International performance benchmarking in winemaking

Abstract

PurposeThe purpose of this paper is to study winemaking efficiency with the help of international performance benchmarking and to finding ways for its improvement.Design/methodology/approachIn this research, three models of data envelopment analysis (DEA) and other tools of international performance benchmarking are used to analyse the efficiency of wine companies. Return to scale (RTS) and scale efficiency, labour and capital productivity and some other indicators are examined. The research is based on a sample of 36 wine companies from 15 countries.FindingsInternational benchmarking expands performance improvement for domestic companies. The most efficient wine companies are originated from Germany, USA and New Zeeland. Scale inefficiency and increasing RTS for most of the wine companies was identified. Only three wine companies have decreasing RTS (those from UK, Australia and France). To increase relative efficiency, these companies need to reduce the output and sales as their costs are growing faster than the revenues. A huge potential for cost reduction and efficiency growth within Ukrainian wine companies was revealed.Research limitations/implicationsThe research is limited to a single industry. This is explained by the requirement of technology (product, service) homogeneity while using DEA tools.Practical implicationsStudy results include the data and recommendations to develop winemaking. These results can be used by wine companies’ management, present and potential investors and proprietors, regulative public authority, e.g. to improve efficiency in winemaking.Originality/valueThis is the first paper that adapts various DEA models to measure efficiency in the wine industry of Ukraine and the tools of international performance benchmarking for wine companies around the world.