[LUM#14] Bottling France
Can a small business succeed in the export market? To answer this question, Carole Maurel* and Foued Cheriet**, two management researchers, examined the case of ten . Perceptions of failure and success, international trajectories and export strategies: can small size be an asset in the international market? A study published in 2020 in the journal Management International.
Whether it’s light whites, vintage reds, or organic rosés, wine remains France’s best ambassador abroad. As the country’s second-largest export category—behind aerospace and ahead of perfumes—one in ten bottles on the international market bears the “Made in France” label. “In the wine industry today, there’s no choice—we have to export,” explains Carole Maurel, an international finance specialist, “and competition on the global market has intensified. The deck has been reshuffled, and French exporters can no longer rely on their natural leadership position or on France’s image.”
Failure and Success
While France, Italy, and Spain remain the traditional and historic leaders in wine production, American, Australian, South African, and Chilean wines are flooding the market, and their strategies differ from ours, as Foued Cheriet, a specialist in agri-food strategies, points out: “In France, we don’t have powerful brands, and the market is highly fragmented, with many small businesses having to compete against industry giants. ” French wine has been structured around its AOCs, its terroirs, its geography—in short, its small producers. To understand how this large category of SMEs reacts to exports, Carole Maurel and Foued Cheriet surveyed ten wine-producing SMEs with very diverse profiles.
First observation: all companies have very different perceptions of failure and success. “In most cases, success is defined by maintaining a presence in a market, achieving satisfactory sales, or entering new markets,” explains Foued Cheriet. “Sometimes, all it takes is for a distributor 10,000 kilometers away to like the product—regardless of sales—for it to be considered a success. More rarely is it measured against a specific numerical target.” Failure is also perceived in a highly subjective manner , ranging from a permanent exit from a foreign market to simply “dissatisfaction on the part of a distributor or a long-standing customer, which highlights the importance of customer relationships for these small producers,” adds Carole Maurel.
Three strategic profiles
This same diversity is reflected in the various strategies implemented by SMEs. Whether carefully planned or more intuitive, these strategies also depend on the paths that led to the decision to export. “Very often, it is an opportunity—such as a meeting at a trade show or a visit to a vineyard that goes well—that prompts the SME to launch into exporting, rather than a truly planned development strategy,” the researcher continues. The survey thus identified three strategic profiles—which are not mutually exclusive—of small wine exporters.
The first approach, known as the “partnership” model, will leverage the long-standing ties and relationships it has built with clients or trusted intermediaries. The second will focus on communication. “It will use its size as an asset by highlighting the image of a small producer from the south of France, closely connected to the terroir, and its local roots,” explains Foued Cheriet. “Consumers are very responsive to the story of the winemaker and their business, and this card isn’t played enough in the export market.” The final strategy relies on human resources: hiring staff dedicated to internationalization projects or utilizing support structures. “This is rarer and less prepared for, and it’s a concern for small exporters, who will more often ask their sales representatives to adapt.”
An asset or a liability?
So, in the end, is the small size of French wine exporters an asset or a liability? “If we look at the literature, small size remains a liability because exporting involves greater risks for small businesses, and a lack of preparation is the biggest factor in failure,” concludes Foued Cheriet. Whether it’s difficulty in securing working capital or funding dedicated staff, poor analysis of target markets, or a failure to adapt products to the relevant markets, the French wine industry does indeed stand out for a certain passivity in terms of marketing and sales follow-up.
Nevertheless, the results achieved demonstrate the potential that remains to be tapped, insists Carole Maurel: “Scale is a resource, and French producers still have a lot of room to grow when it comes to storytelling specific to their businesses and our country’s winemaking tradition—which are real strengths on the international market. This is something small producers can do more easily than large ones. ” The question remains: how will the wine industry adapt to the storms on the horizon? “Between Brexit, Trump’s tariffs, and COVID, it’s a real fireworks display,” the two researchers lament. Enough to turn the wine market… sour.
UM podcasts are now available on your favorite platform (Spotify, Deezer, Apple Podcasts, Amazon Music, etc.).
*Montpellier Research Management (UM – University of Perpignan Via
Domitia, Montpellier Business School)
**MOISA (Montpellier SupAgro – CIRAD – INRAE – CIHEAM-IAM Montpellier)
Cheriet F., Maurel C., (2020), “Being Small and Succeeding Internationally: A Study of 10 French Wine-Producing Companies
,” Revue Management International, vol. 24, No. 6, pp. 114–126.