Goizueta Effect

The global wine market is expected to grow exponentially, topping $450 billion in 2028. Giacomo Negro joins to discuss wine genres and identities, evolving trends, and how organic and biodynamic farming are changing the way wine is produced and evaluated.

Show Notes

Giacomo Negro is a professor of organization and management at Emory University's Goizueta Business School. He holds a PhD in management from Bocconi University where he also received a Laurea degree in economics and business. He recently published the book Wine Markets: Genres and Identities

According to Fortune, in 2020, the global wine market was valued at nearly $349 billion dollars. By 2028, it’s expected to grow exponentially – topping $450 billion. Wine market identities and genres play a key role in shaping the industry. Giacomo joined The Goizueta Effect Podcast to discuss the core audiences that impact how producers make and sell wine – and how wine communities react to evolving trends, like mixing genres. He also shed light on how organic and biodynamic farming are changing the way wine is produced and evaluated.  

What are Wine Genres and What Features Define Them? 

Wine has incredible diversity with hundreds of thousands of labels in the market introduced every year. Whether you are a producer or consumer, genres are useful in understanding and communicating about wine. They also affect how wines get interpreted, evaluated, and valued in the market – and serve as the building blocks of the collective market identities of producers.  
Key genre-defining feature may include region, grape, vintage, producer, effervescence, and source materials, among others.  
The Important Role of Terroir 

Terroir is the complete natural environment in which a particular wine is produced, including factors such as the soil, topography, and climate. Terroir can be a source of competitive advantage in the market to the extent that it identifies a unique place, both geographical and cultural, that is not possible to replicate or imitate. While locations are vital to the notion of terroir, the concept also includes the people that work in and inhabit these places and the history of the culture.  
What are Market Identities of Wine and Why Do They Matter? 

Market identities are different from brands. The two concepts are interconnected, but separate. A brand is created by a producer or an agency, while a market identity is attributed to a producer by an audience. A brand is fungible and can be purchased and sold, whereas a market identity cannot. Market identities are a sociological concept that the audience controls.  
Who are Key Audiences in the Wine Market? 

When referring to audience in the wine market, we are referring to those individuals and groups who screen and evaluate the products and services available. Several audiences have decisive influence including consumers, producers, and market intermediaries such as critics and retailers. State authorities also influence the market dictating rules of production.   
The Important Role of Intermediaries 

With producers changing practices all the time in response to shifts in climatic conditions and technical developments, wine is constantly changing. Without a base, wine quality can only be accessed accurately through consumption.  
Intermediaries have significant influence on these matters, especially for fine wine that requires more interpretation and more knowledge to be understood. 
One role that critics play is gatekeeping by narrowing the field of wines from hundreds of thousands to the top picks. Critics are also able to better evaluate features such as terroir with complex social context that require expert knowledge to decode.  
The Reaction of Communities to Shifting Wine Genres  

In cognitive psychology, people like and value objects that fit in their conceptual distinctions. More typical objects are valued more positively than atypical ones which is dependent on cognitive fluency; an experience with an object or situation is fluent for someone if they have to exert little cognitive effort in understanding and interpreting that object or situation. 
Similar to the outrage of certain fans when Bob Dylan began using an electric guitar, new wine genres or the mixing of genres can generate great uncertainty.  
In Wine Markets: Genres and Identities, Giacomo Negro identifies a key difference between the success and failure of wine genres lies in the social structure of production and the resulting community solidarity among producers.  
He argues that more homogeneous communities of producers develop greater social cohesion within them that helps establish a genre, which in turn organizes and galvanizes a producer's identity. 
How Findings May Apply to Other Industries  

In the book, Giacomo provides three examples of successful mobilization by winemakers around wine genres and one failure to create a powerful market identity. He shares findings can be applied to many social movements. Examples include the interplay between categories of chefs and cuisines, like molecular versus traditional gastronomy, fashion, including the tension between ethical fashion and traditional fashion, as well as artistic styles.  
The Rise of Organic and Biodynamic Farming  

In the regions Giacomo studied, in 1980, only one winery was biodynamic and one organic. By 2010, roughly half of the wineries in his study had joined one of these categories.  
Organic farming is defined by the use of fertilizers solely of organic origins, such as compost manure and green manure, to improve the humus content of soils. Organic farming also emphasizes techniques such as crop rotation and companion planting, biological pest control, and mixed cropping. The fostering of insect predators is also encouraged. Legal standards regulate production methods for organic agriculture.  
Biodynamic farming shares many features with the organic technique; however, this type of farming takes it a step further. It proposes a unified approach to agriculture related to the ecology of the farm and its association with planetary and cosmic rhythms. 
Biodynamic farming includes a set of preparations to promote healthy soil and plant growth through prohibiting certain practices and mandating others. For many, the practices are colorful and mystical.  
Should The Market Pay a Premium for Organic and Biodynamic Wine? 

In blind taste tests by critics, organic and biodynamic wines receive higher scores than traditionally produced wines, however, biodynamic wines do not outperform organic varieties. 
Wines produced through non-conventional farming methods are sold at higher prices on average, but the price increase does not necessarily cover the cost increase. Thereby, non-conventional wineries often make less profits. The fact that they continue to work using these practices demonstrates their commitment to quality. It is also possible that they are working to drive repeat purchases and long-term relationships.  
To learn more about Giacomo Negro and his work, visit goizueta.emory.edu/faculty/profiles/giacomo-negro.  
To learn more about Goizueta Business School and how principled leaders are driving positive change in business and society, visit goizueta.emory.edu.  

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