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Vertical Integration and Financial Performance of French Wine Farms and Co-operatives

  • Adeline Alonso UgagliaEmail author
  • Julien Cadot
Chapter

Abstract

In this chapter, we gather results about vertical-integration strategies of wine farms (and especially co-operative members compared to the others) and wine co-operatives in France to explore wine farms’ performance in relation to their vertical-integration level. We discuss the interest that the wine co-operatives could find in forming commercial unions as the best downstream strategy. The results show that vertical integration for wine-grape producers can be carried out at the farm level or collectively via co-operative membership. In both cases, it seems that operating on the bulk-wine market is not profitable. Indeed, bulk-wine producers display low financial performance, and “traditional” co-operatives seem to be affected by short-termism, by prioritizing the payment to producers over the co-operative’s sustainability. As such, vertical integration appears as an efficient way to create value for wine-grape producers, but it should not stop at the bulk-wine production stage. They should rather bottle the wine. Moreover, vertical integration requires a full consideration of costs and investments necessary to perform well. This implies specific learning and presents wine-grape producers with new challenges, whether they choose to perform vertical integration either alone or within a co-operative.

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Bordeaux Sciences Agro, University of BordeauxGradignanFrance
  2. 2.Institut Supérieur de Gestion (ISG), Paris, France and Department of Agricultural and Applied Economics at Virginia TechBlacksburgUSA

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