Abstract
Brothers Lorenzo and Angelo Poncini are part of a family business in the Trentino region of northern Italy. It began as a trucking firm but diversified over the years. One such diversification is grape growing, which began in 1988. The Poncini family sends its grape harvest, currently Pinot Grigio, to a local cooperative, Gruppo Italiano Cantine, which makes and markets the wine. However, the vines the family originally planted – a major proportion of the planting surface – are getting past their prime and the quantity, if not the quality, of the family’s grapes will soon begin to decline. Lorenzo and Angelo disagree about what strategy the family should use to respond to this situation. Lorenzo favors grubbing up the older vines and applying for EU subsidies to replant, perhaps even with a new grape variety, Glera, whose popularity has increased sharply in recent years, like the wine which it is used to make: Prosecco. Grubbing up and replanting would also create an opportunity to mechanize the harvest, which would reduce the cost of hand-picking in the future. Angelo sees things differently. While he recognizes that the vines are getting old he is reluctant to grub up hurriedly and even more so to rush into planting a new grape variety like Glera, whose market staying power is unproven. The Poncini family business recently started using a family council to help it resolve family and business disagreements and, at the recommendation of Carlo, the oldest of the brothers, Lorenzo develops some strategic options to present to the council. The case requires students to adopt the position of an external member of the council and advise the family what it should do. As the Poncinis run a family business, the likely effects of each option on the family are as important as their financial effects.
Highlights
It was December 2015 and two brothers, Carlo and Lorenzo Poncini, sat together at the long dining table of the family’s holiday house in the mountains
“Remember, we have a family council now.”. He was referring to the fact that in the latter part of 2015, and with some difficulty, the Poncini family had begun to formalize its processes for making decisions about family and business matters
“So why don’t you and Angelo use the council to try to get an objective view of your ideas?” Lorenzo sighed and sat down at the dining table, which before the Christmas festivities had been the scene of a rather fiery family council meeting
Summary
The variety of Italian wine is appreciated worldwide, and Italy’s wine-producing regions are among the oldest in the world. To take Prosecco DOC as an example, the acronym DOC refers to the Controlled Designation of Origin (DOC) status of the Prosecco wine style. This means the wine must comply with very strict rules in a specific geographical area which is historically renowned for its Prosecco production. Italian wine production is highly fragmented in terms of both vineyard size and the number of farms, leading to grape growing virtually everywhere in Italy. Twenty-nine percent of the vine area was managed by 69 percent of the farms, which were less than 5 hectares each. Farms larger than 20 hectares were only 7 percent of the total, but managed 33 percent of the national vine area (See Exhibit 3)
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