to steer the business relationship. The overall wine quality is high and quality standards exist in the sector, thus it is difficult to differentiate via quality attributes (Richter and Hanf, 2020;Richter et al, 2022).…”

The Lower the Better? Discussion on Non-Alcoholic Wine and Its Marketing

“…This rapid development is also made possible by new offers of the service for dealcoholization of wines, which is now possible with small quantities of around 300 L [40], enabling the market entry of small and medium-sized wineries, which play an important role in the small-scale structured German wine market, with over 16,000 producers. Especially given the large number of smaller wineries, the marketing of new products is associated with a high relevance of competitive strategies expressed through the generic strategies of cost leadership and differentiation [41,42]. For small businesses, the differentiation strategy is a fundamental dimension, as competitive advantages cannot be achieved in the form of cost leadership due to their size.…”

Sustainability as “Value of Cooperatives”—Can (Wine) Cooperatives Use Sustainability as a Driver for a Brand Concept?

“…They are not only an opportunity to secure income for small producers, but also provide employment for people from the surrounding area. Small producers are the ones most affected by structural change [31]. Thus, cooperatives are still important for the small and smallest producers in order to be able to survive in this competitive market.…”

“…Cooperatives have to decide whether to apply the cost leadership, differentiation or niche strategy. For wine cooperatives, it is difficult to achieve a competitive advantage by applying the cost leadership strategy as wineries produce low-cost wines of German and international origin [31]. Wine cooperatives can fulfil the purpose of promoting member businesses by successfully implementing a differentiation strategy.…”