Creative highways: cultural imperatives and financial returns in the wine industry
by David Aylward
International Journal of Sustainable Strategic Management (IJSSM), Vol. 2, No. 4, 2010

Abstract: For the past four to five years, the global wine industry has been experiencing severe dislocation between supply and demand at the lower to middle price-points. Wine industries have offered various justifications and excuses about why this is happening while at the same time struggling to implement viable recovery strategies. The overarching problems, however, remain an oversupply of wines with no differentiated characteristics, and consumers who have tired of these formulaic styles. Through empirical data, this paper explores the connection between production styles, philosophical approach, and financial return. It argues that commodity style, high volume wine is locked into a cycle of lower prices per unit and unsustainable profit margins, and that a fundamental change in thinking is required if this cycle is to be broken. Using data from iconic wine producers in Australia and France, the paper outlines explicit and implicit practices that not only protect the cultural asset value of wine, but endorse the comparative economic advantage of artisan production strategies. It concludes with a conceptual template of attitudes and behaviours that are most intimately linked to comparative advantage in both reputation and financial return.

Online publication date: Tue, 22-Mar-2011

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