Stuck in the Middle: Coops between Member Interests and Market Demands A Discussion on German Wine Coops

Without any doubt cooperatives can be considered as one of the oldest forms of cooperation in the agrifood business. Looking back, one can state that for many decades these markets could have been described as (fast) growing.... [ view full abstract ]

Without any doubt cooperatives can be considered as one of the oldest forms of cooperation in the agrifood business. Looking back, one can state that for many decades these markets could have been described as (fast) growing. Hence during these times a coop could produce whatever it wanted and these produce were sold without difficulties. Hence, member-orientation i.e. producer-orientation was no problem.
But today, agrifood markets have changed. As these markets are generally saturated there is a fierce competition for the buyers / consumers. In general, the new marketing paradigm is ultimate “customer orientation” which means that every action taken by a firm should be rooted in the needs, wishes, and desires of the consumers. With other words, the trigger of the production should be the consumer or more general the market demand and not any longer the demands of the producers. However, as coops are member-owned institutions this changed situation might raise a conflict between member orientation and market demand.
Being the world largest import market for wine, the German wine market is not different at all. Rather one can state that the level of competition is very high – thus customer orientation has to be considered as a must to stay on the market. Traditionally wine cooperatives have represented a third of the German wine production (around 33 000 ha). However, in the last decade the market importance of wine cooperatives has significantly decreased. Today only roughly a quarter of the total acreage (27 000 ha) is marketed by coops. This decrease mirrors the institutional difficulties for cooperatives to adjust to changing market requirements.
In this context the paper aims to discuss this conflicting situation between customer and member orientation and to provide some mechanisms how coop managers can solve or at least minimize the conflict between member and customer orientation.