Wine: The Rules of the Game (That Nobody Tells You)
After the whirlwind of Vinitaly, a sensation remains that I believe I share with many colleagues and industry professionals: the growing complexity of our world. Market dynamics that seem illogical, strategies that don't always pay off as expected, the constant difficulty in creating and communicating lasting value... How can one find direction in this scenario? Over the years, confronting these challenges, I've found a particularly powerful analytical tool, albeit perhaps unconventional for the wine world: Game Theory. In this article, I'd like to share some reflections on how this lens can help us decipher certain dynamics and, perhaps, make more informed choices. I warn you that this won't be a superficial analysis; it will require attention and the patience to follow me through reasoning that touches on strategic logic. The goal isn't just to offer a different perspective, but to stimulate a strategic approach that goes beyond intuition or simple reaction to events.
Think about it for a moment: how many strange things happen in the wine world, right? Rock-bottom prices that hurt everyone! Consortia that argue instead of working together. Certain choices about quality... well, sometimes they're simply incomprehensible! Then add in the current global climate – tariffs, stagnant markets – and the situation becomes even more tangled. We all complain that 'there's no logic!', but perhaps, just perhaps, there is indeed an iron-clad logic: Game Theory!
But what is Game Theory really, beyond its possibly misleading name? It's not some arcane sorcery, but a rigorous way to analyze interdependent situations: those very common scenarios where my outcome depends on your choices, and vice versa. It's about understanding the optimal strategy when 'playing' with others (competitors, clients, suppliers...), anticipating their moves and reactions to maximize one's own results or minimize losses. It's a logical tool for thinking better when you're not the only one making decisions.
My personal 'enlightenment' happened almost by chance years ago, during a long work flight to India. I immersed myself in 'The Art of Strategy' by Dixit and Nalebuff: not a text on enology, yet, with practical examples in hand, I saw the dynamics of our sector – price wars, consortium difficulties, seemingly illogical business choices – in a completely new light. In that book, I found a new toolbox for deciphering the present and anticipating the future in our world.
With this new awareness, I began to see our world not only as poetic and artisanal but also as a fascinating playing field. This strategic lens doesn't erase the poetic or artisanal soul of wine, nor does it replace the intuition and passion that drive it; rather, it offers tools to give solid legs to the vision and navigate the complex market interactions. And attention, I'm not saying that the great successes of the past were born only from calculations at the drawing board. Often, as someone might rightfully object, they are the fruit of a complex convergence: history, brilliant intuitions, favorable circumstances of a particular historical period that allowed certain wines or types to emerge. But Game Theory helps us reread those successes too, to understand why certain strategies (conscious or not) worked in that specific context, what were the unspoken 'rules of the game' that favored their affirmation. It's not an abstract exercise, therefore, but a practical necessity to decipher the past and, above all, to navigate the present and future with greater clarity. Let's look at some concrete, perhaps surprising examples.
1. The Quality Game (and Strategic Immobility)
Why do producers or denominations sometimes seem 'sitting' on quality, or struggle to communicate their distinctive identity? Nash Equilibrium helps us understand inertia: it describes a stable situation where no one has an interest in changing strategy alone, given the moves of others. If improving costs, the market doesn't immediately reward the difference, and competitors remain static, it can be rational not to invest more, maintaining a safe but perhaps sub-optimal position in the long term.
An emblematic case illustrating these dynamics, and perhaps also a certain strategic immobility, is offered by the world of Prosecco DOCG from Conegliano and Valdobbiadene compared to the large (in numerical terms) denomination of Prosecco DOC. For a long time, for many players in the DOCG (Conegliano Valdobbiadene), investing massively in qualitative differentiation and building a strong, distinct perceived identity has appeared strategically complex. The higher costs of the DOCG were perhaps compounded by the lack of incisive collective plans to enhance its uniqueness, maybe also due to the strategic fear of weakening the pulling power of the name 'Prosecco' by emphasizing, as would have been right, 'Conegliano Valdobbiadene'. If we then add that for years, the identity perceived by the consumer has been played more on dosage levels (Brut, Extra Dry, Dry) than on the real value differences linked to terroir... It's like defining the identity of a great coffee by the amount of sugar we put in it. Thus, while the DOC thrives due to price issues, the DOCG is struggling to see its added value adequately recognized. Territorial differentiation strategies like the 'Rive', although valid, arrived relatively late to the mass market and are not always understood by the end consumer, especially abroad. The paradoxical effect, known to all operators, is that the DOC can be economically more profitable than the DOCG relative to the production effort. This equilibrium, however, is not immutable: it can be broken by external factors (changes in taste, new competition) or by more courageous strategic moves that inevitably the DOCG Conegliano and Valdobbiadene must take. Intrinsic quality and territorial uniqueness then become fundamental levers again. It's not just technique; it's a move in the game.
2. The (Producer's) Dilemma: Why Do We Hurt Ourselves?
The classic "Prisoner's Dilemma" is a logical trap that manifests all too often within wine denominations. The theory describes a situation in which two actors (in our case, two producers or two groups of producers) would obtain the maximum collective benefit if both cooperated (for example, maintaining high quality standards and remunerative prices, thus strengthening the value of the entire DOC). However, each actor is individually tempted to "betray" the implicit agreement, perhaps by slightly lowering prices or cutting corners on quality to gain an immediate competitive advantage at the expense of the other. The paradox is that if both yield to this temptation, they both end up in a worse situation compared to the initial cooperation: they earn less and, above all, damage the collective reputation of the denomination. It's the classic situation in which the pursuit of myopic individual "rationality" leads to a collectively irrational and harmful result. It's like breaking an unwritten pact for fear that the other will cheat you first.
A glaring example of this trap, with strong international resonance, is that of Spanish Cava. The denomination, having grown enormously in volume in the past, has seen within it a strong tension between producers focused on maintaining high standards and a prestigious positioning, and others more oriented toward competing on price and large numbers to conquer market share. The individual temptation to lower prices or simplify processes to be more competitive in the short term has contributed to devaluing the average image of the denomination, with the result that we all recognize today, also to the detriment of the denomination's real quality potential. Understanding this logical trap thoroughly is the first step to building mechanisms (consortia, regulatory, reputational) that incentivize mutual trust and truly win-win strategies, rewarding cooperation toward common quality and value objectives.
3. Is Cooperation Advantageous? The Consortium Game
Game Theory also helps us understand why cooperation within Consortia is as precious as it is difficult to maintain. The theory suggests that cooperation tends to work better in so-called "repeated games," where interactions between members are continuous over time: here, reputation becomes a fundamental capital. For this reason, truly effective Consortia are not based solely on goodwill, but manage to create tangible collective value (brand, promotion, research, protection) that exceeds the advantages of "playing alone," protected by clear rules and well-studied incentive mechanisms. It's not about goodwill, precisely, but about strategic architecture. However, we must be realistic: even the best strategic architecture can struggle in the face of deep divisions that are not only economic, but often cultural, historical, or related to worldview, making cooperation an arduous path and not always crowned with success.
An illustration of these complexities can be found in the recent case of Bertani Domains leaving the Consorzio Tutela Vini Valpolicella. This event highlights the challenges in reconciling different strategic visions within a composite denomination (from basic Valpolicella to Amarone). When a highly prestigious member believes that collective strategies are no longer aligned with their vision (often oriented toward defending higher positioning), cooperation can crack. It's interesting to note how this path culminated in joining the "Historic Families" group of Amarone, almost emphasizing how the search for effective collective action can also lead to the formation of different, perhaps more homogeneous strategic alliances, when the main consortium framework is perceived as not fully representative of certain instances. This demonstrates how delicate and continuous the work is to build and maintain effective collective action.
4. Investing: Gamble or Strategic Move?
Deciding whether to invest in a new winery, cutting-edge technology, or that special vineyard is always a complex 'game' that goes beyond the simple calculation of direct costs and benefits. One must consider how one's moves will influence competitors' behavior and how they, in turn, will react. Game Theory teaches us to think in terms of scenarios: investing first (first mover advantage) can guarantee a technological, image, or market advantage, but exposes to greater risks if the choice proves wrong or if competitors quickly imitate, nullifying the advantage. The theory helps to ponder these scenarios, to evaluate the strategic value of commitment – that is, how a massive investment can credibly signal one's intentions and discourage the entry of new competitors or aggressive reactions – and to understand the importance of signaling one's intentions to the market.
A fascinating, and little-known, example of this strategic dynamic, played out in a particularly challenging context, is that of the Purcari Wineries group in Moldova. In a country emerging from the Soviet era, with a wine industry historically oriented to the Russian market and mass production, Purcari (leveraging its ancient history, but starting almost from scratch after privatization) made a bold strategic bet: to invest massively in quality, technological modernization, the recovery of indigenous grape varieties, and branding (as with the iconic Negru de Purcari), decisively aiming at the most demanding international markets. It was a "first mover" move in the Moldovan premium segment, with a very high level of commitment and risk, in an uncertain economic and political context and with an international reputation yet to be built. Purcari bet on its ability to create a lasting competitive advantage before others could effectively react. The success achieved – leadership in the premium segment, numerous international awards, up to the stock market listing (IPO) in 2018 – demonstrates how a well-considered strategic investment, even if risky, can pay off enormously, changing the rules of the game in one's competitive context.
5. Uniqueness as a Strategic Shield (The 'Outside the Box' Game)
Sometimes the strategically most powerful move is to stop playing the same game as others. It means creating a wine, or an entire business philosophy, with such a strong, specific, and authentic identity as to make it almost irreplaceable in the eyes of a certain segment of consumers. When this level of differentiation is reached, the rules of competition change radically. One is less exposed to price wars based on pure comparison, less vulnerable to passing market trends, and even more resilient in the face of external shocks, like potential tariffs or embargoes that hit more generic categories. "Thinking outside the box," therefore, is not just an act of creativity, but a precise strategy to modify the rules of the game to one's advantage, building a moat (as financial analysts would say) around one's value.
A masterful, and in some ways controversial, example of this strategy of breaking the mold to create disruptive uniqueness is that of Angelo Gaja in Piedmont. In a region with very strong wine traditions and stringent DOCG rules, Gaja made innovative and bold choices: the introduction of international grape varieties like Cabernet Sauvignon and Chardonnay alongside Nebbiolo and Barbera, the pioneering use of barriques for aging, a maniacal focus on quality and branding. These moves, while attracting criticism from tradition purists, have created wines with an unmistakable Gaja identity, recognized and desired worldwide, capable of commanding very high prices. In fact, Gaja chose not to compete only within the rules of Barolo/Barbaresco, but to create his own "game," based on a very strong brand and unique products that transcend the denomination itself, guaranteeing an almost unassailable market position.
In Conclusion: Understanding the Game to Try to Change It
Game Theory, therefore, doesn't offer magic formulas, but proves to be an indispensable compass for navigating the often turbulent waters of our sector. The examples we've seen – from equilibria on quality to the traps of internal competition, from the challenges of consortium cooperation to bets on investments and uniqueness – demonstrate that understanding the rules of the game is the first, fundamental step to not passively endure them. It allows us to anticipate others' moves, to recognize the perverse dynamics that can damage individuals and communities, but above all, it offers us the conceptual tools to try to influence the game, to build strategies that create authentic and lasting value, rather than just reacting instinctively to events. It's not about becoming cynical calculators, but more aware entrepreneurs and technicians, capable of transforming strategic understanding into targeted actions, which strengthen one's company and, possibly, contribute to a positive evolution of the entire system. The real question, then, is not only if you are ready to play your game, but if you are ready to deeply understand the rules to try, with intelligence and vision, to write new ones.