Economic Performance and the Crisis: Strategies Adopted

by the Wineries of Castilla-La Mancha (Spain)

K. Simon-Elorz
Department of Business Administration, Universidad Pública de Navarra, Madrid, Spain.
E-mail: katrin@unavarra.es
J.S. Castillo-Valero
Agricultural Economics and Business Development, Universidad de Castilla-La Mancha, Madrid,
Spain. E-mail: Sebastian.Castillo@uclm.es
M.C. Garcia-Cortijo
Agricultural Economics and Business Development, Universidad de Castilla-La Mancha, Madrid,
Spain. E-mail: MariaCarmen.GCortijo@uclm.es

ABSTRACT

This article aims to study the strategies and the possibilities for competition of Castilla-La-Mancha
wineries during the period 2004–2010. Therefore a model was defined which analyzes the impact that
environmental variables such as age and size have had on economic performance, compared to marketing
and management strategies adopted by the wineries. Finally, the impact is analyzed that successive reforms
of the wine CMO and the economic crisis have had on the results in Castilla-La Mancha (CLM, Spain)
wineries. [EconLit citations: L25; L66; Q13]. 
C 2014 Wiley Periodicals, Inc.

1. INTRODUCTION

World supply and demand wine markets converge in the European Union. This business sector
is experiencing specific adjustments within the European Union framework. On the one hand,
there is the internal economic crisis, and on the other are modifications in the Common
Agricultural Policy (CAP) regulations. These changes are generating adaptation strategies that
directly affect the performance of wineries.
In the Spanish case and especially in Castilla La Mancha (CLM), the greatest producing
region worldwide, the crisis and the disappearance of distillations subsidized by the Common
Market Organization (CMO) budget for wine in 2008, have caused an exceptional opening to
international markets. The coincidence in time of the economic crisis with the implementation
of the new CMO necessitates the disintegration analysis of what the differentiating impact
of each process has been. Moreover, in CLM the presence of cooperatives representing over
70% of the regional base wine production (over 13 million hectoliters), conditions the adopted
strategies because many privately owned wineries get their supply of grape must and bulk wine
from these cooperatives. Besides, the latter have been the engine of the bulk wine-exporting
boom experienced in recent years in CLM.
The objective of this article is to study the strategies of economic performance adopted by
Castilla-La Mancha wineries. Therefore, this article analyzes the following questions. First,
what is the impact that marketing and financial strategies adopted by wineries has on economic
performance measures.
Second, it analyzes whether investments in the wine growing sector of capital from other
sectors (fundamentally related with the Spanish housing boom) is achieving different results in
terms of performance compared to traditional investments (Galan, 2010).
Modification of the wine sector CMO has caused important changes in winery marketing
strategies. These strategies have gone from bulk production to a market segmentation based
on internationalization and the sale of bottled wine. This has modified winery performance;
therefore, this article analyzes what the impact of these strategies has been. Wineries have
designed a successful strategy to gain world market shares and market positioning in the lowest
Agribusiness, Vol. 00 (0) 1–25 (2014) 
C 2014 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com/journal/agr). DOI: 10.1002/agr.21392