Wine Cooperatives and Returns on Assets

The performance evaluation of wine cooperatives is complicated by distinctive governance and accounting practices. Traditional ratios such as Return on Assets (ROA) provide only partial insights, as they depend on contractual arrangements and surplus distribution mechanisms. This paper develops a simple model of the wine value chain that treats the cooperative as a vertically integrated firm jointly determining grape and wine production, while setting grape input prices to maximize member profits. The model yields a theoretically grounded ROA-based measure that serves as a frictionless benchmark, independent of contractual heterogeneity. Using data from Spanish and Italian wine cooperatives, we empirically assess how determinants identified in the literature-such as firm size, governance, and member-oriented metrics- affect cooperative ROA, farmer ROA, and the integrated ROA benchmark. Results highlight complementarities and trade-offs between cooperative and farmer performance, offering a unified framework for evaluating the profitability of wine cooperatives.