[LUM#14] Bottling France

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

Can a small business be successful in exporting? To answer this question, Carole Maurel* and Foued Cheriet**, two management researchers, examined the cases of ten French wine SMEs 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 International Management.

Read all articles in this issue

Whether white, vintage red, or organic rosé, wine remains France's best ambassador abroad. The second largest export after aeronautics and ahead of perfumes, one in ten bottles on the international market is labeled "made in France." "In today's wine industry, there is no longer a choice: we have to export," explains Carole Maurel, an international finance specialist, " and competition on the global market has intensified. The cards have been reshuffled, and French exporters can no longer rely on their natural leadership position and France's image."

Failure and success

While France, Italy, and Spain remain the traditional and historic producers of wine, American, Australian, South African, and Chilean wines are flooding the market, and their strategies are not the same as ours, as Foued Cheriet, a specialist in agri-food strategies, points out: "In France, we don't have any powerful brands, and the market is highly fragmented, with many small businesses having to compete with giants in the industry. " French wine is 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: they all have very different perceptions of failure and success. "In most cases, success is defined by maintaining a market presence, achieving satisfactory sales, or entering new markets," explains Foued Cheriet. Sometimes, all it takes is for an intermediary 10,000 kilometers away to like the product, regardless of sales, for it to be considered a success. More rarely, it will be measured against a numerical target." Failure is also perceived in a very subjective way , ranging from definitive exit from a foreign market to simple "dissatisfaction on the part of an intermediary or long-standing customer, which shows the importance of customer relations for these small producers," adds Carole Maurel.

Three strategic profiles

The same heterogeneity can be found in the different strategies implemented by SMEs. Whether carefully planned or intuitive, these strategies also depend on the paths that led to the decision to export. "Very often, it is an opportunity, such as a successful meeting at a trade show or a visit to the estate, that prompts an SME to embark on exporting, rather than a genuine planned development process," continues the researcher. The survey thus revealed three strategic profiles—which are not mutually exclusive—of small wine exporters.

The first profile, known as "partnership-based," will leverage long-standing ties and relationships with customers or intermediaries. The second will be based on communication. "It will leverage its size as an asset by promoting the image of small producers in the south of France, close to the land and with strong local roots," explains Foued Cheriet. "Consumers are very sensitive to the history of the winegrower and their business, and this card is not played enough in exports." The final strategy is based on human resources: recruiting staff dedicated to internationalization projects or using support structures. "This is rarer and less common, and it's a concern for small exporters, who will more often ask their sales representatives to adapt."

Asset or handicap?

So, ultimately, is the small size of French wine exporters an asset or a handicap? "If we look at the literature, small size remains a handicap because exporting involves more risks for small businesses, and lack of preparation is the biggest factor in failure," concludes Foued Cheriet. Difficulties in securing cash flow or financing dedicated staff, poor analysis of target markets, and a lack of product adaptation to the markets concerned mean that the French industry stands out for its passivity in terms of marketing and commercial follow-up.

However, the results obtained demonstrate the potential to be exploited, insists Carole Maurel: "Size is a resource, and French producers can still make significant progress in terms of storytelling specific to their company and to our country's wine-growing tradition, which are real strengths on the international market. This is something that small producers can do more easily than large ones. " It remains to be seen how the wine industry will be able to adapt to the storms ahead. "Between Brexit, Trump's tariffs, and COVID, it's a real fireworks display, " lament the two researchers. Enough to turn the wine market sour.

[LUM#14] Bottling France

Failure and success

Three strategic profiles

Asset or handicap?

See also: