Rosario Silva. Professor. IE Business School
10 January 2008
Few business groups can boast a history that dates back to the 16th century. Codorniu is one of these rare exceptions, having evolved successfully over time.
For a business school professor, writing about what is considered the oldest family business in Spain is a an enjoyable task, albeit not an easy one, given the need to understand and summarise the factors underlying the success of a company that dates back to the 16th century and that is being managed by no less than the 17th generation of the same family (Raventós). Although its long life is in itself proof of success, it must also be pointed out that the Codorníu group is among the top three Spanish winemaking groups and one of the leading exporters in the sector.
There is no doubt that the fact it pioneered the making of Cava wine helps understand its privileged position in the sector. Besides the experience it has accumulated over so many years, in my opinion, other important aspects include the following: innovation in winegrowing, the development of distribution channels and the offer of a large brand-name portfolio.
First of all, its commitment to innovation can be seen in the group´s oenology and viticulture centre at the Raimat winery, which, with 2,245 hectares of vineyards, is one of the largest viticulture research centres in the world. Secondly, the purchase of the North American distributor AV Imports and the reorganisation of its commercial network has allowed the company to strengthen its distribution to compete in leading international markets, which are dominated by large drinks companies with powerful distribution systems. Finally, through the takeovers of wineries in Argentina, United States and the designations of origin of Rioja and Ribera del Duero, it has extended its offer of Cava and quality wines from different countries, adapting to new consumer trends. Accordingly, although Cava wine remains the core of its business, the percentage of sales of still wine has increased in recent years and now comprises 32% of the group´s sales.
The worldwide market is changing: a fall in consumption in traditional producer countries such as Spain and France; an increase in competition from wines from new countries; and the appearance of large enterprises as a result of mergers between the large alcoholic drinks groups. These changes seem to indicate that the adaptation to the tastes of new consumers and size will play a key role in the firm’s ability to compete. The Codorníu Group’s strategy for growth has taken these trends into account and shows that it has no intention of losing its competitiveness in an international context. In my opinion, however, continuing to trust exclusively in its own resources may be preventing it from attaining a much stronger position in the new international arena.