Winning business strategies for boutique wineries: the New Zealand experience

Abstract

Although New Zealand's Wine Industry has experienced exponential growth in the last decade, its phenomenal success masks an inherent weakness in its financial robustness. Merely 10% of wineries have sustainable economies of scale, and only 1% produce significant returns. Retaining international competitiveness will necessitate the need for wineries to explore innovative ways to add value and reduce production costs. Size will be the key to sustainability. Surprisingly, in the land which has perfected the cooperative business model, growth has come from mergers and acquisition. This paper reviews the New Zealand wine industry, key drivers of success and examines six generic growth strategies for boutique sized wineries. The authors propose that survival for small producers in the competitive global and domestic environment will come from proactively selecting and implementing a growth strategy. Of those available, cooperation provides significant advantages as producers control the entire value chain.