There is a difference between small and large wine retailers

I emphasized in a recent blog post that formal academic studies are the best way to understand the various aspects of the wine industry (Wine and health experiments, was my example). In this regard, this week I wish to point out an academic study that has investigated the profitability of wine firms of different sizes within Europe.

Most people should expect that smaller and larger wine businesses (on any continent) are in different situations; but it is worthwhile to look at this in some quantitative detail. Indeed, it is just as interesting as the usual media articles about variations in national wine productions within Europe (eg. Per capita wine production in the European Union).
 
The new study I am referring to is:
   Firm size and profitability: Key determinants of performance in European wine firms
   Journal of Wine Economics (2025) 1–19

The Abstract is:

This article examines the determinants of the profitability of European wine companies using dynamic panel models, analyzing 1,025 firms from 14 countries between 2015 and 2021. Unlike previous research that focused mainly on financial variables, this study incorporates financial, non-financial, macroeconomic, and institutional factors to provide a broader understanding of profitability drivers. Given significant differences between the individual categories, separate analyses were conducted for small and medium-sized enterprises (SMEs) and large and very large companies (LVL) companies. The results show that higher debt reduces profitability, while a higher ratio of cash flow to operating revenue and firm growth improves profitability. Investment in fixed assets increases the profitability of SMEs, while net asset turnover positively affects both SMEs and LVL firms. Labor productivity significantly influences profitability when SMEs and LVL firms are analyzed separately. Public and private limited companies are more profitable than partnerships or sole traders. Finally, the rule of law positively affects SME profitability.

The most important conclusion is to outline the ways in which the smaller and larger wine businesses are, indeed, in different situations. This surprises no-one, of course, but it is nice to have someone put it in black and white, even if only for Europe. Not only does it matter that there are wine casks, bottles and glasses of different sizes!