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Searching for
Searching for competitive competitive
advantage through sustainability advantage
A qualitative study in the New Zealand wine
industry 841
Daniel J. Flint Received April 2009
Department of Marketing and Logistics, University of Tennessee, Knoxville, Revised August 2009
Accepted September 2009
Tennessee, USA, and
Susan L. Golicic
Department of Management, Colorado State University, Fort Collins,
Colorado, USA

Abstract
Purpose – Sustainability is becoming increasingly important in supply chains, particularly in those
that function in highly competitive industries. The purpose of this paper is to understand more deeply
the role sustainability plays within supply chains based on a qualitative study conducted in the New
Zealand wine industry.
Design/methodology/approach – This research followed a grounded theory methodology which
used in-depth interviews with managers from wineries, retailers, and restaurants; observations of
operations; and interpretation of field documents/artifacts.
Findings – The findings show that managers within the New Zealand wine supply chains are trying
to find ways to leverage sustainability-related competencies for competitive advantage in what is now
a highly competitive industry. Within this context, the emergent theme of searching for advantage
through sustainability involves: pursuing and leveraging sustainability; telling a story that involves
sustainability; managing supply chain relationships around sustainability; and experimenting with
sustainability initiatives.
Research limitations/implications – The research is limited to the context and participants of the
study. As a qualitative inquiry, findings are exploratory. The research implications, however, involve
deeper studies into how wine industry firms in other nations and regions of the world are treating
sustainability and searching for competitive advantages. Further validation of the models that emerge
can be accomplished through future research, which would draw on aggregate data.
Originality/value – The approach and context within which sustainability is explored is unique. By
seeking deep insights from managers on the cutting edge of sustainability initiatives, we are able to
get close to strategic thinking and explore the impact on distribution relationships.
Keywords Economic sustainability, Competitive advantage, Supply chain management, Wines,
New Zealand
Paper type Research paper

The authors contributed equally to this research and are listed alphabetically.
The authors would like to acknowledge the financial support of the Colorado State University
Office of International Programs and the Visiting Erskine Fellowship at The University of
Canterbury for making this research possible. International Journal of Physical
Distribution & Logistics Management
This paper has been through a double-blind peer review in accordance with IJPDLM’s review Vol. 39 No. 10, 2009
process. This paper will be presented at the 4th Annual Supply Chain Management & Industrial pp. 841-860
q Emerald Group Publishing Limited
Distribution Symposium (SCMID), 5 November 2009, New Orleans, LA, USA: www.cba.ua.edu/ 0960-0035
scmid DOI 10.1108/09600030911011441
IJPDLM Introduction
39,10 Distribution networks ought to serve as a means for competitive advantage (Mentzer
et al., 1989). A competitive advantage exists when a firm has one or more competencies
that allow it to create superior value, relative to competitors, for some market segment
(Hunt and Morgan, 1995). As business becomes more dynamic and managers more
savvy, relying on the product alone to provide such an advantage often only results in
842 temporary benefits. Thus firms increasingly rely on competencies obtained through
their supply chain to excel (Markley and Davis, 2007). One such competency that has
received increasing attention in the literature is environmental sustainability. Indeed,
Porter and Kramer (2006), propose that sustainability is “an inescapable priority for
business leaders in every country” (p. 78). Early studies found positive associations
between environmental management initiatives and financial performance (Klassen
and McLaughlin, 1996; Russo and Fouts, 1997). Subsequently, research has argued that
a proactive environmental strategy creates entry barriers and is a source of competitive
advantage in international markets (Aragon-Correa and Sharma, 2003; Porter and
Kramer, 2006).
In order for a firm to gain and sustain an advantage, it must be difficult for
competitors to duplicate the benefits of the firm’s competencies due to the fact that they
are rare, valuable, imperfectly imitable and have few strategically equivalent
substitutes (Barney, 1991). A sustainability competency therefore provides a
differential advantage if this competency is relatively unique in the firm’s market.
Supply chain management, and in particular distribution-related competencies, is
recognized as providing such an advantage for numerous firms (Mentzer et al., 1989).
However, costs to business organizations as well as to the environment can be high in
today’s global supply chains. As such, sustainability initiatives have focused
significantly on the upstream and downstream distribution aspects of business
management due to the costs associated with distribution. But beyond cost reduction
efforts themselves, can environmental sustainability initiatives within and throughout
the supply chain be leveraged, as logistics competencies can be leveraged (Bowersox
et al., 1995), for differential advantage in the marketplace? And what role(s) can
sustainability-related capabilities play in helping companies differentiate themselves
in a highly competitive and established marketplace?
Prior research in competitive advantage from sustainability[1] has been largely
conceptual or has been limited to studying the advantage obtained by the first mover
in the market. This paper seeks to begin to fill this gap and explores the phenomenon
within the context of the New Zealand wine industry. New Zealand has a rich
ecological heritage and was one of the first countries to address the interdependence
between economic and environmental systems as well as establish voluntary
sustainability initiatives within business (Patterson, 2006). An absence of a core of
heavy industry, a low population density, its relative geographic isolation, a sizable
small to medium enterprise business base, and an economy dependent on a buoyant
agricultural sector all contribute to the value New Zealand places on a “clean green”
image (Brown and Stone, 2007) as well as effective distribution networks. Thus, the
country is committed to goals of sustainability, particularly within the agricultural
sector, which accounts for 50 percent of all exports and 15.7 percent of the country’s
GDP (Aerni, 2009). The New Zealand wine industry, which has experienced a boom
over the past two decades (the number of wineries increased 173 percent and the value
of exports grew 816 percent from 1990 to 2000), capitalizes on the image of the country Searching for
and promotes products through the catch phrase, “the riches of a clean green land” competitive
(Hughey et al., 2005). This specific industry is one of the oldest in civilized human
history and has seen a significant increase in both consumer demand and in the advantage
number of global wine producers competing for that demand (Anderson, 2003). We
originally posed this specific research question: How do managers in the New Zealand
wine industry conceptualize sustainability and what role does it play in their supply 843
chain? It was in pursuit of an answer to this question that the notion of “searching for
advantage” emerged. The paper is structured as follows. First, we review foundational
literature on competitive advantage, sustainability, and branding. Second we explain
the grounded theory qualitative methodology we chose to explore the phenomenon.
Third, we discuss the findings from our fieldwork. Finally, we offer a discussion about
possible implications for managers and researchers.

Foundational literature
As is typical with qualitative, inductive inquiry, and specifically grounded theory
(Glaser and Strauss, 1967; Strauss, 1987), we initially used the literature to establish the
importance of the phenomenon of inquiry. During our inductive inquiry, we discovered
that sustainability was playing a role consistent with competitive advantage and
brand equity theory. We introduce this relevant literature next even though in truth,
literature and field immersion occurred simultaneously in a tacking back and forth
fashion.

The global wine industry

Interestingly, the history of the wine industry closely parallels that of the automobile
industry. The US “Big 3” automakers (General Motors, Ford, and Chrysler) made the
mistake in the 1970s and 1980s of believing that Toyota and Honda were not worthy
competitors and their historical dominance would keep them on top of the market.
Toyota is now the most profitable automobile manufacturer while General Motors and
Chrysler declared bankruptcy despite billion dollar government loans to remain viable.
Similarly, the Old World wine producers (those within Europe) relied on their centuries
of tradition and were thus unprepared for the rapid invasion of their global markets
from New World producers. A 2001 report commissioned by the French Ministry of
Agriculture admitted, “Until recent years, wine was with us. We were the center, the
unavoidable reference point. Today, the barbarians are at our gates: Australia, New
Zealand, the USA, Chile, Argentina, South Africa” (Anderson, 2003, p. 47). While the
top four Old World producers[2] still accounted for almost 55 percent of global
production in 2004, they are losing market share as their exports decreased or grew
much more slowly than those from New World producers (Hussain et al., 2007).
The high levels of competition in the wine industry are being driven by several
factors. Although demand is growing due to changing regulations and consumption
patterns along with reports of the apparent health benefits of wine, the world currently
produces more wine than it can consume. Production surpluses have ranged between
15 and 20 percent over the past ten years (Hussain et al., 2007). Consolidation in all tiers
of the supply chain is escalating making it increasingly difficult for the tens of
thousands of wineries to get their product onto the shelves of fewer and more powerful
retail establishments. Consumer behavior with respect to this product is also changing.
IJPDLM Purchases by most segments are governed by reducing the perception of risk
39,10 (Spawton, 1991), a foundational driver of branding success; therefore consumers are
becoming more educated about products/brands and demanding more variety. This
increased knowledge is expected to lead to discrimination between brands and
preferences for differentiated products. What in the past has been characterized as a
“cottage enterprise” is expected to be indistinguishable from any other highly
844 competitive global industry (Anderson, 2003). Thus those countries and producers best
able to adapt to these market changes and differentiate themselves and their brands
will gain competitive advantage.

On competitive advantage
A functionalist perspective on competitive advantage can be traced back at least to
Alderson (1957), which states that every firm must seek and find a function that
enables it to maintain a position in the marketplace. How firms perceive their market
and competitive environments, whether local, regional or global, will influence the
opportunities they see for differentiation. The competitive challenge is to outperform
rivals in light of internal and external constraints and to satisfy continually changing
consumer wants and needs (Dickson, 1992). As Hunt and Morgan (1995) stipulated,
firms constantly struggle for comparative advantage through resources, which will
yield competitive advantages enabling unique marketplace positioning and eventually
superior financial performance. As firms move to leverage their resources for
competitive advantage, rivals observe these actions and retaliate (Kuester et al., 1999).
This expected behavioral norm prompts some competitors to signal or mask their
intentions (Prabhu and Stewart, 2001). These processes can be seen playing out in
many markets and industries daily as firms and their supply chain partners attempt to
obtain resource advantages through unique distribution networks providing anecdotal
support for the use of distribution systems as a differential advantage. What we do not
know is how the recent emergence of environmental sustainability, which has been
strong across disciplines but extremely so within supply chain management, has
impacted this search for differential advantage.

Sustainability in New Zealand

There has been an increasing range of business initiatives in New Zealand focused on
sustainability. Businesses have begun producing triple bottom line reports (accounting
for the social, environmental and economic impacts of a firm’s actions) and joining
organizations such as the New Zealand Business Council for Sustainable Development.
In accordance with its heritage as described in the introduction, the government has
stated that sustainable development must be at the core of all policy (Roper, 2004).
While the policy development in this area has progressed significantly, these initiatives
are largely voluntary. The argument is that it is more robust in the longer term to rely
on market pressures for implementation rather than mandates through regulations
(Brown and Stone, 2007). This logic appears to be working within the wine industry as
many producers are implementing environmental management systems (EMS) as a
means of differentiation. For example, a select number of vineyards and wineries have
implemented ISO 14001, and a few have obtained organic certification through Bio-Gro
New Zealand (Hughey et al., 2005). Currently, over 600 of the country’s wineries and
vineyards are members of Sustainable Winegrowing New Zealand (SWNZ) in
anticipation of this being a requirement to export wine in the near future (Sustainable Searching for
Winegrowing New Zealand, 2009). Firms in the wine supply chain believe these EMS competitive
serve as a marketing tool and are becoming more important in order to compete in the
industry. Some even believed that their EMS enabled product differentiation and their advantage
business experienced a competitive edge (Hughey et al., 2005). With so many firms
trying to pursue sustainability, it is possible that the first mover advantages for those
individual New Zealand wineries leveraging sustainability in the marketplace has been 845
lost at this point with respect to other New Zealand wineries. However, the nationwide
initiative may very well be behind part of the increased brand equity of New Zealand
wines in general globally. So it could be that efforts, which have differentiated the
region, may help the national industry but simultaneously not help individual wineries,
brands and retailers.

On brand equity
Brand equity is determined by customers and represents the power of a brand in the
marketplace. It is the differential effect of brand knowledge on customers’ responses to
marketing efforts (Keller, 1993). This knowledge is comprised of brand awareness and
brand imagery (e.g. associations, attributes linked to benefits). Customers, both
business and consumer, prefer certain brands over others in part because the
associations customers perceive represent better value (Woodruff, 1997). Due to brand
equity being determined by customers and the dynamic nature of competitive business
environments, customers’ perceptions of value change over time as they are exposed to
competitive offerings (Flint, 2006; Flint et al., 2002), and as a result brand equity
perceptions change as well. In the broadest sense, firms and even nations have brand
identities, and perceptions of products associated with firms, regions and nations are
malleable as well.
How is this related to distribution and supply chain management? As customers
become aware of unique availability options (e.g. place utility), and unique
transportation or distributive options, they naturally value some products, service
providers, and suppliers over others. We would therefore expect that in the wine
industry, certain attributes, capabilities and resources become associated with specific
brands of wine, distributors, producers, and even regions of wine production. The
attempted management of these associations is at the heart of branding. When we
entered into this research, we were essentially interested in how sustainability was
playing out within the wine industry. It was only after becoming immersed in the field
data that we discovered that one role sustainability initiatives were playing, beyond
simply striving toward sound business practice, was one of differential advantage
through brand associations and brand awareness.

Methodological approach
The research question we posed (how do managers in the New Zealand wine industry
conceptualize sustainability and what role does it play in their supply chain?) is
exploratory and as such demands a methodology appropriate for digging deeply into
how mangers interpret, interact within, act on and create their worlds as they attempt
to solve the differentiation business problem. Grounded theory (Glaser and Strauss,
1967; Strauss, 1987) is a particularly good inductive-partially deductive research
tradition that helps to reveal how social actors interpret and act on their environments
IJPDLM as they attempt to solve problems they face. We describe in this section basic tenants of
39,10 grounded theory and how our use of the approach elucidated how New Zealand
managers in the wine industry were addressing differentiation in a highly competitive
environment.
We address only the highlights of grounded theory here, encouraging readers
unfamiliar with the tradition to seek out additional details in available texts and
846 manuscripts dedicated to grounded theory (e.g. Glaser, 1992, 2001; Strauss, 1987). We
adopt the Glaserian approach to grounded theory in this study due to the interpretive
freedom it allows (Glaser, 1992, 2001). This approach aims to construct substantive
theory grounded in field data, i.e. from the bottom up, and draws on a solid foundation
in sociology and social psychology that emphasizes how people interact with others,
make sense of their environments, and use aspects of their environments to define
themselves, and solve problems. Finally, it relies on multiple sources of field data,
primarily but not limited to in-depth interviews, to reveal conceptualizations that are
constructed through rigorous coding and interpretation procedures.
Our data, collected in the first half of 2009, consist of formal (11) and informal (16)
in-depth interviews, over 60 hours of observation, and the collection and interpretation
of over 100 contextually (culturally) relevant documents, e.g. winery brochures,
photographs, advertisements, press releases. Data collection was conducted primarily
on the South Island of New Zealand in the Canterbury, Waipara and Marlborough
regions but also included brief visits to management offices in Auckland on the North
Island. The formal interviews were pre-arranged meetings with wine industry
business managers (winery chief executives, wine makers, grape growers, winery sales
and marketing managers, restaurant managers/owners, sommeliers) and lasted
between 60 and 90 minutes. Some people we revisited several times for follow-up
conversations. We initially contacted firms (growers, producers, retailers) that
attempted to be sustainable and/or innovative based on information provided on their
web site (e.g. a description of an innovative practice). In other words, we contacted
those in which we expected to observe our phenomenon to maximize internal validity.
We then contacted them through email or professional network contacts we had in
those regions. As grounded theory theoretical sampling dictates, we let initial
interpretations of initial interviews help guide us toward who we should interview
next. We made sure to obtain a variety of companies (large and small, public and
private, old and new) to maximize external validity. All formal interviews were
digitally recorded. Table I provides descriptors of the formal interview participants.
Interview questions began broadly by asking participants about their businesses
and personal roles within their organizations. The interviews generally moved in
conversational manner to explore participants’ perceptions of the current business
environment, the aspects of their businesses that make their organizations unique, the
way they were trying to market, the ways they viewed their supply chains and supply
relationships, and their views on sustainability. These were open-ended conversations
conducted by both authors who are well experienced in qualitative interviewing
techniques, bracketing of a priori conceptualizations, and interpretive analyses. Many
probes were used in order to gain deeper and deeper insights to issues raised by the
study participants by tapping into actual lived experiences. Although an initial
interview guide was used, most conversations moved into areas that emerged from
within the interviews.
 Searching for
Pseudonym Descriptors
competitive
Bob Operations and marketing manager at family owned winery in Canterbury advantage
region; parents began the winery; Bob returned to help add business/marketing
discipline and run operations several years prior to the interview; helps set
strategy for organization
Vick Chief Financial Officer of wine holding firm managing four major brands; has a 847
long history in the wine industry both as manager and producer/owner; highly
involved in strategic decision making for firm
Ann Marketing director for small, relatively new winery; decade of experience in
marketing for large, Australian winery; formal brand management training
Ted Chief Executive Officer for boutique winery; significant experience in Australian
wine industry; supply chain specifically designed to leverage and support the
indigenous (Maori) ownership of this winery
Cindy Founder, owner, chief chef at high end restaurant in Christchurch; also runs a
sommelier school and other retail and product ventures
Jim Partner in multi-brand wine company responsible for strategy, positioning,
partnerships and operations
Gina Sommelier at Cindy’s restaurant; formerly trained in wine selection and food
pairings; responsible for wine recommendations for patrons
Mike Austrian sommelier for a second high-end restaurant in Christchurch; very
knowledgeable about menu, wide variety of wines, and customers’ preferences
and reactions to organic wines; a former student of Cindy’s school
Jeff Part owner in largest, most successful wine retailer in Christchurch; very
innovative in creating customer-oriented atmosphere; very knowledgeable about
wines and their differential advantages
Adam Wine maker for higher end winery; responsible for managing supply and
distribution relationships as well; key manager designing and coordinating
minimum carbon foot throughout the supply chain working with major U.K.
retailer
Paul Senior Controller at large and one of the fastest growing wineries in the region; Table I.
responsible for setting up state of the art operations, acquiring state of the Formal interview
equipment; leveraging state-of-the-art processes participants

The informal interviews were not pre-arranged and thus, not digitally recorded. These
interviews occurred during drop-in visits to various companies as recommended by
formal interview participants and area literature. Every participant was aware that we
were researchers collecting data on the wine industry. This sample primarily included
wine retail managers and cellar door (i.e. wine tasting rooms on winery premises)
managers. Extensive notes were taken by one member of the research team, during
both formal and informal in-depth interviews to record observations. Both researchers
were involved in all phases of the study.
Recorded interviews were transcribed verbatim and combined with other sources of
data such as the extensive informal meeting notes and other accumulated company
documents. Coding of the documents involved open coding of meaning units, i.e.
words, phrases, sentences, paragraphs, which essentially involves labeling concepts.
After some time, concepts began to form patterns or clusters and as such, fit into
categories, i.e. addressing or forming aspects of the same issues or more abstract
concept. After a constant comparison by tacking back and forth among all data sources
and interpretations, a core category emerged as it should in grounded theory. This core
IJPDLM category we termed “searching for advantage through sustainability” and will be
39,10 discussed in detail in the findings section[3].

Findings
The core category which emerged as “searching for advantage through sustainability”,
was not sought a priori. We began our investigations merely trying to understand how
848 managers approached sustainability and innovation in such a competitive
environment in the New Zealand wine industry. We wanted to know “what they
were up to” as an ethnographer might put it. It turned out that many of them described
a phenomenon whereby they were trying to work with supply chain partners in order
to find an edge (advantage) and had seemed to have landed on the notion of
sustainability, or something closely related to it, as a way to do it. The core category of
searching for advantage through sustainability involves important sub-categories of
concepts, which include leveraging the brand, telling a story, managing supply chain
relationships, and experimenting with sustainability, each of which is described next.

Leveraging the brand

Searching for an advantage from participants’ perspectives meant finding a way to
differentiate oneself from competitors. In the New Zealand wine industry that may
occur at multiple levels. For example it may sometimes mean differentiating New
Zealand wine from wines produced in other countries, differentiating wine from the
Waipara region near Christchurch from the more well-known and established northern
wine region of Marlborough, or differentiating one winery from another:
The Canterbury region has done a poor job marketing itself. Waipara [region only 30 km
north] has done a better job marketing the region; they try to distance themselves from the
plains growers in Canterbury (Bob).
Demonstrating this point, the Waipara wine region has its own web site. The web site
for Waipara Valley Wine Growers prominently claims that Waipara is “the world’s
greenest wine region” (Waipara Valley Wine Growers, 2009), clearly placing
environmental concerns front and center. Within that region is a winery named
Waterstone who not only claims to be environmentally responsible, but also well
connected to everything in nature as noted on their web site. Thus they are building
their brand based on sustainability:
Waterstone is comprised of a small team who love hunting, fishing and the natural New Zealand
environment. We have planted over 3,500 native trees on our vineyard and we continue our quest
to produce the best wine for a high country rainbow trout cooked over a river stone fire.

Our intrinsic connection with the natural landscape

We realise we are the caretakers for land we need to derive an income from, but also feel we
have a responsibility to increase its biodiversity and recolonise the landscape with native
plantings.
Searching for advantage is about survival right now for individual players in the wine
industry – survival domestically and globally. Excess capacity is a relatively new
phenomenon for New Zealand wineries. Combined with the global recession and the
extreme variety of choice consumers have, this has served to create an intensely
competitive time in the industry. As Ted, who has seen similar patterns before from Searching for
years working in large, mass producers of wine in Australia, there is “a train wreck competitive
about to happen and most (NZ) people don’t see it”. This is why people who do see it
are frantically “searching for a competitive advantage”. advantage
Participants readily spoke about searching for better ways to differentiate
themselves through their brand(s). For example, Vick discussed the importance of
having a physical presence in the valley and tying his brands together. This presence 849
was critical for effective distributor relationships:
A decision we made last year was that we needed a real footprint in the area . . . so the
challenge of locating our Cellar Door to where we were, we didn’t have adequate office
facilities in [ZZ]. We bought this to act as a function of the purchase of the [XX] brand; this
was [XX]’s Cellar Door originally, and we felt that we could utilize this door in the fall for
business administration and local marketing functions which we are doing anyway and that
we could refurbish the Cellar Door and re-brand it and incorporate that in our overall
re-branding of the whole company. So we’re looking at re-branding the whole company as the
[YY] Wine Company. So we actually have a number of entities within our corporate structure,
so we’re working through that central structure and really putting [YY] at the head of that
company, as the key brand . . . . So for me this facility that we look at now is more about
presence to the trade having real roots here as opposed to where we were (Vick).
Similarly, Ted expressed standard views of brand associations and differentiation:
The wine industry is relatively unique, I mean I suppose every industry is relatively unique to
some extent, but the wine industry being a luxury item . . . there is a lot that’s based around
perception. Okay so it’s not just expense, there is a lot of qualitative as well quantitative
aspects to measure when the consumer is actually considering what benefits they’re getting
out of your produce versus someone else (Ted).
Ted went on later to describe how his choice of distributors affected his ability to
export and penetrate markets and move appropriate brands through the network:
When you . . . take that step to exporting . . . you don’t just take a trip across to the UK or the
US and set up an office and hope to god that you make it work. You must first partner up with
people and you get to know the distribution and the way things actually work over there . . .
The core in this business in terms of goodwill is coming effectively down to brands, but also
bearing in mind that brands have lifecycles so as one brand is petering out we’re making sure
we’ve got another brand coming up behind it (Ted).
In essence, the right distribution partners help in leveraging a brand’s image for
differential advantage.
We interviewed managers downstream in the wine supply chain as well, including
retail owners, restaurant owners, and sommeliers. Each was seeking ways to
differentiate themselves. Some of these efforts involve leveraging aspects of
environmental awareness. For example, the owner of a high-end restaurant (i.e.
Cindy) leveraged the fact that all of the lamb served at her internationally known
restaurant was raised organically on her family farm. She and her sommeliers would
steer patrons toward appropriate pairings between the lamb and wine selections,
sometimes emphasizing the taste benefits of organic wines over non-organic. Another
sommelier who we interviewed echoed the same view, i.e. that organic wines have more
complex and superior taste. Because few restaurants offered or emphasized organic
IJPDLM food or wine, this helped differentiate these two restaurants in a competitive dining
industry within Christchurch.
39,10
Telling a story
[You need to] create the story around your wine . . . that’s really important. When people look
850 at a label they don’t think about the wine in the bottle; they think about what that label
represents, and so that is very much what we are trying to do here . . . . a brand that reflects
the place in which it’s grown, the idea of terroir . . . weave those stories into anything you say.
For example the water stone – the symbol of our wine and the symbol of what being and
living here is all about . . . the area is very much about outdoors – hunting and fishing . . . [it’s
about] . . . brand associations (Ann).
Searching for advantage often seemed to involve a related concept that emerged as the
idea of “telling our story”. Each winery, wine business, restaurant and retailer seemed
to strive for a unique story to tell, be it the unique circumstances surrounding the
family who began the winery, the naturally raised lamb served in a restaurant and
raised on the owner’s property, or the relationship between the owners of the most
widely known wine retailer in the city. These stories seemed to be critical for creating
emotional bonds between customers and wineries/restaurants/retailers. Participants
consistently raised the topic of “the story” independently and unprompted.
Participants from many of the wineries with who we met liked to position
themselves as “boutique” to contrast themselves from the few, extremely large,
mass-producers in the country. This boutique positioning demands an almost quaint,
personal relationship with customers, a relationship forged on the hearth of the local
story. Many participants explained that their stories helped to create such memorable
experiences for visiting consumers that the consumers became strong advocates for
and loyal buyers of their brands back home. For a winery this story is “told” often at
cellar doors:
You get to tell them the story. Try to make it a bit different. Often it’s not just the story of the
grapes, it’s about you (Bob).
Even for a high-end restaurant owner, the story had become more critical in finding an
edge within these tough economic times:
Up to last year I would say (my view on business was) more, better . . . today I would say . . .
survival. It’s critical to have a local flavor, a local story (Cindy).
For many of our participants, this story had come to include a focus on
sustainability-related initiatives. We say “sustainability-related” because the term
sustainability when raised by our study participants carried a specific connotation. It
specifically meant the national initiative for all New Zealand wineries to adopt a
standardized sustainability program by 2011 in order to export wine (Sustainable
Winegrowing New Zealand, 2009). This standardized program serves to highlight
processes and metrics for maintaining a winery in an environmentally responsible
way. As one participant described it:
It’s kind of like a beginner’s guide to growing grapes in a sustainable manner . . . helps them
to convert [from using chemicals] . . . managing disease and pests, using cultural means . . .
beneficial bacteria . . . machines for mechanical weeding . . . (Bob).
Yet, even though the initiative was positioned as a “beginner’s guide”, when asked how Searching for
he would describe his winery’s positioning, Bob said it would be, “Single vineyard competitive
wine grown in a sustainable way . . . ” To Bob, it all makes sense as well. After seeing a
promotion for the initiative, he thought, “That’s a good idea. It’s backing up New advantage
Zealand’s clean green image . . . It makes marketing sense and it makes sense from
looking after the land as custodians of the land . . . ”.
Sustainability as seen by our participants usually meant this initiative specifically. 851
But the overall idea of an environmental focus also meant carbon emission and organic
initiatives:
The New Zealand wine industry in general is pretty much focused on sustainability. All the
wineries will not be able to export unless they are part of the sustainability program. A clear
direction is a move toward carbon zero. The concept of organic or biodynamic is significant
here and in the UK market, but I don’t think it is significant in other markets at the moment
. . . but it will be (Ted).
Because the New Zealand sustainability initiative is essentially mandatory, compliance
may help differentiate New Zealand wine from other wine nations, but will do little to
differentiate regions or individual wineries. Thus, many wineries have adopted
additional environmentally related initiatives as Ted mentioned, such as carbon zero.
Carbon zero, known specifically as carboNZeroe in New Zealand, is another voluntary
initiative which strives for a minimal carbon footprint. Tree Hill is one winery which
forcefully markets themselves as “The Wolrd’s first carboNZero certified winery”. We
spoke with cellar managers at Tree Hill who repeated sentiments stated on the
company web site:
The company has for many years operated to minimise its adverse environmental impacts
and this has led to awards and acclaim for its environmental management, waste
management and energy conservation [name of representative of the New Zealand Wine
Council], says the Company is extremely proud to have achieved carboNZero certification, a
significant environmental milestone: “We have a proud history of environmental awareness,
including habitat rehabilitation, and becoming carboNZero certified now places us at the
cutting edge of global sustainability”.
An image demonstrating the overt leveraging of carboNZero for branding purposes is
provided in Plate 1.
Another winery manager participant, Adam, freely criticized his competitor’s
efforts to promote the carboNZero certification as not that significant because it merely
focuses on the wine component of the product and not the final product on the shelf.
Instead of pursuing the carboNZero certification, he and his winery had launched an
initiative with a major grocery chain in the UK, a major export market for most New
Zealand wines, to develop a process to track and target a truly minimal carbon
emissions footprint over the life cycle of the final product, including all supply chain
operations from raw materials to the shelf. Through a partnership with growers, other
component suppliers, the grocer, supply chain service providers, and a consultant, he
was coordinating the monitoring and management of every carbon emissions-related
aspect of production and distribution. This required a fair amount of work on the part
of supply chain partners, including growers. At the end of the day, Adam’s goal was to
be “the world’s first winery classified under this initiative (i.e. low carbon footprint by
stock keeping unit)”. Clearly, Adam feels that being known as the “first”, will create a
IJPDLM
39,10

852

Plate 1.
Overt marketing of
carboNZero

competitive advantage, just in the way Tree Hill promotes itself as the first carboNZero
certified winery.
Some participants dismissed these initiatives as an inappropriate focus for the
long-term. Instead, they were more concerned about organic initiatives:
By 2010-2011, all New Zealand growers need to be sustainable; it will be impossible to trade;
it’s not a choice . . . This does not get any brand differentiation; carbon zero makes no
difference. What really will make a difference is bio-dynamics and organic; we are seeing a
growing movement for organic – sustainability is merely an ante to the game, organic is
where it is (Vick).
Yet, even here, there are differences, which can be made between organically grown
and an organic wine, the latter of which includes the winemaking processes.
All of these attempts to position a firm or brand along environmentally friendly
lines can be seen on promotional literature we collected as well using terms such as
world’s first carboNZero, grown in a sustainable way, connected to the earth, concern
for biodynamics and so forth. An example of a flier demonstrating the recognized
importance of “the story” is offered in Figure 1. To achieve what is being claimed, the
winery needs to coordinate with over 30 growers in some cases to ensure compliance.
To position one’s restaurant or retail establishment as supporting sustainability
initiatives, it too requires extensive coordination with and oversight of numerous
partners in the supply chain.

Managing supply chain relationships

Regardless of the initiative adopted, each seems to require close collaboration and
coordination with numerous supply chain partners. In order to be seen as an organic
 Searching for
competitive
advantage

853

Figure 1.
Example of “story”
literature

vineyard, grape growers must not only alter their own processes, but must also use
products that are organically friendly. Wine makers, in order to minimize the carbon
footprint of bottling, were partnering with local bottle manufacturers who used
recycled glass. One member alone of a wine supply chain cannot claim to be
sustainable, carboNZero, or organic without having already developed solid
relationships with appropriate supply chain partners. Thus, searching for advantage
through sustainability by its very nature demands seeking out and developing and
managing relationships with like-minded business partners. As Ted described it, he
spent a lot of time working on “supply chain alignment of goals, alignment of the
capabilities, . . . do they understand our story? . . . [Dealing with the bad supply chain
partners who don’t get the story] is like a death of a thousand cuts”.
Ann described how connecting the environmental story, one that they know their
customers care about, to supply chain partners was critical for entering global markets,
such as Australia:
IJPDLM We’ve been in Australia for the last five months . . . we’re really keen to build our brand, build
our story, managing relationships . . . [we will] partner with smaller more focused distributors
39,10 rather than large houses where you can get lost. We will always know our customers. There
is always a risk of not knowing who your end customer is if you only work with the
distributors (Ann).
Recall that Adam’s initiative for a low carbon footprint on the shelf required significant
854 coordination and collaboration among supply chain partners who willingly monitored
carbon emission-related processes and shared the results of their evaluations with
other supply chain partners. Ted noted, the supply chain relationships that help along
these lines are “great, sharing relationships.” It is interesting how the story helps
supply chain partners, i.e. distributors, succeed as well. As one winery manager
participant put it:
Oh it’s [the story] absolutely critical you know in terms of we go out and we spend time with
our agents and their sales reps as much as we can in different countries, and it’s fascinating
how if you just arm them with some additional bits of information . . . it just gives them the
extra ammunition that opens the doors, it makes it more appealing . . . for them to be able to
say, ah look . . . the story just makes it, and you know you . . . give them something
memorable with some good points around it, that’s about it. The story’s got to be simple, it’s
gotta be appealing and it’s gotta fit with your business (Jim).
Jim went on to describe how exclusive arrangements with distributors and retailers for
his various wine brands helped all of them differentiate themselves significantly. It
enhanced each of their brand images. One of the consistent themes through their brand
stories beyond simply quality was the sustainable way through which they were
producing and distributing the wines.

Experimenting with sustainability

Several participants commented on their views of a New Zealand cultural attitude, i.e.
that of a desire to experiment:
Kiwis like to try things out . . . They will try one varietal and if that isn’t working out, rip out
the vines and try something else. This experimentation attitude is who we are in New
Zealand. Kiwis will say “okay, let’s give it a go!” about almost any good sounding idea and be
quick to switch if it doesn’t work out (Vick).
This experimentation attitude is reflected in how supply chain partners seem to like to
work with each other. They are each willing to give initiatives a try if the logic seems
sound. Adam’s partnership with a major retail chain in the UK is in essence an
experiment, and within that relationship, the partners are experimenting on ways to
produce and distribute wines in a sustainable way and then leverage that in the
marketplace.
Even the way wineries seem to be using connections with the environment and the
land itself as a differential advantage seems to be part of this willingness to
experiment. For example, Taonga Wines is positioned on its Maori ownership, a New
Zealand indigenous people who are known to be good “custodians of the land”:
Taonga’s competitive advantage is two-fold actually. It’s wholly indigenous owned – only
Maori owned wine company in the world. We are also a boutique winery . . . So it comes down
to the original question, why is someone going to buy our wine? It comes down to the brand
story . . . Getting a piece of the Maori culture is the story we are trying to get across (Ted).
Continuing on the theme of experimentation to find a story, Ted commented that, Searching for
“Wine growers are trying out different varieties, some just don’t have it right yet; some competitive
don’t have a brand of their own – their own story – so they are trying to find it”.
As a way of experimenting with supply chain sustainability issues, Adam, his advantage
partner growers, his distributors, a major retailer in the UK and a consultant all
generated a detailed process map of their wine distribution from grapes on the vine to
consumer purchase and container disposal. At the time of our interviews, they were in 855
the process of identifying carbon footprint data at every step, setting targets, and
managing toward their goal of being able to leverage a fully minimized carbon footprint
on the shelf. For example, this process contributed toward Adam selecting a local glass
manufacturer over a cheaper per unit-imported bottle due to the sustainable ways in
which the local glass bottles were produced combined with the reduced transport costs.

Discussion and implications

The searching for advantage phenomenon emerged out of our field data gathered from
within the New Zealand wine industry as involving aspects of leveraging the brand,
telling a story, managing supply chain relationships, and experimenting, and the
continual interaction among these aspects. This phenomenon is depicted in Figure 2.
The search for differential advantage is not a new concept. However, it is interesting
to note that in New Zealand it seems many managers in the wine industry are finding
that their sustainability efforts can be used to differentiate themselves in what has
become an intensely competitive, almost commoditized, global market space.
Sustainability in New Zealand and its related initiatives, carbon zero and organic
growth/production, are discussed as the right things to do and as useful from a

Figure 2.
Searching for advantage
through sustainability
IJPDLM competitive advantage perspective. They serve as a classic case of how supply chain
39,10 management expertise, i.e. the coordination that occurs across organizations, can serve
as more than a cost focus; it also serves as a differential advantage. Additional images
of documents as examples of hundreds we gathered from the field demonstrating how
wineries and regions were trying to leverage their sustainability efforts in the
marketplace are shown in Figure 3.
856 The implementation of Sustainable Winegrowing New Zealand (SWNZ) has been
discussed by others as a key initiative that helped to position New Zealand wine in the
global competitive landscape by leveraging the environmentally focused cultural
imagery often associated with the nation (Brodie et al., 2006; Hughey et al., 2005). Our
participants freely discussed this initiative and its effects but called into question the
ability of SWNZ to help them differentiate their individual brands. Other environmental
management systems are also evident in the New Zealand wine industry such as ISO
14001 and Bio-Gro (Hughey et al., 2005) which again have served to differentiate the
nation’s wine somewhat, but have yet to significantly help differentiate individual
businesses/brands in the supply chain (e.g. growers, wineries, retailers, restaurants).

Figure 3.
Examples of leveraging
aspects of sustainability
Thus, individual businesses are seeking a capability within the environmental realm that Searching for
as a resource or assortment of resources, serves to create comparative advantage because competitive
it is perceived by some market segment as valuable and/or helps them reduce costs as
comparative advantage theory would predict (Hunt and Morgan, 1995). advantage
From one perspective, the nationwide environmental initiatives may have been a solid
first step that laid a necessary foundation for markets to recognize New Zealand wine,
with the next stage being individual businesses searching for differentiation within that 857
landscape. However, from another perspective, the nationwide initiatives might have
hurt; had they not been implemented, individual businesses might have been able to
leverage their own initiatives – had they pursued them. As it stands now, businesses are
finding that in order to differentiate within this space, they must find a unique edge
and/or simply execute in a far superior fashion in order to break out of the pack. And
they can only do this by aligning themselves with superior and likeminded supply chain
partners. It seems that our study’s participants are coming to the conclusion that growth
is increasingly dependent on coordination across many supply chain organizations, as
others have articulated (Caniëls and Romijn, 2008). For environmentally focused
businesses in the New Zealand regions of the wine world, our findings suggest that there
is an opportunity – maybe even necessity – to align themselves with like-minded
environmentally-focused supply chain businesses. Leveraging a sustainability
positioning requires many coordinated organizations all focused on sustainability. It
seems apparent as well that membership in this coordinated environmentally-focused
network of relationships needs to become part of each organization’s “story” that is told.
From a research perspective, there is still a great deal more to learn about how wine
industry organizations are attempting to understand and leverage all of the emerging
sustainability options at their disposal. There is significant opportunity to continue
exploring these issues, through both qualitative as well as quantitative means. For
example, the themes discovered from this research should be examined across other
new and old world wine regions. Ethnographic research or supply chain case studies
could be conducted in these different regions to determine if similarities exist or if there
are anomalies dependent on certain characteristics, such as history, culture, or even
regulations. These qualitative studies could begin to develop theory or theories about
the role of sustainability in building competitive advantage within the supply chain.
Quantitative research, e.g. surveys, quasi-experiments, or content analysis of
secondary data, could then be used to further develop and test theories. Future
research may also examine other competitive industries to determine how they are
attempting to leverage sustainability in their supply chains for a competitive edge.
We would like to conclude with an implication for supply chain managers, and that
is although sustainability initiatives such as organic, bio-dynamic, and low carbon
emissions can all be used to differentiate companies and supply chains in some way,
marketing purposes need not be, nor should they be, the sole reason for pursuing them.
For some, being organic is merely a way of doing business. Curt described a
well-known winery in the region for example:
Organic is how they do things, it’s not a marketing thing for some wineries; it is what they
stand for; it is integral to who they are; [Curt’s winery] is not at that level . . . (Curt).
However, it is beneficial if you can also grow a business and achieve an advantage by
doing what is sustainable as well as integral to who you are.
IJPDLM Notes
39,10 1. For this research, we are limiting our definition of sustainability to only the environmental
dimension.
2. France, Italy, Germany and Spain.
3. Please note that we have disguised all names of participants and their companies in the
findings and discussion by using pseudonyms. While we used company web sites and
858 marketing literature as data sources, we do not include these in the reference list for
confidentiality purposes.

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About the authors

Daniel J. Flint (PhD University of Tennessee) is The Proffitt’s, Inc. Associate Professor of
Marketing and Director of the Marketing PhD Program in The Department of Marketing and
Logistics, The University of Tennessee, Knoxville. He has an engineering degree from The US
Naval Academy, is a former Naval Flight Officer and sales engineer for Alcoa. Dr Flint has
published in both marketing and logistics premier journals such as The Journal of Marketing,
Journal of the Academy of Marketing Science, Journal of Business Logistics, Industrial Marketing
Management, Journal of Business & Industrial Marketing, Marketing Theory, Services Marketing
IJPDLM Quarterly, and International Journal of Physical Distribution & Logistics Management. His areas
of interest cover business buyer behavior and relationships, customer value dynamics, shopper
39,10 marketing and its supply chain implications, supply chain management innovation, value
co-creation, sustainability as a differential advantage and new ventures.
Susan L. Golicic (PhD University of Tennessee) is an Assistant Professor of Supply Chain
Management at Colorado State University. She has an MBA in logistics and operations from the
University of Tennessee and a BS in Chemical Engineering from Wayne State University. Her
860 research focuses on managing business relationships, strategy and sustainability in the supply
chain. She has several years of professional experience in logistics and environmental
engineering. She has consulted with numerous firms on supply chain management and
forecasting, presented at many academic and practitioner conferences and has published in
Journal of Operations Management, Journal of Business Logistics, International Journal of
Physical Distribution & Logistics Management, Journal of the Academy of Marketing Science,
Industrial Marketing Management, Transportation Journal, The Wall Street Journal and Supply
Chain Management Review. Susan L. Golicic is the corresponding author and can be contacted
at: Susan.Golicic@business.colostate.edu

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