Diversification strategy in Portuguese wine industry: a wine tourism case study

Abstract

Strategic management is the pillar of analysis of this case study, assisted by some marketing instruments, decision analysis and agricultural economy. The sustainability of the winery business is the base for the analysis undertaken. The Adega Cooperativa de Vidigueira Cuba & Alvito (ACVCA), is a cooperative Portuguese winery founded in 1960 and dedicated to wine production and commerce. It is located in the Vidigueira district, in the south of Portugal, Alentejo region. Its foundation was contemporary to the cooperative organization model that allowed to solve the commercialization and scale problems, characteristics at time. Solved these problems, and being inserted in highly competitive sector, the winery was led to shift its management model paradigm and adopt a business management model. In 2018, the Board of Directors had to make decisions aimed at the continuation of the brand's affirmation and conquest of ACVCA's renown. There were several options under analysis and evaluation: increase production capacity, invest in internationalization, focus on segmentation through innovation, diversification of product and business area through Vinho de Talha production and wine tourism. In the past, as a result of the management model adopted, some decisions were taken with regard to increasing production capacity and improve wines quality, having always behind sustainability (the winery is member of the Programa de Sustentabilidade de Vinhos dos Alentejo). To proceed with the internationalization strategy the winery perceived hefty costs. Given that, the last option was chosen. The winery opted for a diversification and differentiation strategy, where we identified three vertices for the adopted strategy: Vinho de Talha, tradition and tourism. In addition to the Vinho de Talha being made through a traditional production process, that make it a different wine, intense and full of personality, the winery distinguishes from other players, because produce it using grapes from centuries-old vineyards with unique characteristics. This winemaking process recovers the winery's material and immaterial heritage, customs and traditions, contributing to the construction of the perceived quality of the wine experiences. Having this is mind, and knowing that wine tourism and wine tourists have characteristics that differentiate them from other tourist offers and tourists (Marzo-Navarro & Pedraja-Iglesias, 2009), the winery improve its wine experiences. They requalified some cellar spaces, open it to the public and built the Casa das Talhas, a particular place for wine tourism allied to Vinho de Talha.