[LUM#14] Bottling France

[LUM Magazine] - Published on April 21, 2021 in Science and Society

Can a small company succeed in the export market? To answer this question, Carole Maurel* and Foued Cheriet**, two management researchers, examined the case of ten French wine producers. 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*.

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Whether it’s light white wines, vintage reds, or organic rosés, wine remains France’s best ambassador abroad. As the second-largest export category after the aerospace industry and ahead of perfumes, one in ten bottles on the international market bears the “Made in France” label. “In today’s wine industry, there’s no longer a choice—we have to export,” explains Carole Maurel, an international finance specialist, “and competition on the global market has intensified. The playing field has changed, 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 winemaking, 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 group of SMEs is responding to exports, Carole Maurel and Foued Cheriet surveyed ten wine-producing SMEs with very diverse profiles.

First observation: all of them 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, it is measured against a specific numerical target.” Failure, too, is 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’s an opportunity—such as a meeting at a trade show or a visit to a vineyard that goes well—that prompts the SME to venture into exporting, rather than a truly planned development strategy,” the researcher continues. The survey thus identified three strategic profiles—which are not mutually exclusive—among 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 intermediaries it works with regularly. The second will be based on communication. “It will use its size as an asset by highlighting the image of a small producer in southern France, closely connected to the terroir, and its local roots,” explains Foued Cheriet. “Consumers are very receptive to the story of the winemaker and their business, and this angle isn’t played up enough in export markets.” The final strategy focuses on human resources: hiring staff dedicated to internationalization projects or utilizing support organizations. “This is less common and less well-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 is still 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, insufficient 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 when it comes to marketing and sales follow-up.

Nevertheless, the results achieved demonstrate the potential that remains to be tapped, insists Carole Maurel: “Size is a resource, and French producers can still make significant progress in telling stories specific to their businesses and to 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 as to how the wine industry will be able to adapt to the storms on the horizon. “Between Brexit, the Trump tariff, and COVID, it’s a real fireworks display,” the two researchers lament. Enough to turn the wine market… sour.

[LUM#14] Bottling France

Failure and Success

Three Strategic Profiles

An asset or a liability?

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