Our top 5 wine business studies of 2018
How do you make a small fortune? Start with a large fortune and then open a winery. Yes, it’s an old joke, however it’s one that could very well apply to you or someone you know if you’re reading this. The wine business is a tricky one, but also a highly rewarding and interesting one.
Proof of this is the impressive amount of studies that have been done on the economics and consumer behaviour surrounding wine and wine making. Over the years we have dissected many industry specific case studies to try and keep up with the fast pace of changes that we are faced with today.
In this article we have compiled five of our favorite studies of 2018 that we believe could benefit other wine industry professionals.
2018 Silicon Valley Bank Wine Report
While this is more of a report rather than a study we would not dare keep this from you. Written by Rob McMillan, EVP and founder of Silicon Valley Bank’s Wine Division, this is probably the most authoritative annual report that does a great job of giving us a clear picture of current conditions, while providing a unique forecast based on micro- and macroeconomic and behavioral trends.
In the 2018 report, Mr. McMillan says that “successful wineries 10 years from now will be those that adapted to a different consumer with different values – a customer who uses the internet in new and interactive ways, is frugal and has less discretionary income than their generational predecessors.”
This is something that we expanded on in our article “ Why Wineries Need to Expand Their Sales Opportunities”.
The report that takes author Rob McMillan 4 months to make each year, provides the reader with more than enough evidence about the current state of the wine industry and what is influencing existing or emerging trends.
Percentage of growth for wineries in US
Closing with bold, yet data backed forecasts this report is proving to be a go to source for many of our business decisions and a must read for any wine professional.
The full study can be found here
Sonoma School of Business and Economics: Wine Business Case Research Journal
While this one is technically not a study but a journal full of studies, we doubt our readers would mind us sharing this one. At Sonoma School of Business and Economics, several contributors have kept a journal of wine studies.
Their description reads: “Welcome to the Wine Business Case Research Journal. Our mission is to provide exceptional decision-focused case studies involving real people and real events in the global wine business context. We will publish multimedia cases as well as cases in traditional document format. These cases are grounded in field research to illustrate the complex challenges that wine businesses contend with today.”
The WBCRJ is published by the Wine Business Institute at Sonoma State University. The Journal is dedicated to enhancing case research and publishing exceptional teaching cases in an electronic format. A unique feature of this journal is to provide an industry digest of each issue’s cases for dissemination, thereby informing global wine researchers and industry practitioners about cutting-edge challenges and possible exemplary solutions.
Volume I, issued spring 2016, can be found here
Volume II, issued spring 2018, can be found here
Making a connection: tasting rooms and brand loyalty
Branding in the wine industry has been one of our main focus points from a business perspective which is why it should be no surprise to find more that one study on the subject in this top 5 list. This study by Joanna Fountain, Nicola Fish, and Steve Charters the researchers look at the value of the winery tasting room as an avenue for relationship building with consumers and its effects on brand loyalty.
As to its findings, Emeraldinsight states: “Establishing brand loyalty through a winery tasting room experience requires more than just good wine or good service quality, it requires an experience which is personalised and which establishes an emotional connection between the visitor and the winery, their product and winery staff. Generally smaller wineries are making this emotional connection more effectively than larger wineries.
By contrast, staff at small and larger wineries alike were making little effort to establish concrete links to instil brand loyalty with the wine tourist post‐visit by encouraging repeat visitation or promoting their mailing lists or even eliciting wine sales.”
While the study is by no means as thorough as the aforementioned SVB Wine Report, due to the relatively small number of consumers the researchers focused on, it is definitely an interesting read.
The full study can be found here
Globalization And The Emergence Of New Business Models In The Wine Industry
Dating back to 2005 this study is slightly older than the others, but this is where some of its strengths lie. As a reader we are in the unique opportunity to look at these predictions with the information and insights the writer was lacking at the time, and see how they have played out over time.
The abstract from the study by Richard M. Castaldi and his team from San Francisco State Universityreads: “The forces of globalization have dramatically altered the international competitive landscape of the wine industry. This paper identifies and analyzes four new business models that have emerged among major industry competitors as wineries strive to create sustainable sources of competitive advantage.”
Business models according to Castaldi
In the study Mr. Castaldi identified four different business models back in 2005. These models are classified as “Largest Player”, “Lone Ranger”, “Wine Groups”, and “Diversified Conglomerate”. Each business model has attributes that can help create competitive advantages, according to Castaldi.
For example, both the Largest Player and Wine Groups business models use economies of scale in innovation, production and marketing as sources of competitive advantage.
Take some time to revisit the past by reading this interesting study on wine industry business models.
The full study can be found right here
Boozing or branding? Measuring the effects of free wine tastings at wine shops
While at first the catchy title caught our attention, the methodology of this study was interesting enough for us to read through this one. By reading out scanner data from wine clubs after hosting a free wine tasting, researcher Larry Lockshin focused on both the sales effects of free wine tastings and the effects on attitudes towards future purchases four weeks after the tastings.
This is a case study that has been put together well with interesting findings: “Scanner data shows a 400 per cent increase in sales of the wines tasted on the day of tasting, and a small but significant effect on sales during the four weeks afterwards.
Only about 33 per cent of the attendees purchase; the other two‐thirds are boozing.”
All together an entertaining read which can be found here.