Analysis and structural characterization of the vid-pisco market

Marco Esteban Chiang Vegas; Rodrigo Lam Araoz; Marcos Fernando Ruiz-Ruiz

doi:10.1515/opag-2022-0320

Article Open Access

Analysis and structural characterization of the vid-pisco market

Marco Esteban Chiang Vegas , Rodrigo Lam Araoz and Marcos Fernando Ruiz-Ruiz

Published/Copyright: July 17, 2024

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From the journal Open Agriculture Volume 9 Issue 1

Abstract

The objective of this was to determine the factors and social actors that characterize the vid-pisco market in Peru. Using a methodology with a non-experimental qualitative approach of exploratory and descriptive scope, a structural analysis was carried out with the support of a group of five experts familiar with the system studied and the Cross Impact Matrix Multiplication Applied to a Classification tool. The findings allowed us to identify the most influential and dependent factors of the system: the number of people identified with the vid-pisco as a Peruvian symbol, the number of liters of pisco consumed per person, and the percentage of market growth per person per year. On the other hand, the most important social actors turned out to be tourists who visit the country and consume pisco, local consumers, and national distributors. The key factors are important for the system since good management of these favors its development; in the same way that the actions carried out by the actors would complement their development. This study constitutes a starting point for the planning and design of strategies that support the evolution of the system in the medium or long term.

Keywords: pisco; cultural identity; structural analysis; Peru; market

1 Introduction

Pisco is a drink of great cultural impact for Peru that is currently one of the main liquors of the aforementioned Andean country, and its importance lies in its contribution to the construction of the local, national, and international identity of Peru, becoming an attractive product to both for Peruvians and foreigners [1]. This colorless spirit distilled from wine is produced from eight varieties of authorized grapes [2], using traditional distillation techniques that give it the qualities of this liquor, adding to this the climatic characteristics and the composition of the soils of the valleys of Lima, Ica, Arequipa, Moquegua, and Tacna where pisco is produced make it worthy of the authenticity of true pisco [3] (Figure 1).

Figure 1

Map of pisco-producing cities. Note. Vinetur. Source taken from Ref. [7].

This Peruvian drink is related to life in society, gastronomy, and traditional festivals. It is part of the history of farming families of the Peruvian culture and it is constituted as a tradition, history, and heritage that has achieved national and international recognition [4]. By virtue of the above, the contribution of the study was theoretical, since by finding little research on the same topic discussed, its objective is to affirm which factors and social actors of the previously investigated vid-pisco market do interrelate and significantly influence its growth. Additionally, this study contributes to a literature review that allows you to familiarize yourself with current knowledge and helps you understand the theories driving the field, including giving you the opportunity to see and even evaluate successful and unsuccessful methods. Furthermore, it is expected that this research will provide producers with a broader vision to improve their strategies and decisions, generating greater demand among new and old consumers.

1.1 Pisco market

Pisco is a liquor obtained through the distillation of recently fermented fresh musts, the must is the natural juice of the grapes, and its production is carried out through traditional methods that maintain the quality established in the main production areas: the coast of the regions of Lima, Ica, Arequipa, Moquegua, and the valleys of Locumba, Sama, and Caplina in Tacna [5–7]. This distillate is a symbol for Peru; it also unites gastronomy; traditional, civic and religious festivals, music, songs and dance. The name pisco for many means history, part of the Peruvian culture, a tradition, a name of national origin, and that over the years has obtained international recognition [4].

In 1991, the Peruvian State recognized pisco as a Peruvian “Denomination of Origin,” this term identifies a product as authentic from a country or locality thanks to its processes and natural factors. Later, in 2006, the World Intellectual Property Organization (WIPO) recognized pisco as a product originating from Peru [8]. This recognition benefits the Andean country with the power to showcase its products internationally, highlighting the cultural history behind this drink. In this way, trade is facilitated in national and international markets, increasing its value and generating economic income [1].

In recent years, the Peruvian distillate has shown a notable increase in the markets where it participates. According to Gestion [9], Carmen Robatty de Moquillaza, president of the Pisco Committee of the Association of Exporters, mentioned that in 2020, almost US$ 4 million were sold abroad, while in 2021, there was an increase of 8.2%, and in 2022 with 45% (US$ 10 million 494 thousand). A growth of 21.4% was recorded in the United States, Belgium [10–12] of 1,052%, Brazil of 2,449%, France of 108%, and China of 817%. However, according to Directorio de Productores de Pisco [13], in 2021, 525 pisco producers were registered, while in 2023, there was a decrease, registering 510 companies [14]. Of these companies, the production company La Caravedo SRL stands out with its brand Portón, which develops campaigns for international markets [12,15], and has managed to obtain a 32.18% share in exports, which have reached 7,218.1 thousand dollars, distributing the highest percentage of share among producers in the city of Lima and Ica with 53.4 and 43.7% [12,16].

On the other hand, in 2021, sales in the interior of the country amounted to 5.8 million liters compared to 2020, where they reached 3.8 million liters [17]. An important factor related to this growth is tourism, which has had a significant influence by giving greater value and positioning pisco internationally; and it is shown that the implementation of activities such as the pisco route, tour of pisco wineries located in the main producing regions of Peru, that involve tourists have increased the production and consumption of said drink [1].

1.2 Background

The Peruvian pisco market focuses on its national identity. According to Mitchell and Terry [18], there has been controversy for many years regarding the true origin of the drink and this affects trade policies, as well as trade, marketing, and other factors of the market. However, the authors emphasize that Peru, thanks to its production methods, has managed to position itself as the main producer of liquor. On the other hand, Morón Orellana [4] mentions that there is recognition of the origin of pisco produced in Ica, considering it as a cultural heritage of Peru.

Pisco has been positioned both nationally and internationally and continues to expand, so it is important to develop image strategies that show the drink as an emblem of Peru [1]. Likewise, Ramos Serrano and Rubio Hernandez [19] mention that advertisements for North American liquors highlight their year of origin, thus alluding to antiquity as a synonym for prestige, tradition, and quality, for example, Four Roses, an exceptional American Bourbon since 1888. In other circumstances, real scenarios are used as cultural identity, and in the most typical situations, the liquor appears as a representation of sociability and celebration as can be seen in Figure 2. As explained above, it is important that pisco be recognized at the national and international levels as a Peruvian drink; according to Dargent Chamot [3], the designation of origin of pisco is subject to regulations and administered by a regulatory council that is responsible for guaranteeing its authenticity and quality in both the national and international markets.

Figure 2

Pisco advertising related to football. Note. Santiago Queirolo advertising.

The producers, responsible for the production of the drink that raises the name of Peru, maintain a fundamental role in the pisco market. In the aforementioned countries, there are associated and non-associated producers; according to Higuchi et al. [20], non-associated producers want to grow economically and export their products. However, he believes that to achieve this, producers must come together to be part of larger groups and achieve a common goal.

Additionally, producers participate in fairs to market and promote their products, in the same way they have participated in regional and national contests where they obtain a medal for the quality of their product, generating greater marketing and status for it [21]. These national, regional, and international pisco contests are essential since they favor an interaction between producers, consumers, and tasters [8,22]. Figure 3 shows products from producer Tacama winning medals for their piscos at a world competition in San Francisco.

Figure 3

Medals of Tacama products. Note. Own Tacama.

Likewise, Torres-Mendoza [23] highlights that the best strategy for pisco producers is horizontal association; in this way, small producers are grouped, eliminating their powers, increasing production volumes, and increasing negotiating power with suppliers and customers. In addition, it is important to propose distribution strategies that focus on consumer demands to boost the product and support the offer [15]. The mental representation that customers perceive about the drink is essential for market growth. Ugarte Marquez et al. [24] explain that the largest number of consumers is between 18 and 29 years and that the purchase decision is affected by attributes such as elegance, presentation, and price. These attributes were mentioned by regular pisco consumers when they were asked what they first thought of when hearing the word pisco. Considering what was explained above, there are various factors and social actors that intervene in the national and international pisco markets.

According to López [6], the routes represented by gastronomic products and drinks are presented as a tourism model characterized by the complex connection between the tourism and agricultural sectors. Products like pisco are characterized by being elements of a culture and belonging to its historical tradition. Likewise, tourism can be understood from a triple complementary perspective: for producers as a profitability strategy, for institutions as a development argument, and for society as a tool that leads to an increase in the quality of life.

With respect to the aforementioned, Figure 4 shows a PEST analysis, a tool that allows you to discover and evaluate the factors that can affect the market or business at present and in the future; divided into political, economic, sociocultural and technological sectors that contain the most relevant factors that can influence the vid-pisco market [25,26].

Figure 4

PEST analysis. Note. Own elaboration.

2 Materials and methods

This study used an applied methodology with a non-experimental qualitative approach of exploratory and descriptive scope. Initially, a review of articles found in different databases on vid-pisco was carried out to collect the factors and social actors of beverage markets. In this way, the study system could be previously defined to characterize the market. Subsequently, the structural analysis was developed through which the variables that will make the evolution of the studied system possible are prioritized.

Structural analysis is a systematic method through which the relationships between variables are analyzed to obtain the influential and dependent variables of the system studied [27]. This analysis was divided into four successive phases: listing of factors and actors in the system, definition of relationships between factors and social actors, identification of key factors and hierarchy of social actors, and a final phase for the discussion of results. The tool used for the structural analysis was the so-called Cross Impact Multiplication Matrix Applied to a Classification (MICMAC) developed by Godet et al. [28,29]. The research phases are presented in Table 1.

Table 1

Research phases

Phase	Scope	Technique and/or tool
Phase 1: A list of factors and actors of the system	The set of both internal and external variables that characterize the vid-pisco market were listed without a priori excluding any review	Documentary review
Phase 2: Definition of relationships between factors	Relationships of influence and dependency between the factors were established	Showdown Matrix
Phase 3: Identification of key factors and hierarchy of social actors	The key factors and actors for the evolution of the system were identified	MICMAC
Phase 4: Analysis and discussion of results	The factors and actors in the system, and what they could mean were analyzed	Focus group

The main objective of the structural analysis was to encourage collective reflection on the aspects of the system, for which there is no single and/or official way to collect the results of the analysis, since the variables, being subjective in nature, give rise to the importance of complementary interviews [27]. For this purpose, pisco producers and specialists on the subject were interviewed to delve deeper and discuss the system studied. In addition, the variables found in the documentary review were presented to know the perspectives of each expert, thereby achieving a more complete analysis of the essential variables within the vid-pisco market and how they have influenced it.

The first phase consisted of listing the set of factors that characterize the vid-pisco market. To carry out this phase, a documentary review was carried out in databases such as Scopus, Readalyc, Scielo, and Web of Science. These variables were classified into the following dimensions: political, economic, technological, and social. In addition, they were validated by sector experts, who helped define the main factors and fundamental social actors of the system.

In the second phase, the influence and dependence between the variables was established. These were recorded in a confrontation matrix and the help of previously contacted experts was required to rate each one. The profiles of the experts are shown in Table 2.

Table 2

Profile of experts who participated in the classification of the variables

Code	Profile
E1	Specialists with more than 10 years of experience in the commercial area of pisco products in one of the most important producers in Peru
E2	Expert with 12 years of experience in the area of pisco production for one of the largest producers of wine products in Peru
E3	Owner of one of the most symbolic wineries in Ica with more than 40 years in the commercialization and production of wine products at the national level
E4	Specialist with training of more than 15 years of experience in the wine sector in one of the most recognized pisco brands in Peru
E5	Owner of one of the oldest wineries in Ica, which has more than 50 years of experience in the production and marketing of wine products

The experts used the rating scale presented in Table 3, which helped them rate the influence of horizontally arranged variables versus vertically arranged variables.

Table 3

Variable rating scale

Impact degree	Qualification
Strong (high influence)	3
Mean (mean influence)	2
Weak (weak influence)	1
Null (null influence)	0

In the third phase, corresponding to the identification of key variables and hierarchy of actors, the MICMAC tool, developed by Godet, was used, which was essential to identify the variables that influenced the system. Subsequently, they were classified in a matrix according to the influence and/or dependence of each variable on the other [8,9]. Finally, with the help of experts, the degree of power that the actors have over the system was classified. This classification was also carried out through a confrontation matrix where the impact of each actor on the other was rated. Based on the sum of the values obtained in the matrix, these actors were positioned hierarchically.

In the last phase, the interrelationship between the factors and social actors with the greatest influence on the system was analyzed. This made it possible to characterize the behavior of the system with respect to the key variables, to offer an approach to its development and evolution.

3 Results

Following the phases described in the previous section, the factors identified for the vid-pisco market system are listed in Table 4.

Table 4

Factors for the vid-pisco market

Code	Factor
	Political-legal dimension
F1	Rules
F1	Number of regulations in force for the production of vid-pisco
F2	Laws
F2	Number of laws in force for the commercialization of vid-pisco
F3	Tax
F3	Percentage of excise tax for alcoholic beverages
	Social dimension
F4	Consumption level
F4	Number of liters of pisco consumed per person
F5	Associations
F5	Number of associations created for the expansion of vid-pisco market
F6	Competition
F6	Number of substitute products, either of the same category or different.
	Cultural dimension
F7	Peru Brand
F7	Quantity of Peru brand products consumed
F8	Fairs held
F8	Number of fairs held per year in which pisco is present
F9	Attendees
F9	Number of attendees per fair
F10	Identity
F10	Number of people identified with vid-pisco as the flagship drink
	Economic dimension
F11	Average price
F11	Average price of pisco in soles compared to substitutes
F12	Grapes
F12	Quantity of pisco grapes harvested per year
F13	market growth
F13	Percentage of growth of the vid-pisco market per year
	Technological dimension
F14	Technological level
F14	Scale of the technological level used in the production of the vid-pisco

In Figure 5, a Cartesian plane is shown with the projection of the 14 factors in the four power zones that represent their location according to the greater or lesser impact (indirect impacts).

Figure 5

Cartesian plane of indirect hits. Note. Made using the Micmac tool.

This plan describes the importance of each variable for the development of the vid-pisco market:

Link variables: These are the ones in the upper right corner, which are very influential and dependent. Any alteration of these would have repercussions on the others, considerably modifying the system. The factors that were located in this quadrant were as follows: the number of people identified with vineyard pisco as their signature drink (F10), the number of liters of pisco consumed per person (F4), and the percentage of growth of vineyard pisco market per year (F13).

Input variable: These are the ones in the upper left corner, who are very influential, but not very dependent. These can act as drivers of the system and, where possible, actions are directed primarily toward these variables. In this power zone, only one factor was found: number of associations created for the expansion of the vineyard pisco market (F5).

Excluded variables: They are the ones in the lower left corner and the ones who are not very influential and not very dependent. These variables are inert to the system, meaning that they will not affect it and can be excluded without consequences. In this sector, the following factors were found: the percentage of the tax on the consumption of alcoholic beverages (F3), the number of fairs held per year in which pisco is present (F8), the number of attendees at fairs (F9), the average price of pisco in soles compared to substitutes (F11), the quantity of pisco grapes harvested per year (F12), and the scale of the technological level used in the production of vid-pisco (F14).

Result variables: They are the ones in the lower right corner and the ones who are little influential and very dependent. These variables cannot be addressed head-on, since their evolution is explained through the impact of the input and link variables. The factors found in this sector were as follows: the number of regulations in force for the production of vid-pisco (F1), the number of laws in force for the commercialization of vid-pisco (F2), the number of substitute products, whether in the same or different category (F6), and the number of Peru brand products consumed (F7).

Regarding the social actors, Table 5 shows the hierarchy created through a confrontation matrix, with the help of the group of experts previously contacted.

Table 5

Hierarchy of social actors

Code	Actors
A1	Tourists who visit Peru and consume the vid-pisco
A2	Local consumers
A3	National distributors that help the sale of vid-pisco and strengthen its position
A4	Media that advertise the vid-pisco e for market expansion (social networks, commercials, billboards, etc.)
A5	Producers/wineries that produce different types of vid-pisco
A6	Farmers who supply the wineries for the production of vid-pisco
A7	Local governments that encourage the consumption of vid-pisco before any other alcoholic beverage
A8	Exporters that help the arrival of vid-pisco in various countries

4 Discussion

The results of this research are related to some studies by previously cited authors. Affirming what Zambrano Reyes [1] mentions when referring to pisco as a drink of great cultural importance for Peru, which is currently one of the country’s emblematic liquors, since its importance lies in its contribution to the construction of local identity, national, and international of the country, becoming an attractive product for both Peruvians and foreigners.

Identity (vid-pisco as a Peruvian drink), as a key factor, is so influential and dependent that it considerably affects the system. It is worth remembering what Morón Orellana [4] mentioned when explaining that pisco has become an image of Peru, since it is related to life in society, gastronomy, and traditional festivals. This drink is part of the history of the peasant families of the Peruvian culture of the towns; and it is constituted as a tradition, history, and heritage, which has achieved national and international recognition since it unites various cultural and social aspects of the Andean country. Furthermore, the author mentions that the word pisco for many means history, part of Peruvian culture, tradition, and a name of national origin.

With respect to the aforementioned, Cáceres Yparraguirre and Julca Otiniano [8] highlight that, in 1991, pisco was recognized as a Peruvian Denomination of Origin and later in 2006 the WIPO recognized pisco as a product originating from Peru, thus strengthening the identity that has been created and strengthened throughout history in relation to the pisco and the Inca country. Consequently, Zambrano Reyes [1] highlights that such recognition supports showing pisco internationally, highlighting the cultural history behind this drink. In this way, trade is facilitated in national and international markets, showing an increase in its value and generating economic income.

Market growth, like identity, is a variable that substantially influences the system. Yachi Del Pino [15] mentions that, in recent years, pisco has shown notable growth in the markets where it participates, and the number of companies in this sector has also increased. The author highlights the company La Caravedo SRL, which has been developing a campaign for international markets. Furthermore, a finding of great importance is the relationship between the identity variables, explained above, and market growth. Likewise, Ugarte Marquez et al. [24] mentioned that the mental representation that customers perceive about the drink (identity) is fundamental for market growth, thus defining that these variables are related and depend on each other.

In correspondence with the above, after prioritizing the social actors that participate in the system, it was obtained that the most relevant actors are the tourists who visit the Inca country and consume the pisco. For this reason, Zambrano Reyes [1] suggests that an important factor that is related to the growth of the market is tourism, which has significantly influenced giving greater value to the vid-pisco and positioning it internationally. The author mentions that carrying out activities such as the pisco route attracts tourists to enjoy national customs and their national drinks. Likewise, López [6] highlights that the routes represented by gastronomic products and drinks are presented as a tourism model characterized by the complex connection between the tourism and agricultural sectors. This means that pisco is characterized by being elements of a culture and belonging to its historical tradition.

The associations of pisco producers, a key factor that is very influential in the system, however, depend on other factors and social actors to survive. Torres-Mendoza [23] highlights that the best strategy for pisco producers is horizontal association, grouping small producers to eliminate their competition, increase production volume, and increase bargaining power with suppliers and customers. On the other hand, Yachi Del Pino [15] mentions that it is important to propose distribution strategies that focus on consumer demands to boost the product and sustain the offer.

According to this research, the fair where producers participate is an excluded variable, that is, it has little influence on the system and is very dependent on other factors. Said variable, if it were excluded from the system, would have no consequences for it. In contrast, the research by Cáceres Yparraguirre and Julca Otiniano [8] mentions that producers participate in fairs to market and promote their products. In the same way, producers have participated in regional and national competitions where they obtain a medal for the quality of their product, generating greater marketing and status for it. These national, regional, and international pisco competitions are essential since they encourage interaction between producers, consumers, and tasters.

5 Conclusions

The effects found after this research allow us to characterize the current context of the vid-pisco market through the variables and social actors that constitute it. It is important to mention that the variables identified as “links” belong to the social, cultural, and economic dimensions of the system, implying that the vid-pisco market is not a simple and common market that is only driven by economic variables, but society and culture that surrounds the market significantly influence and are an important part of its growth.

Another relevant finding is that the variables defined as “links” are positioned as dependent variables, and when considering the definitions of other authors, they reaffirm the veracity of the results obtained. This is because, without identity or consumption, there would be no growth because the social and cultural variables of the system fail. On the other hand, without market growth, there would be no greater consumption and therefore the identity of pisco would not grow as it had less reach. And finally, without consumption, there would be no growth and the identity of pisco would be lost over time. These link variables are independent of the rest, that is, they are not influenced by the rest of the variables, but by themselves, since a small alteration of any of them strongly influences the system.

Finally, this research and characterization of the vid-pisco market allows planning and designing scenarios for the future of the aforementioned system, thus promoting new research based on what is presented here.

Funding information: Authors state no funding involved.
Author contributions: All authors have accepted responsibility for the entire content of this manuscript and consented to its submission to the journal, reviewed all the results and approved the final version of the manuscript. MCV: conception of the project, fieldwork, results elaboration and discussion and final manuscript revision; RLA: conception of the project, fieldwork, results elaboration and discussion and final manuscript revision; MFRR: methodological design,results elaboration and discussion and final manuscript revision.
Conflict of interest: Authors state no conflict of interest.
Data availability statement: All data generated or analyzed during this study are included in this published article.

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Received: 2023-11-03

Revised: 2024-01-30

Accepted: 2024-06-12

Published Online: 2024-07-17

This work is licensed under the Creative Commons Attribution 4.0 International License.

Articles in the same Issue

https://doi.org/10.1515/opag-2022-0320

Keywords for this article

pisco; cultural identity; structural analysis; Peru; market

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BY 4.0