Photo: Elements Margaret River
Photo: Elements Margaret River
07 Sep 2018
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Collaboration is the key to smaller wine producers reducing supply chain costs, a recently completed Wine Australia-funded Incubator Initiative project has concluded.

Led by Kristina Georgiou, a lecturer and researcher in the Curtin University faculty of Business and Law, the project investigated the potential for smaller wineries to collaborate to reduce or share costs in the supply chain, particularly around cold chain logistics.

‘While participants in the project realised that cold chain logistics was “best practice” in terms of temperature-controlled transportation and storage and distribution of wine, there was some reservation as to whether such a solution would be economically viable’, Ms Georgiou said

Image: Ewen Bell / Wine Australia

‘The general view was that some aspects of a cold chain solution, such as the temperature-controlled road transport of wine, should be implemented in a collaborative arrangement.’

Ms Georgiou said the findings of the study indicated there was a very strong interest in collaborating with other wine producers in the transportation and distribution of wine.

‘Overall, there were several benefits acknowledged for collaboration, regardless of the geographic location of the producer’, Ms Georgiou said.

‘These include cost savings, economies of scale, administrative time efficiencies, access to new markets and increased sales due to more competitive pricing of wine.’

Collaborative options included:

  • Negotiation with transportation and logistics providers on behalf of collaborative group members for better pricing of the transportation and distribution of wine to individual consumers as opposed to intermediaries (e.g. distributor).
  • Consolidation of shipments from a single collection point for a given region so that economies of scale could be achieved on behalf of the collaborative group.
  • Establishing a preferred transportation provider for export shipments on behalf of a collaborative group so that buyers in the targeted export country could benefit from competitive pricing due to economies of scale – which could drive higher demand of wine from collaborative group members.
  • Development of a mobile phone application or web site to ensure shipping loads were at optimum capacity – which in turn would encourage economies of scale for the collaborative group.

Image: Tourism Australia

However, Ms Georgiou said the options needed to consider issues around scheduling (e.g. a regularly scheduled weekly or monthly shipments to a given locale) for consolidated shipments; the ability to track individual orders; and guidelines around exporting processes and pricing.

Ms Georgiou said in addition to collaborative transportation and distribution of wine, some producers expressed interest in the collaborative group positioning and marketing themselves to different markets.

‘This could include a branded retail store in a given country, in-country sales people representing a collaborative group, or an in-country warehouse owned (or warehouse space rented) by the collaborative group that supplies local customers’, she said.

Key recommendations from the project include:

  • Establish a collaborative group.
  • Negotiate collaborative group prices with transportation providers for shipment to individual end consumers.
  • Develop collaborative overseas or interstate warehousing and distribution hubs.
  • Regularly schedule transportation of wine for the collaborative group.

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