TRANSACTION COSTS IN THE INTERNATIONAL TRADE OF PORT WINE

Abstract

The port industry is unique in that its firms have survived for several centuries and were "born
global" with exclusively international business from when they were established. This study
provides an overview of the internationalization strategies of all the firms that traded port internationally during the second half of the twentieth century. It explains the main challenges they
faced and the strategies they followed. In other industries such as whisky and champagne,
some firms were able to evolve from exports to foreign direct investment during this period
through the creation or acquisition of production units and distribution channels abroad. Port
wine firms, on the other hand, integrated horizontally by merging and acquiring other port wine
firms. The resulting industry concentration has proven to be the most efficient response to
the increasing transaction costs in international business that emerged in the global alcoholic
beverages industry.