According to Michael E. Porter, when we talk about strategy, we have to differentiate between operational efficacy and strategy. The former refers to the way in which companies execute similar activities, with one doing so better than its competitors – in other words, more efficiently. By constantly improving their operational processes, companies can make better use of their own resources, a basic condition for increasing profitability. But this might not always be enough – the primary reason being that competitors can rapidly imitate new technologies and make more effective use of their own resources.
By creating and implementing a competitive strategy, companies can set themselves apart. This entails the deliberate selection of a set of activities, not merely a collection of certain parts, which allow the company to deliver a unique value combination and maintain it over time.
The success of a sustainable strategy is based on doing several things well – not just a few – and on the combination of all of these activities. In other words, it requires a holistic way of thinking.
An article in the Harvard Business Review, “Yes, Sustainability Can Be a Strategy”, examined the concept of a sustainable strategy as a tool to provide companies with a competitive advantage.
The studies carried out for this article show that a sustainable strategy can be both a necessity and a differentiating factor. According to the article, certain sustainable activities are simply becoming “best practices”, and some companies are developing a competitive edge through sustainable strategies that their competitors cannot easily match.
In the wine and grape sector, we can find clear and solid examples of sustainable strategies.
In its latest sustainability report from 2021, Treasury Wine Estates presented its sustainability strategy and indicated that embedding sustainability in its business model was fundamental for the company to thrive in the long term.
Treasury Wine Estates focuses its sustainability strategy on three main areas: building a resilient business, fostering healthy and inclusive communities, and producing sustainable wine. The strategy centres on areas where the company can have the greatest impact and responds to global challenges, including those identified by the Sustainable Development Goals (SDGS).
Jackson Family pursues a similar line of thinking in its sustainability strategy. In 2021, the family-owned company introduced a new roadmap for its sustainability strategy with clearly marked objectives for 2030: social responsibility, environmental action, conservation of land and farming, water management, and action-based global leadership.
Finally, Concha y Toro, one of the leading wine producers in Latin America and recently certified as a B Corp, builds its strategy on one key objective: to generate growth in value and profitability.
To this end, the company bases its sustainability plan on six strategic pillars: wine and brands, producers and supply chains, clients and markets, our team, the global and local community, and the environment.
This wine world giant first adopted a sustainability strategy in 2011, and since then the company has been increasing and formalizing its commitment to sustainability as a strategic and differentiating factor.
One common element found in all of the aforementioned strategies is the use of a methodology known as “materiality analysis”.
Increasingly implemented in the wine industry, this tool is used to identify and prioritize the most important sustainability-related topics for an organization and its interest groups, estimating the possible environmental, social, and corporate governance impacts which could affect the business and its stakeholders.
It is a very useful tool from a strategic standpoint and allows organizations to develop and implement an excellent strategic plan.
Also worth remembering is the fact that a good sustainability strategy makes for more dynamic companies that can better adapt to the constantly changing circumstances of today’s world.
A company is considered dynamic when it improves its capacity to take decisions, solve problems, identify opportunities and risks, and modify its existing resources. Considering the high level of uncertainty that characterizes our present, this dynamic capability enables a sector as traditional as the wine industry to improve its ability to adapt.
All sustainable strategies should add value to the brand, but they can also offer other benefits, such as satisfying consumer demands, increasing efficiency, attracting valuable talent, and creating new opportunities.
What is necessary, however, is to find a way of involving the company’s entire team. This means we have to turn the strategy into a motivating force, into something invigorating, so that it comes to define the company’s new language and thus become part of its culture. After all, without a suitable strategy, it is really difficult to integrate exciting ideas and align them with the company’s commercial priorities.
Although establishing the right sustainable strategy is important, the most decisive moment is the actual implementation and execution.
Every sustainable strategy should be understood as a tool that we can use to have a positive impact on the vinicultural sector. A good strategic plan provides us with purpose and direction, but executing this plan effectively through our products and services is what really makes the difference, allowing us to transform business models and offer solutions to our common global challenges.
In short, sustainability should be approached from a strategic standpoint, aligned with the core of the business and implemented within the business model to create new products and services. In doing so, organizations can attract the kind of innovation that will make it possible to find solutions to global problems while at the same time satisfying the needs of their stakeholders.
Marta Juega, PhD