The Effect of Terroir on Wine Business Model in Burgundy: To Make Wine or to Sell Harvest?

Abstract

The paper explores the strategies of the wine stakeholders with respect to outsourcing versus integration of the wine-making process by analyzing original and recent data issued from the companies producing wine in Burgundy. Our research question is: Does terroir matter for wine business model between staying viticulturist or becoming winemaker? We investigate this question within the mosaic of the Burgundian vineyard. A Principal Components Analysis highlights the latent variables explaining the different strategies of stakeholders in Burgundy, and a cluster analysis tries at identifying the differences existing between the winegrowers, with a special focus on the viticulturists and the winemakers. The results show that the strategies of the Burgundian wine stakeholders with respect to outsourcing vs. integration differ according to the level of Appellation d’Origine. Consequently the terroir operates as discriminant factor between outsourcing whether integrating some, if not all, of the stages of the wine-making process, including sales. Each sub-region of the Burgundian vineyard has a specific business model strongly related to the territory nesting the wine estates.