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Challenges in the Development of the Wine Industry: an Exploratory Study

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Challenges in the Development of the Wine Industry: an Exploratory Study 271 Bulgarian Journal of Agricultural Science, 27 (No 2) 2021, 271–278 Challenges in the development of the wine industry: an exploratory study Sanja Jelic Milkovic*, Krunoslav Zmaic and Tihana Sudaric University of Josip Juraj Strossmayer in Osijek, Faculty of Agrobiotechnical Sciences Osijek, 31 000 Osijek, Republic of Croatia *Corresponding author: [email protected] Abstract Milkovic, S. J., Zmaic, K. & Sudaric, T. (2021). Challenges in the development of the wine industry: an exploratory study. Bulg. J. Agric. Sci., 27 (2), 271–278 The objective of this paper is to investigate and identify the structure of winemakers in Eastern Croatia and the problems and obstacles they face in their business. Survey was the method used to collect the data, and survey questionnaire was used as the instrument. The survey was performed on a sample of n=30 winemakers from five Eastern Croatian counties (Osijek- Baranja, Vukovar-Srijem, Virovitica-Podravina, Požega-Slavonija and Brod-Posavina Counties). Survey results pinpoint insti- tutional factors, expensive production inputs, and insufficient oenological support and expertise as the obstacles winemakers face in further development of this industry. Survey results can be used as a framework for future research of this type and as the basis for the development of future measures and policies concerning wine production. Keywords: viticulture and viniculture production; winemakers; winemaker problems Abbreviations: PAAFRD (The Paying Agency for Agriculture, Fisheries and Rural Development); COM (Common organisation of the market); one-way ANOVA (one-way analysis of variance); N (total number of respondents); M (arithmetic mean); SD (standard deviation) Introduction Republic of Croatia takes place both on small family farms and in large wineries (Čop et al., 2019; Jelić Milković, 2019). The entire geographical territory of the Republic of Croatia Croatian viticulture is characterised by relatively old vine- falls within the viticulture zone of the Northern Hemisphere, yards, fragmentation of areas planted with vine and a large and viticulture and viniculture are strategic industries of spe- number of varieties, combined with the relatively small size cial importance for the Republic of Croatia (Jelić Milković, of the Croatian market (Grgić et al., 2011). In 2017 vineyards 2019, Grgić et al., 2011). The winemaking sector is an im- in Croatia make 1.5% of total agricultural areas at its disposal portant sector of the Croatian economy with a long tradition in Croatia (Croatian Bureau of Statistics, 2018). In 10 year, and more than 2500 years of production (Croatian Chamber of period 2008-2018 the degree of self-sufficiency decreases and Economy, 2015). Winegrowing and winemaking contribute to on average is 84.80%, average wine consumption in Croatia the tourism offer and ensure the economic and social sustain- per capita in a ten-year period is 28.08 l. Average wine pro- ability of small and medium-sized winemakers (Jakšić et al., duction in Croatia was 1140.56 thousand hl (2008-2018) and 2016; Grgić et al., 2011). Winemaking is present in both the total domestic consumption in same period of time amounts Continental and in Adriatic Croatia, and each region has its to 1334.56 thousands hl (Croatian Bureau of Statistics, 2018). distinctive geographic, geological, agricultural and econom- According to Kalazić et al. (2010), the Croatian wine ic characteristics (Čop et al., 2019). Wine production in the market is characterised by a large number of competitors 272 Sanja Jelic Milkovic, Krunoslav Zmaic and Tihana Sudaric and very strong competition between large and small win- structure of the winemakers in Eastern Croatia and the prob- emakers. Croatian vintners are troubled by the unfavourable lems they face in their business. 30 winemakers completed economic structure and growing import of wine (Čop et al., the questionnaire correctly, which puts the response rate at 2019). The unfavourable economic structure results in poor 15.96%. The whole questionnaire consisted of open- and visibility of the Croatian wines and in low competitiveness closed-ended questions, divided into several groups. Since in the international market (Čop et al., 2019, Alpeza et al., the questionnaire was very extensive, this paper only exam- 2014). The Republic of Croatia needs to increase its wine ines the sections of the survey dealing with the winemak- production, because a competitive production is the only ers’ characteristics and business structure (the form of busi- way to neutralise imports, which are objectively increasing ness of the economic operators, membership in associations, (Jelić Milković, 2019). Winemakers face the following ob- whether or not they receive state aids, whether or not they stacles in wine exports: import barriers and market policy, have participated in EU-funded project applications, the size logistical and financial obstacles, and marketing and promo- of economic operators and production capacities). tion restrictions (Jakšić et al., 2016). In order to overcome The data were analysed using the SPSS Statistic V23 sta- these obstacles and deal with the situation in the wine mar- tistical software package. Descriptive statistics were used in ket, Croatian vintners established the Wine Association in data analysis to describe the sample (percentages, frequen- 2011, whose objectives are to promote Croatian wines and cies, arithmetic mean, standard deviation). In terms of para- create a Croatian wine brand (Vina Croatia) in Europe and metric tests, the authors of the survey used Student’s t-test worldwide (Jakšić et al., 2016). The Ministry of Agriculture (independent t-test) and simple analysis of variance (oneway is implementing measures aimed at increasing productiv- ANOVA) to determine the differences in individual charac- ity, quality, and competitiveness in the wine sector through teristics relevant for identifying the difficulties and problems its operative programme (Jakšić et al., 2016). The Paying in the development of the viticulture and viniculture industry. Agency for Agriculture, Fisheries and Rural Development As for non-parametric tests, the authors used the Kruskal- (PAAFRD) is also implementing common organisation of Wallis test by ranks to analyse the questions about the politi- the market (COM) measures to support the wine sector, in- cal environment and the changes in production technology cluding vineyard restructuring and conversion, investments against the questions related to the form of business and the in wineries and wine marketing, and promotion of wines in county the economic operator is based in. The levels of sig- the markets of third countries. The objective of this paper nificance were indicated with p < 0.05 (*), p <0.01 (**). is to investigate and identify the structure of winemakers in Eastern Croatia and the problems and obstacles they face Results and Discussion in their business. As an exploratory study research tend to provide an insight into most important factors (political, Thirty winegrowers and winemakers from five Eastern economic and technological) which are common to an in- Croatian counties participated in the survey. The majority vestigated winemaker and their issues in particular business of the respondents are based in the Osijek-Baranja County sector in order to plan new sectoral policies. (43.3%), followed by Vukovar-Srijem County (23.3%), Požega-Slavonija County (20.0%), Brod-Posavina County Material and Methods (10.0%) and Virovitica-Podravina County (3.3%). These three counties Osijek-Baranja (2226.15 ha), Vukovar-Srijem Information for this study was collected by the survey (1631.95 ha) and Požega-Slavonija (1490.72 ha) are tradi- method, using a questionnaire as the instrument. The ques- tionally the largest wine producers in Eastern Croatian, and tionnaire was completed by winemakers from five Eastern among the largest on a national scale (PAAFRD, 2019). All Croatian counties (Osijek-Baranja, Vukovar-Srijem, Virovit- winemakers who participated in the survey (n=30) are reg- ica-Podravina, Požega-Slavonija and Brod-Posavina Coun- istered in the in the Vineyards Register and the Register of ties). The survey was carried out between May and Septem- Excise Duty Payers, which grants the wine trading license. ber 2018, with small, medium-sized and large winemakers All winemakers who have a minimum surface area planted registered in the Vineyards Register and the Register of with vines of 0.1 ha or are required to submit production, Excise Duty Payer as the target group. A total of 188 wine- stock and harvest declarations are required to register in growers and winemakers, categorized as subjects defined by the Vineyards Register. All winemakers whose annual wine the primary study, were registered in the Vineyards Register production output is higher 1000 hl are required to regis- in the Republic of Croatia in 2018. The questionnaire was ter in the Register of Excise Duty Payers (PAAFRD, 2019, sent to the winemakers’ addresses in order to examine the Ministry of Finance – Customs Administration, 2019). The Challenges in the development of the wine industry: an exploratory study 273 great majority of the winemakers (90.0%) stated that their near future. This is an aggravating factor for strategic busi- annual revenue was lower than € 1.34 million. Only 10.0% ness planning and the development of marketing. Most of winemakers have annual revenue of € 6.72-13.44 million. the winemakers who participated in the survey, 52.2%, have Most (60.0%) vintners who took part in the survey believe between 1 and 10 ha planted with vine. 26.1% have between that the capacity utilisation rate of their agricultural opera- 10 and 50 ha, and 17.4% have more than 100 ha planted tors is 51–79%. 16.7% respondents believe it is 80-99%, with vine. Grgić et al. (2011) state that grape production is 13.3% respondents believe that their capacity utilisation rate significant for small and medium-sized family farms char- is under 50%, and 10.0% believe that the capacity utilisa- acterised by relatively old vineyards and fragmentation of tion rate in their economic operator is 100%.
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