The Sicilian cooperative system of wine production

Abstract

Purpose The purpose of this paper is to verify whether, besides the traditional organisational models mainly implemented by wine-making cooperatives, more modern and hybrid organisational forms can be profitably applied within an increasingly competitive wine market. Design/methodology/approach The study outlined in this paper deployed a mixed method. Specifically, an archived analysis, a survey and a descriptive case study (including visits, interviews and documentary analysis) were the methodological techniques used in this study, which were “in series but integrated” between themselves. In this paper, the landscape of Sicilian wine cooperatives is described by collating and processing different types of statistical sources, which have been integrated by direct surveys undertaken in 2017. Thereafter, the study focussed on a wine cooperative with a specific business model and a strategic edge by analysing its strategic choices and main structural and governance characteristics. Within this case study, a financial ratio analysis, which was based on 2011-2017 financial statements, was conducted to analyse the profitability, financial balance, capital structure and debt relationships of the wine cooperative. Findings The Sicilian wine cooperative system is still predominantly characterised by partial and vertical integration, implemented by cooperatives which elect to sell mainly bulk wine to wine merchants. In such a context, there is scope for other degrees of integration and strategic inter-firm alliances; the latter includes “vertical quasi-integration”. The study demonstrated how the wine cooperative under investigation is overcoming the structural problems of the regional wine sector and why it is retaining such a strategic alliance with one of the most important Italian wine conglomerates. Indeed, it has acquired greater strength and reliability since its collaboration with the aforementioned wine company. Thus, total revenue and the company’s market share of packaged wine have increased. However, there are still margins for improving sales’ profitability. Research limitations/implications This study has territorial limitations but Sicilian wine cooperatives generally play an important role in the regional, Italian and European wine industries. As such, this research should be considered as an exploratory study, deserving further investigation into different strategic choices within the wine cooperative system by performing cross-case comparisons. Results may also be useful in orienting cooperative strategies in Sicily (or further afield) to small-to-medium wine cooperatives, often lacking specific abilities relating to the distribution, marketing and selling of their wine. Public agricultural policies may also be enlightened by these research pathways. Originality/value The authors contend that their study provides hitherto missing information relating to inter-firm strategic alliances, which wine cooperatives might implement to enhance their competitiveness and survive in the long-run.

Prosecco has another story to tell: the coexistence of multiple knowledge networks in the same value chain

“…In this study, by contrast, we find that a value chain exists but that each stage is associated with a distinct network of relationships. Our results reflect an almost entirely contrasting scenario from that presented by Borsellino et al (2020). Therefore, we propose the following: P1.…”

“…The use of the same technologies (only varying in terms of supplier) by all companies guarantees a knowledge base that is largely shared at the technical level (Ferreira et al, 2018). This explains why the technology acquired by larger companies is further passed later to smaller companies (Borsellino et al, 2020). As mentioned previously, there is very little collaboration between bottling companies.…”

“…Barisan et al (2019) analyzed how the strategic incorporation of sustainable practices reinforced competitive advantage and shared value in the Conegliano Valdobbiadene Prosecco Superiore DOCG (Controlled and Guaranteed Denomination of Origin) district. As well as providing an overview of the Italian wine industry, Bandinelli et al (2020) proposed a classification of environmental practices specific to the wine industry, whereas Borsellino et al (2020) studied the profitability of modern and hybrid organizational forms compared to traditional ones in wine-making cooperatives in Sicily, Italy. Naudé and Badenhorst-Weiss (2020) studied the supply chain risks involved in wine production in the Western Cape province of South Africa.…”

“…One of the implications of their study is identifying a need to foster the establishment of networks between small Italian wine companies, which would make possible the access to external to the cluster knowledge sources and the process of building a common knowledge reservoir in the cluster. Borsellino et al (2020) studied wine production in Sicily, Italy, intending to identify which cooperative model could be most profitable in an increasingly competitive market. The authors indicate that the cooperative wine production system in that region of Italy is partially or vertically integrated.…”

Transitioning towards Organic Farming: Perspectives for the Future of the Italian Organic Wine Sector

“…This need is perhaps even stronger for wine, which is to be considered as "a differentiated product with a variety of characteristics that may interact with or cancel out the signal that the eco-label sends" [11]. In addition, the increasingly globalised wine market is facing many changes, to which "the small-scale viticulture sector in many traditional, European producer countries has not yet been able to respond appropriately" [12].…”