Wine Industry Newsletter

Study shows collaboration key for logistic efficiencies

Cold chain logistics
Photo: Kristina Georgiou, Chief investigator of the Incubator initiative: How can small producers in Western Australia achieve economies of scale efficiencies in logistics and distribution?

Collaborative business models are known for their role in helping small-scale producers reduce risk, share a range of costs and build market presence. Previously, in the March edition of the Wine Industry Newsletter, we highlighted a Wine Australia funded, Curtin University led research project on collaborative business models in the WA wine industry.

The results are now complete and the findings offer insights into potential pathways and strategies to engage in collaboration, specifically around sharing transportation services among multiple wineries for the shipping of wine to both domestic and international markets. The recommendations flowing from the findings include:

  • 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.

Since completion of the study, there have been exciting developments in the use of collaboration amongst wine producers in the transportation of wine. For example, one of the transportation and logistics providers interviewed for the project has indicated that they are offering collaborative solutions to wine customers in South Australia, and are investigating these services in New South Wales and Victoria. There has been expressed interest in serving the Western Australia market if demand is sufficient.

The results do suggest cost savings of collaboration between wine producers in the transportation of wine to end consumers, particularly in international markets. Next steps will be to explore further options for WA producers in order to take advantage of economies of scale and the opening up of expanded market reach at favourable price points in the transportation of wine to end destinations.

A full copy of the report is available.