If CEIBS Management Professor Per Jenster had followed his own theories taught in his EMBA course Strategic Management, he would have thought twice before entering the wine business - a sector he describes in lectures as a 'structurally unprofitable industry' in which ease of entry is only rivaled by the difficulty of exiting with success.

Good thing this professor has not followed his own expert advice. In fact, his own teachings have not stopped Prof. Jenster from venturing into the field, along with his brother, and even finding "quite good" success as a vintner. Still, the professor says his three-year-old side business on 110 acres of vineyards in Argentina (one of his eight business ventures) is as much about passion as profit.

In his new book, The Business of Wine -- A Global Perspective, Prof. Jenster and his co-authors offer a comprehensive, birds-eye view of the industry “from the vineyard to the wine glass.”

Published in June by Copenhagen Business School Press, the 350-page book was written together with marketing professors David E. Smith and Darryl J. Mitry and oenologist Lars V. Jenster. Below, Prof. Jenster shares with TheLINK his thoughts on the global wine industry and what his book offers for industry players and wine lovers around the world.

theLINK: Your book offers a de-tailed view of the wine industry today. Is now a good time to enter this business?
Per Jenster:Let me put it this way, I often start off my EMBA classes in Strategic Management by telling my students that when they are finished with the course they should be able to theoretically argue why the professor's purchase of a vineyard was quite a stupid financial decision. [This is] because the wine business is what you call a 'structurally unprofitable industry.' I also tell them that, sometimes in life, you have to do things that are fun.

theLINK: Can you describe the scope of the global wine industry as well as China’s share, position and performance within it?
Jenster:The Chinese market for wine is very exciting right now, for local and international firms. A few local firms have grown exceedingly well while many foreign firms are struggling to enter the market. Therefore, many in the international community are very curious to learn more about what is going on in China. We've just written an article that will be published in the International Journal of Wine Business Research and one of the things [discussed in that paper] is that there are actually already areas in which China has shown world leadership. It's exciting and it surprises many people. But at the same time, there are some real challenges in China in terms of developing quality, consistency, and branding. The question is: will China ever be a large player in the global wine industry? Right now, China is blessed with quite high price levels. So, many of the larger players in China are making reasonable, although not extraordinary, returns. What will happen in the future? It’s difficult to say.

The wider wine industry outside of China is not doing particularly well, because it is an industry based on an agricultural commodity. It is very easy to enter but it is capital intensive -not only the vineyards but half the capital is often tied up in working capital - and it is very difficult to exit.

If demand suddenly falls, you cannot just stop growing grapes. It takes four years just to get the grape vines to produce grapes and it takes eight years for them to actually become useful grapes. For other products, like airplanes, you can at least park them in the dessert when you don't want to use them. If we would stop attending to our grape vines for six weeks, they're dead. So, when demand slows, people keep on producing; that’s why it's a horrible industry to invest in. But it’s fun, it's romantic, it's the dream of many people.

theLINK: What do wine buyers and wine drinkers look for and how should these needs influence mar-keting and production strategy?
Jenster:Your biggest challenge as a wine producer is getting access to the channel. And once you are in the supermarket, you're trying to sell a wine and there'll be 249 other different bottles up there on the shelves next to yours. So, how on earth can you actually make yourself interesting? Of course, the quality of your grapes is very important. Sometimes you have limitations on what you can make, probably because the year's been bad or the grapes are not good enough, or the way you have grown your grapes is not optimum. But many people can actually produce very good wine. The problem is, of course, how on earth do you sell it - at a profit?

So yes, this is certainly an industry where marketing, product positioning, branding and customer understanding are all very important. And it is also one where channel access is absolutely critical.

theLINK: How are companies re-sponding to the changing demands of the market?
Jenster:There is a lot of consolidation taking place. In fact one of the themes we are discussing in our book is the different strategies available to different types of players. We've had great value in looking at Chinese wineries like Changyu and Suntime, and we also detail different strategy positions in our book.

theLINK: What are some of the sur-prises that The Business of Wine offers readers?
Jenster:Most people who would buy this book are academics, other savants inside the industry, or just people who are simply interested in wine. It offers a much more holistic perspective on the industry within the context of a lot of recent developments. We hope it's going to stimulate a lot of good discussions amongst wine lovers and academics alike.