Just Accepted Manuscripts
Original Research Article

Competitiveness of wine cooperatives in light of pricing strategies and marketing channels: Evidence from Germany

PDF (Just accepted)
  • Rebecca Hansen,
  • Sebastian Hess
Rebecca Hansen
University of Hohenheim
Sebastian Hess
University of Hohenheim
DOI: https://doi.org/10.36253/wep-16253

Published 2025-03-11

Keywords

  • Hausman-Taylor estimation,
  • Competitiveness of cooperatives,
  • wine cooperatives,
  • quantile regression

How to Cite

Hansen, R., & Hess, S. (2025). Competitiveness of wine cooperatives in light of pricing strategies and marketing channels: Evidence from Germany . Wine Economics and Policy. https://doi.org/10.36253/wep-16253

Copyright (c) 2024 Rebecca Hansen, Sebastian Hess

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

For decades, there has been a debate in the literature about the competitiveness of wine cooperatives, with many studies concluding that they are potentially less competitive in pricing their wines than other forms of enterprises, while others have found the opposite. Using two datasets on German winegrowers’ cooperatives as an example, the competitiveness of cooperatives between 2015 and 2020 was compared in hedonic price analyses. One dataset included evaluations in commercial German wine guides and the other included wines from Germany’s annual public Federal Wine Awards. The Hausman-Taylor panel estimator was applied so as to include the time-invariant “cooperative” dummy. Furthermore, quantile regressions were used to account for possible differences in the price segments. The results point to the heterogeneous characteristics of cooperatives that have led to different marketing strategies and positioning on the German wine market. It can be concluded that the organisational form of cooperatives in the wine sector does not face a general competitive disadvantage compared with other forms of enterprise.

PDF (Just accepted)

References

  1. J.H. Hanf, E. Schweickert, Cooperatives in the balance between retail and member interests: the challenges of the German cooperative sector, Journal of Wine Research 25 (2014) 32–44. https://doi.org/10.1080/09571264.2014.871122.
  2. M. Härle, J.H. Hanf, Wirkung von Einflussstrategien auf das Verhalten von Mitgliedern am Beispiel von Winzergenossenschaften, Mainz, Germany, 2015.
  3. S. Troiano, L. Rizzi, F. Marangon, Social or environmental consciousness? Exploring the consumption of cooperative wines among European citizens, WEP 12 (2023) 69–84. https://doi.org/10.36253/wep-14241.
  4. B. Frick, Does Ownership Matter? Empirical Evidence from the German Wine Industry, Kyklos 57 (2004) 357–386. https://doi.org/10.1111/j.0023-5962.2004.00258.x,
  5. A. Dilger, Prinzipal-Agenten-Probleme im deutschen Weinbau, Zeitschrift für das gesamte Genossenschaftswesen 55 (2005) 179–189. https://doi.org/10.1515/zfgg-2005-0126.
  6. G. Schamel, Can German Wine Cooperatives Compete on Quality?, Mainz, Germany, 2015.
  7. I. Schäufele, R. Herrmann, G. Szolnoki, Erzielen Weine mit höherer Qualität höhere Preise? Eine hedonische Preisanalyse zur DLG-Bundesweinprämierung, German Journal of Agricultural Economics 65 (2016) 132–150. https://doi.org/10.22004/ag.econ.284975.
  8. M. Dressler, Strategic winery reputation management – exploring German wine guides, International Journal of Wine Business Research 28 (2016) 4–21. https://doi.org/10.1108/IJWBR-10-2014-0046.
  9. G.H. Schamel, Structure, organization and a vision: Reasons for the success of wine cooperatives?, Punta del Este, Uruguay, 2019.
  10. M.L. Cook, The Future of U.S. Agricultural Cooperatives: A Neo-Institutional Approach, American Journal of Agricultural Economics 77 (1995) 1153–1159.
  11. P. Fanasch, B. Frick, What Makes Cooperatives Successful? Identifying the Determinants of Their Organizational Performance, Journal of Wine Economics 13 (2018) 282–308. https://doi.org/10.1017/jwe.2018.28.
  12. S. Albæk, C. Schultz, On the relative advantage of cooperatives, Economics Letters 59 (1998) 397–401. https://doi.org/10.1016/S0165-1765(98)00068-8.
  13. D. Pennerstorfer, C.R. Weiss, Product quality in the agri-food chain: do cooperatives offer high-quality wine?, European Review of Agricultural Economics 40 (2012) 143–162. https://doi.org/10.1093/erae/jbs008.
  14. J.H. Hanf, E. Schweickert, Changes in the wine chain - Managerial challenges and threats for German wine co-ops. AAWE Working Papers, 2007.
  15. Deutsches Weininstitut, Wines of Germany: Statistics '22 / '23, Bodenheim, 2022.
  16. G. Szolnoki, D. Hoffmann, Consumer segmentation based on usage of sales channels in the German wine market, International Journal of Wine Business Research 26 (2014) 27–44. https://doi.org/10.1108/IJWBR-10-2012-0028.
  17. M. Minnici, Multidimensionale Erfolgsbewertung fusionierter Winzergenossenschaften in Deutschland. Dissertation, 2019.
  18. V. Valentinov, Why are cooperatives important in agriculture? An organizational economics perspective, Journal of Institutional Economics 3 (2007) 55–69.
  19. P.R. Merel, T.L. Saitone, R.J. Sexton, Cooperatives and Quality-Differentiated Markets: Strengths, Weaknesses, and Modeling Approaches, Journal of Rural Cooperation (2009) 24. https://doi.org/10.22004/ag.econ.163816.
  20. S. Castriota, D. Curzi, M. Delmastro, Tasters’ bias in wine guides’ quality evaluations, Applied Economics Letters 20 (2013) 1174–1177. https://doi.org/10.1080/13504851.2013.797552.
  21. G. Schamel, A. Ros, Indicators of Individual Wine Reputation for Friuli Venezia Giulia, Italian Economic Journal 7 (2021) 323–339. https://doi.org/10.1007/s40797-020-00138-9.
  22. D. Kaimann, Spiess Bru, Clarissa Laura Maria, B. Frick, Ratings meet prices: The dynamic relationship of quality signals, J Wine Econ (2023) 1–19. https://doi.org/10.1017/jwe.2023.14.
  23. D. Marks, Seeking the Veritas about the Vino: fine wine ratings as wine knowledge, Journal of Wine Research 26 (2015) 319–335. https://doi.org/10.1080/09571264.2015.1083953.
  24. S. Landon, C.E. Smith, Quality Expectations, Reputation, and Price, Southern Economic Journal 3 (1998) 628–647. https://doi.org/10.1142/9789813232754_0001.
  25. J. Valette, P. Amadieu, P. Sentis, Cooperatives versus Corporations: Survival in the French Wine Industry, Journal of Wine Economics 13 (2018) 328–354. https://doi.org/10.1017/jwe.2017.1.
  26. C. Krieger, J.H. Hanf, V. Belaya, Markenbildung und -führung bei Winzergenossenschaften: Ergebnisse einer Unternehmensbefragung. Berichte über Landwirtschaft - Zeitschrift für Agrarpolitik und Landwirtschaft, Band 92, Heft 3, Dezember 2014 (2014). https://doi.org/10.12767/buel.v92i3.56.
  27. B. Richter, J. Hanf, Competitive Strategies for Wine Cooperatives in the German Wine Industry, Wine Economics and Policy 9 (2020) 83–98.
  28. G. Schamel, Coordinating for Quality: How Cooperatives can beat Private Wineries on Quality and Reputation, St. Catherines, 2013.
  29. B. Frick, Some Cooperatives Produce Great Wines but the Majority Does Not: Complementary Institutional Mechanisms to Improve the Performance of an Indispensable Organizational Form, J Wine Econ 12 (2017) 386–394. https://doi.org/10.1017/jwe.2017.33.
  30. R. Soboh, A. Oude Lansink, G. van Dijk, Efficiency of Cooperatives and Investor Owned Firms Revisited, Journal of Agricultural Economics 63 (2012) 142–157. https://doi.org/10.1111/j.1477-9552.2011.00324.x.
  31. J. Höhler, R. Kühl, Dimensions of member heterogeneity in cooperatives and their impact on organization - a literature review, Annals of Public and Cooperative Economics 89 (2018) 697–712. https://doi.org/10.1111/apce.12177,
  32. M. Costanigro, J.J. McCluskey, Hedonic price analysis in food markets, in: J.L. Lusk, J. Roosen, J.F. Shogren (Eds.), The Oxford Handbook of the economics of food consumption and policy, Oxford University Press, Oxford, 2011, pp. 152–180.
  33. S. Lecocq, M. Visser, What Determines Wine Prices: Objective vs. Sensory Characteristics, J Wine Econ 1 (2006) 42–56. https://doi.org/10.1017/S1931436100000080.
  34. F. Livat, N.G. Vaillant, Expert opinion and brand reputation: an analysis from a French Cuban cigars guidebook, Applied Economics Letters 13 (2006) 97–100. https://doi.org/10.1080/13504850500390564.
  35. E. Oczkowski, Hedonic Wine Price Functions and Measurement Error, Economic Record 77 (2001) 374–382. https://doi.org/10.1111/1475-4932.00030.
  36. M. Algner, A. Fritsch, R. Reichel, Winzergenossenschaften im Wettbewerb, Zeitschrift für das gesamte Genossenschaftswesen 57 (2007) 167–177. https://doi.org/10.1515/zfgg-2007-0302.
  37. Gault&Millau, Gault&Millau Weinguide Deutschland 2020, ZS Verlag, 2019.
  38. G. Eichelmann, Eichelmann 2020 Deutschlands Weine, MONDO Heidelberg, Heidelberg, Neckar, 2019.
  39. FWA, Bundesweinprämierung, 2024. https://www.dlg-bwp.de/de/.
  40. S. Rosen, Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition, Journal of Political Economy 82 (1974) 34–55. https://doi.org/10.1086/260169.
  41. J.M. Wooldridge, Econometric analysis of cross section and panel data, Second edition, MIT Press, Cambridge, Massachusetts, London, England, 2010.
  42. J.A. Hausman, Specification Tests in Econometrics, Econometrica 46 (1978) 1251–1271. https://doi.org/10.2307/1913827.
  43. J.A. Hausman, W.E. Taylor, Panel Data and Unobservable Individual Effects, Econometrica 49 (1981) 1377. https://doi.org/10.2307/1911406.
  44. B.H. Baltagi, Essays in Honor of Jerry Hausman, Emerald Publishing Limited, Bingley, 2012.
  45. C. Cornwell, P. Schmidt, D. Wyhowski, Simultaneous equations and panel data, Journal of Econometrics 51 (1992) 151–181. https://doi.org/10.1016/0304-4076(92)90033-N.
  46. B.H. Baltagi, Econometric Analysis of Panel Data, sixth ed., Springer, Cham, 2021.
  47. B.H. Baltagi, G. Bresson, A. Pirotte, Fixed effects, random effects or Hausman–Taylor?: A pretest estimator, Economics Letters 79 (2003) 361–369. https://doi.org/10.1016/S0165-1765(03)00007-7.
  48. B.H. Baltagi, Simultaneous equations with error components, Journal of Econometrics 17 (1981) 189–200. https://doi.org/10.1016/0304-4076(81)90026-9.
  49. R Core Team, R: A Language and Environment for Statistical Computing, Vienna, Austria, 2021. https://www.R-project.org/.
  50. R. Koenker, G. Bassett, Regression Quantiles, Econometrica 46 (1978) 33–50.
  51. R. Koenker, J.A.F. Machado, Goodness of Fit and Related Inference Processes for Quantile Regression, Journal of the American Statistical Association 94 (1999) 1296–1310. https://doi.org/10.1080/01621459.1999.10473882.
  52. J. Rebelo, L. Lourenço-Gomes, T. Gonçalves, J. Caldas, A hedonic price analysis for the Portuguese wine market: Does the distribution channel matter?, Journal of Applied Economics 22 (2019) 40–59. https://doi.org/10.1080/15140326.2018.1550596.
  53. Das Deutsche Weinmagazin, Weinmarkt im Plus, 2021.
  54. H. White, A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity, Econometrica 48 (1980) 817–838.
  55. V. Chernozhukov, C. Hansen, The Effects of 401(K) Participation on the Wealth Distribution: An Instrumental Quantile Regression Analysis, Review of Economics and Statistics 86 (2004) 735–751. https://doi.org/10.1162/0034653041811734.
  56. R. Del Rey, S. Loose, State of the International Wine Market in 2022: New market trends for wines require new strategies, WEP 12 (2023) 3–18. https://doi.org/10.36253/wep-14758.