Benchmarking Economic Sustainability: What Factors Explain Heterogeneity between Wine Businesses?

Abstract

To assess a wine producer’s economic sustainability, it is useful to benchmark its economic indicators against a suitable reference group. Existing research mainly compares wine businesses either by region or by size alone. There is a research gap concerning which of the two benchmarking factors can be more suitable or whether both factors are required. Using a framework of economic sustainability benchmarking figures, the effects of region and size, as well as the effect of their interactions, on 10 economic indicators were estimated through an ANOVA and the estimation of effect sizes. The analysis is based on a unique data set of business data averages of 382 German wine estates across six agricultural years (2014–2019). Region and size both had a significant influence on 7 out of 10 benchmark indicators. Wine estates from distinct regions more strongly differed in their primary indicators of production factors, price and yield as well as secondary indicators of cost and productivity. Contrarily, wine estates of diverse size groups more strongly differed in their tertiary indicators of profitability and return, which are key indicators of economic sustainability. Both size and region should be utilized for suitable economic indicators when benchmarking wine businesses for future assessments of economic sustainability. Hereby, this paper provides a first step in making economic sustainability less subjective for the German wine industry and how to move forward in regards to benchmarking within empirical frameworks and tools of economic sustainability.