Original Research Article
The competitive landscape in transitioning countries: the example of the Armenian wine industry
Linda Bitsch
Published 2022-01-20
Keywords
- competition intensity,
- industry structure,
- policy implications,
- rural development,
- Armenia
- wine ...More
How to Cite
Bitsch, L., Richter, B., & Hanf, J. H. (2022). The competitive landscape in transitioning countries: the example of the Armenian wine industry. Wine Economics and Policy, 11(1), 31–45. https://doi.org/10.36253/wep-10657
Abstract
Scholars showed that in transition and developing countries originating from the Soviet period, the degree of market competition is rather low, as large corporates that had been operating were still prevailing. One can assume that the markets had been highly attractive and many newcomers must have been interested in entering the market, due to fewer market participants, i.e. processors and retailers, but numerous farmers are engaged in the commodity production. This had provoked relatively high profitability for downstream firms acting on the local market and likely increased the market competition. However, evidence exists that market structures and hence competition is still hampered. Therefore, this study aims to show how competition in markets of transition countries has developed and provide a detailed description of the market structure to derive the degree of competition. As the subject of research, the Armenian wine industry has been exemplarily chosen as its wine industry is emerging and represents a key sector in the Armenian agri-food industry. Similar cases exist in other transitioning and developing countries. Empirical results from the qualitative research that allows a comprehensive overview of the whole sector reveal that the competition intensity is relatively low, and wine producers act in an oligopolistic market surrounding. Based on this, implications for producers and policy makers are derived, which include competitive and rural policy implications.
References
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Comtrade (2020). Online database. Retrieved from https://comtrade.un.org/data
Cook, P. (2004). Competition policy, market power and collusion in developing countries: chapter 2. In P. Cook, C. Kirkpatrick, M. Minogue, & D. Parker (Eds.), Leading Issues in Competition, Regulation and Development. Edward Elgar Publishing.
Dutz, M. A., & Vagliasindi, M. (2000). Competition policy implementation in transition economies: An empirical assessment. European Economic Review, 44(4-6), 762–772. https://doi.org/10.1016/S0014-2921(99)00060-4
Faria, C., & Vanneron, L. (2016). The Wine Sector in Armenia: A study of the industry's competitiveness and recommendations for investments and policy instruments for export promotion PART I. ADB - TA 9045 ARM: Industrial Policy Wine Sector Evaluation, Investment Requirements, and export strategy policy instruments.
Friesenbichler, K. S., Böheim, M., & Laster, D. C. (2014). Market Competition in Transition Economies: A Literature Review. SSRN Electronic Journal. Advance online publication. https://doi.org/10.2139/ssrn.2490427
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Gläser, J., & Laudel, G. (2010). Experteninterviews und qualitative Inhaltsanalyse als Instrumente rekonstruierender Untersuchungen (4. Aufl.). Lehrbuch. Wiesbaden: VS-Verl.
Gramzow, A., Batt, P. J., Afari-Sefa, V., Petrick, M., & Roothaert, R. (2018). Linking smallholder vegetable producers to markets - A comparison of a vegetable producer group and a contract-farming arrangement in the Lushoto District of Tanzania. Journal of Rural Studies, 63, 168–179. https://doi.org/10.1016/J.JRURSTUD.2018.07.011
Hanf, J. H. (2015). Outline of the Azerbaijani wine business: paper presented at the 9th Annual Conference of the American Association of Wine Economists (AAWE), Mendoza.
Hanf, J. H. (2016). Vertical integration in the Azerbaijani wine business. Journal of Applied Management and Investments, 5(2), 92–99.
Hanf, J. H., Atoyan, S., Bitsch, L., & Gagalyuk, T. (2019). Supply chain networks in the Armenian agribusiness: Setting a benchmark. ECONOMIA AGRO-ALIMENTARE. (2), 359–378. https://doi.org/10.3280/ECAG2019-002010
Hanf, J. H., Marquardt, V., Urutyan, V., & Babayan, A. (2016). The impact of foreign direct investment on the agribusiness of transition countries: the example of the Armenian wine business. International Journal of Business and Globalisation, 16(4), 423–447. Retrieved from https://www.researchgate.net/profile/Vardan_Urutyan/publication/304942629_The_impact_of_foreign_direct_investment_on_the_agribusiness_of_transition_countries_The_example_of_the_Armenian_wine_business/links/58a6982eaca27206d9a7a4e9/The-impact-of-foreign-direct-investment-on-the-agribusiness-of-transition-countries-The-example-of-the-Armenian-wine-business.pdf
Harutjunjan, A., Ghvanidze, S., Bitsch, L., & Hanf, J. H. (2019). Analyse des Konsumverhaltens auf dem armenischen Weinmarkt. In M. Stoll & H.-R. Schultz (Eds.), Deutsches Weinbaujahrbuch 2020 (pp. 58–64). Stuttgart: Verlag Eugen Ulmer.
Harutjunjan, A., & Loseby, M. (2011). The Prospects For Wine Tourism As A Tool For Rural Development In Armenia–The Case Of Vayots Dzor Marz1. Economics of Agriculture. (58(297-2016-3894)), 661–679. https://doi.org/10.22004/AG.ECON.245091
Hugger, A. E. (2018). Consumption in Armenia - An Analysis of the Wine Demand: Bachelor-Thesis. Retrieved from http://icare.am/wp-content/uploads/2019/10/Bachelor-Thesis-Anne-Elisabeth-Hugger-Consumption-in-Armenia-%E2%80%93-An-Analysis-of-the-Wine-Demand.pdf
ICARE (2014). Baseline Study of the Armenian Wine Sector. Yerevan, Armenia.
Jernigan, D. H. (2009). The global alcohol industry: An overview. Addiction (Abingdon, England), 104 Suppl 1, 6–12. https://doi.org/10.1111/j.1360-0443.2008.02430.x.
Ji-Hyeon, C., Jang, H., & Byung-Joon, W. (2007). Agro-industry cluster development in five transition economies. Journal of Rural Development, 29(6), 85–119. Retrieved from http://repository.krei.re.kr/bitstream/2018.oak/18655/1/Agro-industry%20cluster%20development%20in%20five%20transition%20economies.pdf
Johnson, H., & Robinson, J. (2013). The world atlas of wine (7th edition). London: Mitchell Beazley.
Khachatryan, N., & Oppen, M. von (1999). Assessing the market potential of brandy produced in Armenia. Deutscher Tropentag. Participatory Knowledge and Technology Development, Berlin.
Lerman, Z., Csaki, C., & Feder, G. (2004). Evolving farm structures and land use patterns in former socialist countries. (Discussion Paper No. 888-2019-2139).
Macours, K., & Swinnen, J. F.M. (2008). Rural–Urban Poverty Differences in Transition Countries. World Development, 36(11), 2170–2187. https://doi.org/10.1016/j.worlddev.2007.11.003
Mankiw, N. G., & Taylor, M. P. (2006). Economics. London: Thomson.
Marquardt, V., & Hanf, J. H. (2012). Assessment of foreign influence on the Armenian wine business: Review of the Vineyard Data Quantification Society and the European Association of Wine Economists. Enometrica, 5(1), 27–44.
März, U., & Bitarishvili, I. (2017). The Qvevri Wine Identity - Practice of the Qvevri Wine Cluster members. Tblisi, Georgia.
MFA (2020). Armenia: A Land of Century-Long and Rich History: Restoration of Armenian Independence: Third Republic of 1991. Retrieved from https://www.mfa.am/en/history/
National Statistical Service of the Republic of Armenia (2016). Statistical Yearbook of Armenia 2016. Retrieved from http://www.armstat.am/en/?nid=586
Odling-Smee, J. (2001, July). The Economic Transition in Armenia. American University of Armenia, Yerevan, Armenia. Retrieved from https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp073101
Orsi, L., Noni, I. de, Corsi, S., & Marchisio, L. V. (2017). The role of collective action in leveraging farmers' performances: Lessons from sesame seed farmers' collaboration in eastern Chad. Journal of Rural Studies, 51, 93–104. https://doi.org/10.1016/j.jrurstud.2017.02.011
Paraušić, V., Cvijanović, J., & Mihailović, B. (2013). Market analysis of clusters in Serbian agribusiness. Economics of Agriculture, 60(4), 713–728. https://doi.org/10.22004/AG.ECON.162028
Paraušić, V., Mihailović, B., & Hamović, V. (2010). Imperfect competition in the primary agricultural commodity market in Serbia. Economic Annals (Ekonomski Anali), 55(184), 113–150. https://doi.org/10.2298/EKA1084113P
Porter, M. E. (2004). Competitive strategy: Techniques for analyzing industries and competitors (1. Free Press export ed.). New York: Free Press.
RA (2020). 2014-2025 Strategic Program of Prospective Development. Retrieved from https://www.gov.am/files/docs/1322.pdf
Scannell, N. J., Newton, J. G., & Ohanian, R. (2002). Viticulture, Wine Production, And Agriculture In Armenia: Economic Sectors In Transition. Journal of Applied Business Research (JABR), 18(4). https://doi.org/10.19030/jabr.v18i4.2125
Urutyan, V. (2017, November). Assessment of Management Systems of Wineries in Armenia. International Wine Conference, Yerevan, Armenia. Retrieved from https://icare.am/wp-content/uploads/2017/11/VWFA_Conference_Urutyan-2.
Urutyan, V., & Yeritsyan, A. (2015). Assessment of training needs of winemakers and management systems of the wineries in Armenia. BIO Web of Conferences, 5, 3005. https://doi.org/10.1051/bioconf/20150503005
Vine and Wine Foundation of Armenia (2018, March). Development of Wine Sector in Armenia. Closing Conference of SEMP Project in Armenia, Yerevan, Armenia.
Vine and Wine Foundation of Armenia (2020). History. Retrieved from http://vwfa.am/history/
WHO (2018). Armenia – Alcohol Consumption and Patterns. Retrieved from https://www.who.int/substance_abuse/publications/global_alcohol_report/profiles/arm.pdf?ua=1
Baghdasaryan, K. (2018, March). Development of Wine Sector in Armenia. Closing Conference of SEMP Project in Armenia, Yerevan, Armenia.
BBC (2019). Did wine cause a full-scale revolution in Armenia? Retrieved from http://www.bbc.com/travel/story/20190129-did-wine-cause-a-full-scale-revolution-in-armenia
Bitsch, L. (2017). A structural analysis of the Armenian Wine Industry: Elaboration of strategies for the domestic market [thesis]. Giessen: Justus-Liebig-Universität / Hochschule Geisenheim University. Yerevan: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Retrieved from http://icare.am/wp-content/uploads/2019/10/Master-Thesis_Linda-Bitsch_Publication-ICARE-1.pdf
Bitsch, L., Ghvanidze, S., & Hanf, J. H. (2018). "Die Wiege des Weinbaus" - weinwirtschaftliche Entwicklung im Kaukasus. In M. Stoll & H.-R. Schultz (Eds.), Deutsches Weinbaujahrbuch 2019 (pp. 144–149). Stuttgart: Verlag Eugen Ulmer.
BKwine (2018). The Wine Cube can help Armenia develop its wine tourism? Retrieved from https://www.bkwine.com/features/more/wine-cube-can-help-armenia-develop-wine-tourism/
Comtrade (2020). Online database. Retrieved from https://comtrade.un.org/data
Cook, P. (2004). Competition policy, market power and collusion in developing countries: chapter 2. In P. Cook, C. Kirkpatrick, M. Minogue, & D. Parker (Eds.), Leading Issues in Competition, Regulation and Development. Edward Elgar Publishing.
Dutz, M. A., & Vagliasindi, M. (2000). Competition policy implementation in transition economies: An empirical assessment. European Economic Review, 44(4-6), 762–772. https://doi.org/10.1016/S0014-2921(99)00060-4
Faria, C., & Vanneron, L. (2016). The Wine Sector in Armenia: A study of the industry's competitiveness and recommendations for investments and policy instruments for export promotion PART I. ADB - TA 9045 ARM: Industrial Policy Wine Sector Evaluation, Investment Requirements, and export strategy policy instruments.
Friesenbichler, K. S., Böheim, M., & Laster, D. C. (2014). Market Competition in Transition Economies: A Literature Review. SSRN Electronic Journal. Advance online publication. https://doi.org/10.2139/ssrn.2490427
Ghvanidze, S., Bitsch, L., Hanf, J. H., & Svanidze, M. (2020). “The Cradle of Wine Civilization”—Current Developments in the Wine Industry of the Caucasus. In L. Badalyan, B. de Cordier, F. Guliyev, D. Lezhava, L. Di Puppo, J. Perović, . . . K. Turmanidze (Eds.), Agriculture and Trade with Russia (pp. 9–15).
Gläser, J., & Laudel, G. (2010). Experteninterviews und qualitative Inhaltsanalyse als Instrumente rekonstruierender Untersuchungen (4. Aufl.). Lehrbuch. Wiesbaden: VS-Verl.
Gramzow, A., Batt, P. J., Afari-Sefa, V., Petrick, M., & Roothaert, R. (2018). Linking smallholder vegetable producers to markets - A comparison of a vegetable producer group and a contract-farming arrangement in the Lushoto District of Tanzania. Journal of Rural Studies, 63, 168–179. https://doi.org/10.1016/J.JRURSTUD.2018.07.011
Hanf, J. H. (2015). Outline of the Azerbaijani wine business: paper presented at the 9th Annual Conference of the American Association of Wine Economists (AAWE), Mendoza.
Hanf, J. H. (2016). Vertical integration in the Azerbaijani wine business. Journal of Applied Management and Investments, 5(2), 92–99.
Hanf, J. H., Atoyan, S., Bitsch, L., & Gagalyuk, T. (2019). Supply chain networks in the Armenian agribusiness: Setting a benchmark. ECONOMIA AGRO-ALIMENTARE. (2), 359–378. https://doi.org/10.3280/ECAG2019-002010
Hanf, J. H., Marquardt, V., Urutyan, V., & Babayan, A. (2016). The impact of foreign direct investment on the agribusiness of transition countries: the example of the Armenian wine business. International Journal of Business and Globalisation, 16(4), 423–447. Retrieved from https://www.researchgate.net/profile/Vardan_Urutyan/publication/304942629_The_impact_of_foreign_direct_investment_on_the_agribusiness_of_transition_countries_The_example_of_the_Armenian_wine_business/links/58a6982eaca27206d9a7a4e9/The-impact-of-foreign-direct-investment-on-the-agribusiness-of-transition-countries-The-example-of-the-Armenian-wine-business.pdf
Harutjunjan, A., Ghvanidze, S., Bitsch, L., & Hanf, J. H. (2019). Analyse des Konsumverhaltens auf dem armenischen Weinmarkt. In M. Stoll & H.-R. Schultz (Eds.), Deutsches Weinbaujahrbuch 2020 (pp. 58–64). Stuttgart: Verlag Eugen Ulmer.
Harutjunjan, A., & Loseby, M. (2011). The Prospects For Wine Tourism As A Tool For Rural Development In Armenia–The Case Of Vayots Dzor Marz1. Economics of Agriculture. (58(297-2016-3894)), 661–679. https://doi.org/10.22004/AG.ECON.245091
Hugger, A. E. (2018). Consumption in Armenia - An Analysis of the Wine Demand: Bachelor-Thesis. Retrieved from http://icare.am/wp-content/uploads/2019/10/Bachelor-Thesis-Anne-Elisabeth-Hugger-Consumption-in-Armenia-%E2%80%93-An-Analysis-of-the-Wine-Demand.pdf
ICARE (2014). Baseline Study of the Armenian Wine Sector. Yerevan, Armenia.
Jernigan, D. H. (2009). The global alcohol industry: An overview. Addiction (Abingdon, England), 104 Suppl 1, 6–12. https://doi.org/10.1111/j.1360-0443.2008.02430.x.
Ji-Hyeon, C., Jang, H., & Byung-Joon, W. (2007). Agro-industry cluster development in five transition economies. Journal of Rural Development, 29(6), 85–119. Retrieved from http://repository.krei.re.kr/bitstream/2018.oak/18655/1/Agro-industry%20cluster%20development%20in%20five%20transition%20economies.pdf
Johnson, H., & Robinson, J. (2013). The world atlas of wine (7th edition). London: Mitchell Beazley.
Khachatryan, N., & Oppen, M. von (1999). Assessing the market potential of brandy produced in Armenia. Deutscher Tropentag. Participatory Knowledge and Technology Development, Berlin.
Lerman, Z., Csaki, C., & Feder, G. (2004). Evolving farm structures and land use patterns in former socialist countries. (Discussion Paper No. 888-2019-2139).
Macours, K., & Swinnen, J. F.M. (2008). Rural–Urban Poverty Differences in Transition Countries. World Development, 36(11), 2170–2187. https://doi.org/10.1016/j.worlddev.2007.11.003
Mankiw, N. G., & Taylor, M. P. (2006). Economics. London: Thomson.
Marquardt, V., & Hanf, J. H. (2012). Assessment of foreign influence on the Armenian wine business: Review of the Vineyard Data Quantification Society and the European Association of Wine Economists. Enometrica, 5(1), 27–44.
März, U., & Bitarishvili, I. (2017). The Qvevri Wine Identity - Practice of the Qvevri Wine Cluster members. Tblisi, Georgia.
MFA (2020). Armenia: A Land of Century-Long and Rich History: Restoration of Armenian Independence: Third Republic of 1991. Retrieved from https://www.mfa.am/en/history/
National Statistical Service of the Republic of Armenia (2016). Statistical Yearbook of Armenia 2016. Retrieved from http://www.armstat.am/en/?nid=586
Odling-Smee, J. (2001, July). The Economic Transition in Armenia. American University of Armenia, Yerevan, Armenia. Retrieved from https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp073101
Orsi, L., Noni, I. de, Corsi, S., & Marchisio, L. V. (2017). The role of collective action in leveraging farmers' performances: Lessons from sesame seed farmers' collaboration in eastern Chad. Journal of Rural Studies, 51, 93–104. https://doi.org/10.1016/j.jrurstud.2017.02.011
Paraušić, V., Cvijanović, J., & Mihailović, B. (2013). Market analysis of clusters in Serbian agribusiness. Economics of Agriculture, 60(4), 713–728. https://doi.org/10.22004/AG.ECON.162028
Paraušić, V., Mihailović, B., & Hamović, V. (2010). Imperfect competition in the primary agricultural commodity market in Serbia. Economic Annals (Ekonomski Anali), 55(184), 113–150. https://doi.org/10.2298/EKA1084113P
Porter, M. E. (2004). Competitive strategy: Techniques for analyzing industries and competitors (1. Free Press export ed.). New York: Free Press.
RA (2020). 2014-2025 Strategic Program of Prospective Development. Retrieved from https://www.gov.am/files/docs/1322.pdf
Scannell, N. J., Newton, J. G., & Ohanian, R. (2002). Viticulture, Wine Production, And Agriculture In Armenia: Economic Sectors In Transition. Journal of Applied Business Research (JABR), 18(4). https://doi.org/10.19030/jabr.v18i4.2125
Urutyan, V. (2017, November). Assessment of Management Systems of Wineries in Armenia. International Wine Conference, Yerevan, Armenia. Retrieved from https://icare.am/wp-content/uploads/2017/11/VWFA_Conference_Urutyan-2.
Urutyan, V., & Yeritsyan, A. (2015). Assessment of training needs of winemakers and management systems of the wineries in Armenia. BIO Web of Conferences, 5, 3005. https://doi.org/10.1051/bioconf/20150503005
Vine and Wine Foundation of Armenia (2018, March). Development of Wine Sector in Armenia. Closing Conference of SEMP Project in Armenia, Yerevan, Armenia.
Vine and Wine Foundation of Armenia (2020). History. Retrieved from http://vwfa.am/history/
WHO (2018). Armenia – Alcohol Consumption and Patterns. Retrieved from https://www.who.int/substance_abuse/publications/global_alcohol_report/profiles/arm.pdf?ua=1