Innovation Management in Wine Business – Need to Address Front-End, Back-End, or Both?

Abstract

In order to provide needed orientation of innovation management in the SME wine industry, a multi-case study was realized. The innovation activities of four German wineries for their entire value-creation coverage were analysed. The focus of the study was on an apparent challenge whether wineries should emphasise viticultural (back-end) or marketing and sales (front-end) innovations. The results of the four cases analysed suggest that innovation matters, strategic positioning influences each wineries’ innovation portfolio, winery size and organization impact the innovation portfolio, resource dependency can be reduced through cooperative action at the industry level, and smaller producers must leverage their entrepreneurial orientation. All integrated wine producers need to address front- and back-end innovation, but with flexibility for innovation accentuation and individual innovation portfolios. Wineries also need to recognize the synergetic value of two different challenges: (1) convincing products require optimal planting and farming whereas (2) the product assortment and its treatment should consider customer profiles. Hence, front- and back-end innovations need to be synchronized and considered in parallel, without ignoring each winery’s strategic accents and therefore individualization of the innovation portfolio. A synergetic innovation approach, exploiting technology and data mining, can foster the development of competencies and best practices when using existing wine industry resources and capabilities. Knowledge exchange at the industry-level helps producers reach consensus on innovation activities, goals, and strategies, and to improve the business ecosystem by identifying elements that are obsolete or ripe for change.