Economic and Financial Performance of the Portuguese Wine Market: Business Intelligence Approach

Abstract

In the past years, the international wine industry has been subject to intensive globalization and international competition as a result of the aggressive entrance of new players (New World Wine) as well as the consolidation of traditional producers’ countries (Old World Wine), which brings, simultaneously, challenges and opportunities to the industry. In Portugal, winemaking is one of the most relevant socio-economic activities, which makes it one of the most critical industries in Portugal. This study aims to develop a prototype business analytics solution that delivers the necessary inputs to evaluate Portuguese winemaking enterprises’ financial and economic health. Consequently, three research questions were defined: How can one create segments of Portuguese winemaking companies based on their financial performance? What was the evolution of the main financial indicators and margins within each segment and vineyard region? What has been the impact of COVID-19 on these companies’ profitability? Multiple financial ratios for 148 Portuguese companies were computed based on information from 2016 through 2020. Additionally, data of the entire sector was retrieved from the Bank of Portugal for the same period. This study uses analytical tools and dashboards to analyze the wine sector performance and the firms’ performance under each region by comparing their financial results. This study contributes to the literature by expanding on previous research on specific regions of Portugal. Additionally, this study presents the results employing a business analytics solution, including cluster techniques and AI insights. It was concluded, through the analysis of the economic-financial performance, that large companies have higher financial performance. Additionally, the sector, in general, suffered a drop in financial results because of the impacts of the COVID-19 pandemic.