Power Play in the German Wine Business: Are German Wine Co-operatives able to Use their Power to manage their Business Relationships?

Abstract

Due to the pyramidal-hierarchical structure of supply chain networks power is an essential part of them and the fact that it is very often unequally distributed among the participants is quite obvious, which might represent great difficulties for member-owned enterprise coops. By clarifying the concept of power and identifying its five different sources, we were able to build hypotheses of how power affects cooperation and coordination – the two main elements of chain management in wine business. The first aim of our research is to elaborate on the question of power. Furthermore, we will construct some hypotheses regarding the use of power as a chain management instrument. Our second aim is to apply our general findings to the wine production chain, analysing the power play between cooperatives and retailers, and between cooperatives and their members. Due to the explorative nature of our study, we based the elaboration of our second aim on oral interviews, which were conducted in 2009, as well as in 2010, at five major international food and beverage fairs (twice ProWein, Anuga, and twice Fruit Logistica) in Germany. In addition, we conducted a comprehensive review of the Lebensmittelzeitung – the leading German food and beverage newspaper – for the last five years. Discussing our hypotheses in the context of the German wine sector, in which cooperatives are still of high importance, we were able to show that power is a very useful tool for managing strictlycoordinated chains. However, depending on which source the power originates from, its effect may be completely different.