The Growth and Survival of Multinationals in the Global Alcoholic Beverages Industry

The global alcoholic beverages industry offers the interesting case of a non–science-based industry in which firms have both survived a long time and grown very large. It is also an industry in which brands play a significant role in firms' strategies. From the 1960s, the alcoholic beverages industry underwent several major changes, the most significant of which was a profound concentration, as leading firms undertook multiple international mergers and acquisitions. Rapid internationalization, diversification, and, ultimately, globalization accompanied concentration.

I had three main aims for my dissertation: to understand the rationale for multinational growth and survival in the global alcoholic beverages industry from 1960 to 2003, to study the role of brands and marketing knowledge in that growth and survival, and to explain why in this industry brands so frequently outlive the firms that created them.

Using a historical, international, and comparative approach, I look at the evolution of the largest multinational firms from several continents, operating in distinct alcoholic beverages businesses (wines, spirits, and beer). I draw on original research covering over seventy firms, including leading multinational enterprises worldwide, such as Diageo in spirits, beer, and wines; Anheuser-Busch in beer; Ernest & Julio Gallo and Constellation Brands in wines; Moët-Hennessy Louis Vuitton in champagne and cognac; Foster's Brewing in Australian beer and wine; and Suntory in Japanese wines and spirits. The historical and geographical range of the study made it possible to address key questions about the international behavior of multinational firms over time.

Fundamentally, this dissertation is a work of international business history, informed throughout by the application of economic theory, particularly the theory of international business. I follow the empirical, historical studies of Alfred D. Chandler, Jr., and Geoffrey Jones while drawing on the theoretical discussions of Mark Casson and John H. Dunning, whose economic methods and concepts of international business help resolve and generalize various issues in the growth of the multinationals that I analyzed. ¹

I consider three levels of institutional analysis: the country, the industry, and the firm, focusing in particular on the contribution of firm-level capabilities to growth and survival in the alcoholic beverages industry from 1960. The three levels of institutional analysis are not distinct but rather overlap and complement each other, with each level providing important determinants for the growth and survival of firms.

The combination of new empirical research with theoretical models of current interest in management and the use of different levels of institutional analysis helped structure the dissertation; each chapter corresponds to a different topic related to the growth and survival of firms. This structure allowed analysis of numerous issues, ranging from mergers and acquisitions to alliances in distribution, related and unrelated diversification, corporate governance, and the life of brands.

My dissertation has several key features. First, I looked at an industry that has not yet received much attention from scholars. Second, I included businesses from different sectors within the industry. The differences among these sectors—wines, spirits, and beer—help explain the distinct paths along which firms evolve. Third, I extended existing knowledge on the growth and survival of multinational firms by moving attention away from technological innovation to brands. ² Furthermore, we can generalize the conclusions about patterns of corporate growth and survival of multinational firms beyond this particular industry.

Although certain firm-specific advantages, such as brands, marketing knowledge, and distribution networks, are always important in explaining the growth and survival of firms, their relative significance changes over time. When country- and industry-specific factors that affect all firms more or less equally were benign—that is, when consumption patterns were culture-specific, competition and the institutional environment were principally domestic, and the industry was fragmented—it was possible for firms to grow and survive without constantly rebuilding their firm-specific advantages. Once these country- and industry-specific factors became adverse, however, it was no longer possible...