The Marketing Implications of Value Chain Governance Strategies of Wine Products Using Geographical Indications (GIs) in Italy and UK

The Marketing Implications of Value Chain Governance Strategies of Wine Products Using Geographical Indications (GIs) in Italy and UK

Raymond Hawkins-Mofokeng (Department of Agricultural Economics and Sciences, University of Bologna, Bologna, Italy), Maurizio Canavari (Department of Agricultural Science, University of Bologna, Bologna, Italy) and Martin Hingley (Lincoln International Business School, University of Lincoln, Lincoln, UK)
DOI: 10.4018/IJFBMBM.2017070102
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Value chain governance (VCG) strategies have important marketing implications for specific wine and agri-food products that used GIs in Italy and UK. There are many challenges surrounding the prevailing trend or movement towards the adoption of exclusive quality standards and distinctions in the global supply chains of agri-food products, including wines to support the conception of traceability and safety assurances. This article aimed to reviewing previous research that could be relevant to the analysis of governance mechanisms in supply chains related to GIs for these products. The study analyzed how other researchers coped with these research issues. The survey was qualitative in nature, and recapped selected case studies from Italy and UK, regarding the VCG of wine and food products GIs. Therefore, the findings were limited only to the impact of VCG, wine and food production in these areas and could not be generalized beyond them. The article contributes in advancing knowledge and transferring it from existing situations in developed countries or markets to the developing ones.
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Value chain governance (VCG) designs possess vital business suggestions to any stakeholder involved with specific references to the product and industry types, which means that the more people, transactions, interactions, ideas, or activities are involved the more growth and returns are realised; as well as opportunities that arise along the whole value chain spectrum (Humphrey and Schmitz, 2001). However, the undisputed issues that the global value chains of agricultural products cannot ignore in general are traceability and safety assurances. These issues create outstanding challenges that relate to a shift towards the adoption of exclusive quality standards and product distributions, which still need to be addressed (Clement-Lopez et al, 2014).

This movement towards the adoption of exclusive quality standards and product destinations does not, however, fully consider small-scale farmers in global agri-food chains, and also hinders them to access global markets in terms of exports and imports as far as terms and conditions relating to barriers to entry in global trading are concerned (Bitzer, Obi and Ndou, 2016). On the other hand, recent evidence shows that, even in some other developed countries that have adopted this notion (of quality standards) within their domestic trading boundaries, they experienced concerns regarding their retailers’ requests for unachievable perfection on the production and provision of agri-food products; which results in food wastage along the supply chain (Goldenberg, 2016).

According to Hammervoll (2011), value is created through the establishment of cooperative connections amongst organizations, which offers essential advantages to all partners involved, due to their sharing of expertise, information, and creativity management. However, there is limited knowledge regarding how value formation must be governed. Humphrey and Schmitz (2001), further investigate as to why firms will tend to set and impose restrictions along the chain. It is important to understand how this concept functions and why it matters in the global supply chain spectrum, for example, in order to control and assist in challenges facing the industry in relation to agri-food safety, traceability, food wastage and child labor issues. This may have direct and indirect impact on the value chain, and stakeholders since retailers who control supply chains mostly have no direct possession of production and manufacturing facilities, and rather take ownership only when goods are in their possession (USAID Microlinks, 2016). Lee, Gereffi and Beauvais (2012) maintain that there is a need for the development of adequate agri-food quality standards and destinations in order to adhere to the strict public food regulations, cutting down costs and lowering the degree of uncertainties along these complex supply chains to address such major challenges.

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