People love their wine—weather it’s a dry red paired with a steak dinner or a simple glass of bubbly to toast a friends wedding, it’s a staple of global cuisine. But there’s obviously a business behind the wine industry too.
Cheryl Nakata, professor of marketing and international business and head of managerial studies in the University of Illinois Chicago’s College of Business Administration, knows that better than just about anyone.
When Nakata visited Romania a few summers back, she studied the country’s winemaking industry and made recommendations on how to improve it. Most wine drinkers in America have never tasted Romanian wine and that is because about 90-percent of Romanian wine is consumed domestically. So despite Romania’s ranking as the 12th largest producer of wine in the world very little of it is sold outside its borders.
Accompanied on her research visit by Romanian-American UIC student Otilia Flandro, Nakata interviewed 13 managers and owners of seven wine companies, plus five Romanian wine industry experts, finding that “the largest producers largely ignore the international market because they have a lock on the domestic market.”
With that said, there are some producers want to export their product.
“This is, in part, a desire for legitimacy,” Nakata said. “If you take pride in your work, you want others to recognize it as exceptional, too.”
A big reason why Romanian hasn’t broken into international markets is due to what Nakata calls an “image liability.”
“Romania is part of the European Union, but not a welcome member,” Nakata said. “There’s an east-west divide. Western Europe has economic and cultural dominance. If you’re in Eastern Europe, you feel a step below and a century behind. It makes for an intriguing marketing challenge.”
Another barrier to export is cost.
“Romania can’t make wine of high quality and low production cost,” Nakata said.
“Their vineyards are small, so they don’t have economies of scale, they don’t have the same technology [as competing winemakers], and the cost of labor is high.”
“The wine industry is intrinsically fascinating,” said Nakata. She explained how the business of wine epitomizes all of the tensions of globalization, married to the fact of wine as a physical product.
“Grape juice is grape juice, but there’s a difference between a $5,000 bottle of wine and a $5 bottle. It has a lot to do with the people who make it and where the grapes are grown.”
“Look out for Romanian wines,” she said. “Maybe they’ll be the next big hit, like Australian or Chilean wines.”