All Working Papers

This document presents the current state of the brewing industry in Latin America with special attention given to micro brewing firms. We find that the market conditions in Latin America are favorable to significant growth in the brewing industry and particularly for craft and specialty beers. This study draws on a general overview of the industry in the region as well on five different countries.

Research by many scholars studying consumer behavior has determined that choice overload can be a demotivating characteristic for consumers faced with a broad array of options. However this has yet to be studied at the wine retail level. Wine is unlike most consumer goods due to the large number of intrinsic characteristics relative to extrinsic ones, and the sheer number of choices in the category a consumer must choose from. Also salient is the general concept that as a wine consumer grows in experience they desire a broader range of choices.
A three-part study was designed to test for the existence of the choice overload effect: first a qualitative survey was sent to 4000 wine consumers (from a retailer’s email database) in order to establish a baseline of self- reported behavior in a wine shop environment. Next over 100 customers were observed as they shopped in a group of wine stores. Finally those same customers were interviewed post-purchase about their satisfaction with the wines they purchased.
Analysis of the data generated showed no evidence of the choice overload effect in any of the three phases of the study. An examination of how this retailer was able to mitigate and even eliminate the impact of choice overload was discussed, and points to future research in this field.

This paper explores recent developments in outward Foreign Direct Investment (OFDI) from Chinese companies in the wine sector in the Bordeaux (France) and West Australia (WA) regions. The objective is to explore the extent of the phenomenon, which although widely mediatized, has not been the subject of academic scrutiny. As OFDI official figures provide little detail, we undertook primary research in the two regions, in addition to analysis of secondary trade data.
Results indicate that the level of Chinese OFDI is relatively low, although the number and speed of acquisitions, especially in Bordeaux, has attracted attention. The motivations of investors in both regions were: the exploitation of growth in the home market; security of supply; prestige and diversification of risk. In Bordeaux the ‘appellation’ was a clear motivation, as were the vineyards’ historic buildings. A final motivating factor was the wish to avoid the complex supply chains in Bordeaux, by bringing wine direct to the Chinese market. In Australia, cementing existing business relationships, as well as access to Australian residency were specific motivations. Both regions have a relatively open investment climate and no significant investment barriers were noted, although the potential exists, especially as evidence emerges of illegal funding of some investments. We conclude with some directions for future research.

Argentinean wineries experienced a tremendous 4-time growth in their export value between 2000 and 2012, while for the same period the average rise of world wine exports was around 70%. Today, Argentina is the 9th biggest wine exporter in the world. The country has succeeded in building ”king of Malbec” notoriety and many of its wines rank as best sellers in foreign markets. This impressive growth is the result of the winning strategies wineries implemented years ago. Indeed, in the late 90’s the industry changed its model to focus on the production of quality wines and the development of foreign markets. New marketing and communication tools were created and have strongly contributed to wineries ́ success. Two decades later, new challenges for this quality model appear. On the one hand, wineries ́ margins are threatened by high inflation in Argentina. On the other hand, higher buyers ́ concentration in foreign markets defines wineries ́ reduced bargaining power. A descriptive analysis, based on Argentina Customs Office data, was carried out to understand last years ́ performance and identify possible trends. Grape varieties, vintages, price, marketplaces and bottle sizes are described. Main differences between foreign markets are pointed out. Four different categories of wineries are described based on their export volume. Their specific strategies in terms of price segment are assessed allowing an identification of their different profiles. Results show the price upgrading strategy of the Argentinean industry. Cheap wines have traded up towards premium category as the only way to deal with inflation pressures. Whereas some expensive wine have traded down towards premium category in an attempt to conquer consumers threatened by the ongoing economic crisis.

The relationships between cooperation and competition are a central element of geographically defined clusters. This article advances an understanding of the cooperation–competition nexus by examining how firms in three regional wine clusters in Australia engage in knowledge exchanges about climate change. The findings suggest that, in the main, firms across all three regions appear to be predominantly engaging in these specific knowledge exchanges within their own narrow sub-clusters. This so-called ‘liquid geography’ is suggestive of a somewhat competitive lock-out posture. However, firms in ‘elite’ sub-clusters appear to be cooperating more via external knowledge exchanges, albeit perhaps with self-interest in mind. The results also suggest that only with respect to adaptive climate change innovations (as opposed to mitigative innovations) do implementation rates differ. This appears to be advantaging firms in elite sub-clusters over all other firms in the regions. Implications are discussed along with future research directions.

When cash-strapped Pierre Lafond opened Santa Barbara Winery, the first urban winery of its kind, in downtown Santa Barbara, CA in 1964, he did not realize that his model one day would become a global movement. Now, after 50 years, the urban winery and movement has burst beyond its initial urban dwelling to over 200 urban wineries on four continents. What initially began as a practical and cost-wise decision by Lafond, against the prohibitively expensive and traditional rural winery-vineyard combination, has ripened into a globalized phenomenon. True to its urban appellation, the urban winery and movement has converged with the recent and on-going gentrification and urban renewal taking place across America and abroad. More importantly, the urban winery and movement has not only captured the attention of world-renown wine critics, such as Robert Parker, but also the newest generation of oenophiles, the Millennials. Indeed, the urban wineries’ recent successes mirror those of their sibling industries: beer and spirits. Because the urban winery and movement has and will continue to grow globally, it needs to be adequately examined and defined. As such, an urban winery must meet two criteria: first, it is a premise in which wine is produced for consumption or sale within a defined territory or area of more than 2,500 people; second, it is categorized first into one of three “purist” or commercial winery models (proprietary, custom crush, or DIY), then, if applicable, a following “blended” model that incorporates one or more of these functions: gastro, entertainment, oenotourism, and education. Just as humans began to cultivate grapes in the first vineyards millennia ago, globalized grapes are being crushed under humanity’s monumental and historical migration from the rural environment into the urban one – a migration marked by the advent of the urban winery. In the end, the urban winery and movement reminds oenophiles everywhere that there is more than one way to crush a grape.

Gender diversity in the workplace is considered both an economic and ethical imperative and as such has garnered substantial research attention. To advance the literature, this study analyzes firm-level predictors of women in top management roles across all wine producers in Australia between 2007 and 2013. In the main, firm size reduces the likelihood of women representation in top roles, as predicted. Firms with strong environmental sustainability credentials are more likely to have higher levels of women’s representation in top roles, including in CEO and marketer roles, supporting our hypothesis. However, contrary to the prediction, high export orientations within firms were found to negatively impact women’s representation in top roles; namely, women in the CEO and winemaker roles. The findings are discussed and future research directions put forth.

Recent studies about catching up are often focused on the emergence of high-tech sectors such as electronics, software, pharmaceutical and telecommunications. These industries are indeed globally known for having sparked economic growth in some selected countries, such as Japan and South Korea in the eighties and nineties, and India and China in more recent years. Nevertheless, there is little doubt that in a large number of emerging countries the agro-food industry still significantly contributes to GDP. Though often depicted as low value-added and with little innovation content, the agro-food industry is a sector with considerable opportunities for technological and rent upgrading. UNCTAD (2009) has identified a group of dynamic and competitive middle-income countries, including Argentina, Brazil, Chile Thailand and Malaysia, which have become exporters of high-quality processed primary products. Some authors have envisaged an undergoing process of de-commodification of primary commodities, which are increasingly transformed from standardized staples into high-quality, diversified, processed goods, with raising barriers of entry, high knowledge intensity and technological dynamism, increasing value added content and high export price per unit (Farinelli, 2012; Kaplinsky and Fitter, 2004; Kaplinsky, 2005; Perez et al, 2009).
Among the most dynamic primary industries there is wine, which is an extremely interesting case from a catch up point of view because the latecomers in the international market have changed how wine is produced, sold and consumed and in doing so they have challenged the position held by the incumbents (Giuliani et al, 2011). Until the end of the 1980s without a doubt, European countries, and particularly France and Italy, dominated the international market for wine. Subsequently, significant changes into the market, namely the decrease in consumption in traditional consuming countries, the entry of new inexperienced consumers and the increasing importance of large distribution have put under attack this supremacy. Initially the USA and Australia and later emerging countries such as Chile and South Africa have gained increasing market shares in terms of both exported volumes and values at the expense of the incumbents. More recently, due to the higher involvement of consumers and the increasing attention to variety and regional specificities in some market segments a new comer as Australia has slowed down its growth, opening up opportunities to newer entrants such as Argentina and New Zealand. At the same time, innovation has also interested the incumbents, in particularly Italy, which has challenged the leadership of France in some key markets such the USA (Mariani et al., 2012).
Finally, some further future changes can be envisaged in the new rapidly growing Asian markets, still representing a small share of the global demand but with a lot of potentialities of becoming a new key scene in the wine industry.
In this paper we aim at investigating the different catch up cycles occurring from the 1960s until 2010 in the global wine sector through a detailed analysis of exports in volume, value and unit price. This analysis allows addressing issues related with the increasing share in the global market of latecomer countries and the relative decline of the incumbents, as well as possible changes in the market leadership within these two groups.
In the next section after a brief account of the literature on catch up we focus on catch up in the wine industry since the 1960s. Then, in the Section 3 we present an analysis of the evolution of the industry investigated based on trade data. Section 4 provides a detailed analysis of the entry of the New World (NW) producers explaining how market changes opened up a window of opportunity and then followed transformations in the innovative and knowledge base and in the institutional settings. The following section focuses on the resurgence of Old Word (OW)1 countries in the international markets. In Section 6, we discuss about the rise of new actors among the latecomers. Section 7 puts forward the hypothesis of a new cycle following the emergence of Asia both as a rapidly growing market and as a new production source. Section 8 concludes.