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

For decades, the literature has engaged in a robust debate regarding the competitiveness of wine cooperatives. Many studies suggest that these cooperatives may exhibit lower pricing competitiveness compared to other enterprise forms, while others have found the opposite. To clarify these conflicting findings, this study employs two datasets focused on German winegrowers' cooperatives to compare their competitiveness across various price segments of the wine market through hedonic price analyses. The first dataset encompasses the premium wine segment, comprising 1,320 observations derived from wine guide data. The second dataset, which includes 18,740 observations, reflects the broader market characterized by lower average wine prices. The results reveal that the heterogeneity in cooperative sizes influences diverse marketing strategies within the German wine market. Especially larger cooperatives operating in the broader market at lower price segments tend to achieve relatively lower prices compared to other enterprise types. However, this competitive disadvantage dissipates within the high-price, high-quality segment, particularly for wines recognized in wine guides. The findings indicate that the organizational structure of cooperatives in the wine sector does not inherently confer a competitive disadvantage relative to other enterprise forms; rather, it is the heterogeneity among cooperatives that explains the variability in competitiveness. Furthermore, the findings suggest that wine prices in the lower price segments are particularly sensitive to signalling of quality attributes. Thus, cooperatives may enhance their competitiveness by emphasizing the quality attributes of their wines to offset any pricing disadvantages.