Challenges in the wine industry

desafios setor


The Portuguese wine sector needs to reposition itself on the world market, especially regarding the modernization of production conditions, the increase in the critical mass in the commercialization, and national wines branding reinforcement. Only then will it be possible to revitalize a sector of enormous potential, whose products can be competitive across borders.


Need for repositioning 

It will mainly be the cooperative structures that will have to rethink their participation along the value chain of the product, due to the weight they have in the market – 50% in relation to bottling agents and producers. For this reason, they will have to bet on the valorization of joint strategies of action instead of each cellar individual interests, which enhances the creation of value for the whole sector.

The dependence on investment and exploration incentives, the aging of human capital and strong competition from neighbouring markets have created great difficulties in boosting agriculture in Portugal. The wine industry is no stranger to this scenario.

However, the potential that is recognized and the concerted strategy that has been developed raises the expectation of a more promising future than the present. It remains to be seen whether the industry players are able to get there.

The wine sector has been a national and international reference, with tradition and know-how accumulated over several years. But the limited organizational capacity of the industry players in responding the challenges posed by the global economy has resulted in a loss of competitiveness.

The Portuguese wine sector needs to reposition itself on the world market, especially concerning the modernization of production conditions, increase of the critical mass in the commercialization and the reinforcement of the branding of national brands.

For this reason, they will have to bet on the valorisation of joint strategies of action in detriment of the individual interests of each cellar, which enhances the creation of value for the whole sector.

In fact, the small size of the national players, the limited investment in marketing in foreign markets and the low investment in branding and brand development are pointed out as the main obstacles to increasing the export quotas of the national wine sector.

As a result of these factors, the national wines have presented, in the international market, a positioning in segments of reduced value and with a factor of competitiveness based essentially on the price, which limits its expansion and profitability.

Portugal’s strengths, such as the quality of its products and the variety and quality of its raw material, have not been used to give significant competitive advantages vis-à-vis competing countries. In the early 1990s, the industry potential was acknowledged in a study by Michael Porter, the recognized strategy guru, due to the study of industrial clusters in Portugal.

Almost 15 years later, this sector lost competitiveness, despite the efforts with the introduction of improvements in wine, production and commercial areas. This scenario, common to traditional European producers, stems from market conditions that show a tendency towards stagnation of consumption, after a period of marked reduction in the mid-1980s. On the other hand, there is a rapid increase in the relative weight of the new producing countries (Chile, Argentina, South Africa, Australia and the USA) due to their high commercial aggressiveness and product quality.


Launching strategy

The reversal of the negative trend in the wine sector is due to the efforts made by the different agents to define and implement a convergent strategy. This process that has been led by ViniPortugal, whose purpose is also the promotion of national wines in foreign and domestic markets.

Plan to escalate the cluster competitiveness:


  1. To improve the quality of the grapes by increasing the partnerships/pricing based on quality; 
  2. Improve the size and capitalization of companies through consolidation and investment; 
  3. Introduce professional management and certification under the ISO standards throughout the cluster; 
  4. Target and maintain as a country category in GB and USA; 
  5. Analyze consumer preferences in GB and USA and reflect this information on product and packaging;
  6. Use consumer/viticulture research to develop 3 to 5 main types of Portuguese wines; 
  7. Develop and expand the super premium category (€7-12); 
  8. Protect Portuguese brands (DOC, vine varieties, etc.) through the eradication of wines in reduced quality; 
  9. Create “Portugal Regional” brand and a council promoting quality wines to facilitate and compensate for innovation;                                                                                                                                                                         
  10. Invest in collaboration between the cluster key areas: drive innovation through joint initiatives between the wine sector and the investigation/academic world.

Esta estratégia nacional foi definida em 2003 num novo Relatório Porter, realizado pela Monitor Group, que define um plano de 10 medidas para melhorar a competitividade do cluster materializada em 7 campanhas de implementação, que incluem mais de 50 ações no seu conjunto. 

Este estudo propõe-se servir de referência, definindo um modelo de atuação para o setor, havendo ações de cariz nacional e cujos principais intervenientes são os decisores políticos, e outras para implementação a nível individual, pelos agentes do setor.

Mais recentemente, durante o ano de 2004, para aprofundar o conhecimento dos agentes nacionais dos mercados alvo definidos (Grã-Bretanha e EUA) foram apresentados estudos específicos para a comercialização de vinhos nestes países por forma a que os nossos produtores possam adequar melhor os seus produtos a estes mercados.


Role of the cooperative model

Implementing the strategy defined in the Porter Report is only possible if there is an ability to trigger and accept the change. Cooperative wineries play a key role in the success of the defined strategy.

However, the business model of the cooperatives revealed some inefficiencies, making it uncompetitive and characterized by:


  • rigidity imposed by the cooperative status;
  • limited participation of the cooperatives members in these entities destiny;
  • grapes collection regime (qualitative selection);
  • management reduced professionalization;
  • lack of responsiveness to market stimuli.


To meet future challenges, cooperatives must work together in various areas of the current business model and rethink their participation along the value chain of the product.

In a study carried out by Fenadegas (Federação Nacional das Adegas Cooperativas de Portugal) it was concluded that most cooperatives show a willingness to join in various activities in the value chain.

Despite this, there is still a clear lack of opportunity to integrate the wine production sector. So far, it has not been possible to stimulate a concerted action, although the agents recognize their need.Leadership Business Consulting has been supporting several agents in the sector, especially in the cooperative subsector, in projects to define and operationalize business development strategies, focusing on the definition of joint actions that allow the rationalization of resources and use of synergies.

These joint opportunities can result in significant reductions in production costs and increased capacity for promotion and marketing, which allow us to raise critical mass to address new markets, increase the profitability of the business and, consequently, better remuneration for winegrowers. These projects have been carried out both at a local level (including, for example, wineries of the same council) or at regional level, by defining a joint strategy for a wine region.


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