Disintermediation: The optimal distribution strategy for small wineries?

Abstract

This study examines the utilisation of the disintermediation strategy by a family owned New Zealand wine business. A longitudinal case study approach was used to gather qualitative data about their distribution strategy. The key finding is that this business originally earnt 95% of total revenue through selling directly to end consumers by disintermediating their supply chain. Today, that figure has reduced to 80% of total revenue and the distribution strategy now includes some indirect retail and restaurant channels. This change in distribution strategy over time has been driven primarily by consumer demand. Whilst the disintermediation strategy initially allowed the business to maximise profits, gain distribution efficiencies, and enhance customer relationships, it did not fully meet the needs of all consumers. We discuss the rationale of the various direct and intermediated channels utilised by this business and suggest that these will be useful for other small wine businesses that want to achieve similar benefits through a combination of channel strategies.