CURRENT STATE OF WINE PROTECTION DURING STORAGE AND TRANSPORT - PowerPoint PPT Presentation

1 CURRENT STATE OF WINE PROTECTION DURING STORAGE AND TRANSPORT Thomas Atkin Sonoma State University Susan Cholette San Francisco State University 3 rd Annual International Workshop on Food Supply Chain San Francisco, CA November 5,2014

2 Wine Industry in California • $22 billion sales • 450 wineries in Sonoma County • Wine exports broke sales records in 2013 • 1.55 billion (90% CA) • Hong Kong is a huge auction market • Gateway to China • Sales could grow if proper handling assured

3 Why Benchmark Storage and Transport? • Wine changes with time • Changes are greatly influenced by storage temperatures • Aroma, flavor, structure, color, healthiness • Heat – any temperature above 60 F • May change varietal character • Shorten life expectancy • Over 75 F • Undesirable aroma, flavor, and color changes • Wine should never see a temp over 86 F • No indication of deterioration until you drink it

4 Why Benchmark? • Cold causes problems too • Loss of potential aroma and flavor • Visible crystals • Storage condition during distribution is the most common cause of a loss of • Quality and Value

5 Why Benchmark ??? • Reassure Consumers • Reduce risk of deterioration • Reduce incidents – breakage, wrong delivery, theft • Increase customer satisfaction • Protect the wine • Control what happens after it leaves the winery? • Assure the customer consumes it as the winemaker intended it to be . • Maintain Value • Wines lose value at auction due to storage uncertainty

6 Handle Wine Like Milk or Produce • Produce • Vacuum Cooled to 32-34 F • Trucks can keep it Cool • 38 F cuts storage life in half • Milk • Chill to 40 F • Keep at 40 transport and storage • Wine • Easy

7 Literature Review • Total Quality Management (TQM) • An integrated business strategy designed to develop an awareness of quality in all organizational process (Swink et. al, 2011) • Performance measures are central to TQM • Wine Storage Mgmt. Certification Scheme (Chen 2011) • Cholette (2010) surveyed California wineries on their exporting, private labeling and postponement practices. • Case based summary of export practices (Atkin and Gurney , 2013)

8 HKQAA • Hong Kong Quality Assurance Agency • 1 st Wine Storage Certification in the world • World’s largest wine auction market • Needed an objective standard of quality • Not a lot of confidence in US handling

9 HKQAA Standards • Temperature • Minimum Temperature – 52 degrees F • Maximum Temperature – 63 degrees F • Max Daily Fluctuation – 4.4 degrees • Humidity – 55% to 80% • Temp and humidity sensors needed • Electronic records to monitor data • Regular maintenance of equipment

10 Research Propositions 1. Larger wineries are more likely to control shipping conditions. 2. Larger wineries are more likely to control storage conditions. 3. Larger wineries have more information available on the storage and shipping conditions. 4. Higher priced wine is better protected than lower priced wine. 5. More wineries anticipate implementation of storage and shipping measurements.

11 Survey Instrument • Purpose is to assess what wineries are doing now. • Categorize wineries by sales volume, retail price, channels. • What do they think will happen in the future. • Where are the problem areas?

12 Sample • 37 Respondents – All in California • 65% less than 5,000 cases • 22% 5,000 to 24,999 cases • 14% over 25,000 cases • 97% sell for over $15.00 per bottle • 64% of wineries report that most (70 to 100%) of their wine needs to be held between 50 degrees and 60 degrees

13 Preliminary Results - Storage • 5 point Likert Scale – Strongly Disagree to Strongly Agree • During STORAGE, cases of our finished wines are maintained at an adequate temperature (between 50 and 60 degrees Fahrenheit ) at the following locations. • At the winery – 69% strongly agree • Independent Whse. – 56% strongly agree • At Distributor – 26% strongly agree • At Retailer – 6% strongly agree • 41% DO NOT agree that wines are maintained at an adequate temperature at retailer.

14 Preliminary Results - Transport 5 point Likert Scale – Strongly Disagree to Strongly Agree During TRANSPORT , my company’s wine is maintained at an adequate temperature (between 50 and 60 degrees Fahrenheit) during the following movements. • Own Vehicles – 38.9% agree or strongly agree • To Ind. Whse. - 44.4% agree or strongly agree • To Distributor - 40.5% agree or strongly agree • Direct to Consumer - 38.9% agree or strongly agree • To Retailers – 17.6% agree or strongly agree

15 Headline - No Summer Shipping DTC Are there times of the year when you AVOID shipping to your WINE CLUB members or DIRECT SHIP CUSTOMERS? • 0.0% wineries ship direct to customers in July and August • Only 25% ship during June • Only 38% ship during September • A large majority of wineries do not ship direct to customer from June through September.

16 Transport Damage What Percentage of your wine do you estimate is damaged or spoiled during TRANSPORT on its way to consumer? • A Majority of respondents - 65% - estimate that 1 to 2% of wine is damaged or spoiled during transport.

17 Satisfied? • 54% of wineries are satisfied with the protection of their wine as it moves through the distribution supply chain. • 100% require temperature control during storage. • Only 1 (out of 36) utilizes temperature sensors/recorders on shipments. • Only 2 (out of 35) have an information system that can track conditions during storage and transport.

18 Future Concerns • 75% anticipate that more wineries will implement and track performance standards for the storage and transport of wine. • 87% say finding cost effective transportation services is the greatest challenge in this area.

19 Managerial Implications • Great opportunity for improvement. • Transportation tracking • Retailer handling of wine

20 Future Research • Send survey to larger group of respondents • California • National • International • Compare to other countries • Put together Best Practices • Encourage wineries to monitor logistics • Extend to import/export

21 Thank you!!