All Working Papers

The findings of an experimental study exploring the taste testing of wine with varying degrees of expertise and in the presence of variations in quality, brand and country of origin (COO) cues are reported. Novices experienced difficulty in evaluating quality and even when detecting a quality difference were unable to assign an intelligent meaning to that difference. Experts did use physical quality and price evaluations, but in a complex and unexpected manner. Novices were found to use brand name in a limited fashion and relied mainly on COO information. The results demonstrated the importance of the extrinsic cues for both novices and experts. Surprisingly, there was no clear evidence of domestic preference.

France is one of the largest and most ancient wine producers in the world. Even if its leading position has been challenged over the past decade, France remains a reference in terms of terroir and quality (Anderson, 2001; Berthomeau and al., 2002). Among the different well-known French wine regions, Champagne has a very unique status. Champagne covers less than 4% of the French vineyard whilst representing more than 1/3 of the total of French exports in value (37%).
Several economists (Barrère, 2000, 2001 et 2003 ; Ménival, 2007 ; Rasselet, 2001 ;
Viet, 2003) think that Champagne’s economic success is due to its particular institutional
model, composed of an interprofession, the Comité Interprofessionnel du Vin de Champagne
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(CIVC) and an AOC (appellation d’origine controlee) , two separate institutions which work
together quite effectively. This model enabled Champagne producers to adapt their offer to the evolving international demand, both in quantity and in quality, and to maintain the equilibrium between grape-growers and Champagne Houses thanks to a fair sharing of the
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added value. Thanks to the mid-term interprofessional contracts that existed between 1959
and 1989, the CIVC was able to control prices and quantities for a long time. However the liberalization of the markets in the 1990’s led to the end of the interprofessional contracts and grape-price control, which considerably reduced the regulation power of the CIVC. Nowadays it can only control the quantities produced through the management of planting rights and yields at the harvest, which is completed by a “reserve mechanism”.
This model of economic growth has now reached a dead end with the total surfaces of
the Champagne area planted. The situation is unique in the world and leads to the following
paradox: between 2000 and 2007, sales increased much faster than the production. At first, it allowed to reduce huge stocks, but very quickly it resulted in the inflation of the grape and wine prices. This situation, characterized by a lack of control on prices, was called the prosperity crisis. It led Champagne producers to launch a big project to revise the production area, the homogeneity and coherence of which had long been discussed. This working paper aims at answering the following questions: What led the Champagne producers to launch the revision project? How are they going to proceed? What will be the consequences?

This article addresses the nature of wine clusters in international perspective bringing together two separate literatures, the cluster/networks one and the one on the development of the wine industry, to analyze the mechanisms of innovation that have emerged in the sector. The study of innovation is often linked to economic clusters (Niosi 2005; Wolfe and Lucas 2004a; 2005), both as an analytical tool and as a policy option in the fostering of innovation and development (Feser, Renski, and Goldstein 2008; OECD 1999; 2002; Palazuelos 2005), even if not all effects of clustering are positive (Palazuelos 2005). The wine industry has received extensive attention through the use of cluster analysis (Alvarez 2007; Aylward 2004; Mytelka and Goertzen 2004; McDermott 2007; Hickton and Padmore 2005; Larreina and Aguado 2008). In general terms, clusters have been used in a broad multidisciplinary fashion and the approach has been applied to a host of issues (Boschma 2005; Malmberg and Power 2005) but this has also contributed to a reduction of its analytical sharpness and has fostered the emergence of different meanings for what should be similar concepts (Martin and Sunley 2003; see also Feser, Renski, and Goldstein 2008). However, we believe that cluster and network analysis can be used within the context of a multi-layered approach to the study of innovation policy in the wine industry. Clusters exhibit broad differences among them, by nation, by sector and by analytical approach and alongside them we often find networks. However, clusters and networks are different things with the latter embedded in the former. Both coalesce according to elective affinities, shared goals and layered interests among people. The fact that the clusters analyzed here are market clusters adds a powerful incentive to succeed, but also adds a high sensitivity on initial conditions.
Clusters coalesce geographically, while networks coalesce ideationally. This makes the latter a bit more flexible geographically: for example, global pipelines exist and networks of academics are relatively common if generally show low intensity. The 'quality' of the network embedded in the cluster may be the key to cluster success or at least a strong prerequisite of it (Eisingerich, Bell, and Tracey 2010). Therefore, we also argue that the relative degrees of success enjoyed by the various wine clusters reflect their ability to respond to shocks in the industry and the capacity of the institutional setting in which they exist to channel and foster some of the responses and activities generated by these shocks. Cluster theory offers some important fixed points from which the analysis of these agglomerations of actors can begin. Besides the notion that clusters occupy a (sometimes difficult to define) geographical area, they are internally heterogeneous in terms of the actors that compose them. Along with a broad range of firms (suppliers, service providers, banks, and so forth) we find public entities like universities and government institutions. Actors establish both traded and untraded linkages with one another, and they do so within an area of geographical proximity.i
In our analysis we are also cognizant of the fact that clusters and networks are not the sole level at which the process of innovation develops and that a multilevel approach that would include both regional systems of innovation and the national innovation policy from which many regulation, policy and economic dimensions depend (Aharonson, Baum, and Plunket 2008), is also critical in understanding the deployment of innovation. Regulation is going to affect both cluster structure (for example by creating specific organizations) and network capacity (by affecting the flow and ease of information). Regarding wine clusters, the above-noted characteristics apply with two provisos. First, the wine industry itself is highly dependant on a scarce supply of specific terroirs placed within amenable climatic zones. Second, because tradition and quality are very important, the degree of innovation that the cluster may absorbe could be different from that of other industries.
In the next section, we highlight the literature on innovation, and in section three we deal with the literature on the wine industry. In the successive section we explore the specific nature of the countries that we have chosen as subjects of our analysis: Australia, New Zealand, Canada, the United States, Argentina, Chile, France, Germany, Spain and South Africa. Finally, some conclusions are offered. Our sample covers most of the critically important old world producers, with the exclusion of Italy, and all of the important new world producers. The broad diversity in regulatory, legislative, policy and economic systems ensured by the scope of the sample is necessary to measure the effects these variables have on cluster performance.

Typical products, mainly local food and wine, are considered suitable features to characterise the tourist supply of a destination and in many cases they are a major attraction of a territory. These products contain a strong reference to the territory in which they are produced. They simultaneously represent on the market a geographic area, its traditions and its cultural heritage, they identify a local community and its identity as well. Therefore typical products can be defined as ‘territorial intensive products’ (TIPs). Wine tourism represents the most innovative phenomenon of the more general tourism supply created around a TIP and certainly the most evident. The paper considers the importance of quality wine in Italy in helping to create the tourist supply of different territories through the creation of the Wine and Food Routes (WFRs) that represent a particular kind of tourist thematic itineraries. The paper confirms that quality wines are the ‘driver’ of WFRs creating a model of socioeconomic district.

The promises of the Internet as a platform for reaching new outlets, markets of global dimensions, intimate customer relationships, low cost and streamlined distribution chains have largely been disappointing in the wine industry. This paper draws on an e-mail commercial survey to investigate web customer service offered by 300 wine companies across Italy. The overall feedback rate was 55%. The main problem of these firms was the inability to respond to customer inquiries in a timely and informative fashion. In particular, only 18% of these wineries responded within four hours, 37% responded within 12 hours. There are also significant differences in response rates by regional business location.

In this paper, we present the evolutionary path occurred in the Chilean Wine industry generated by learning-by-imitation processes occurred after foreign direct investments improved few existing firms as well as created new firms. This process of learning-by-imitation was fostered by the development of knowledge networks and the arrival of highly qualified entrepreneurs.

The determination of the absolute value of a good is a primary need of each individual, and is historically at the basis of economic theory.
David Ricardo, in the Essay on the Low Price of Corn on the Profits of Stock of 1815 (Ricardo, 1951b, p.9), writes, “Wherever competition can have its full effect, and the production of commodity be not limited by nature, as is the case with some wines, the difficulty or facility of their production will ultimately regulate their exchangeable value”. “The ‘difficulty’ or ‘facility’ of production is judged on the basis of the amount of labour required,” summarizes Fernando Vianello on page XVI of his Italian Introduction to Ricardo’s On the Principles of Political Economy and Taxation (1976). “If commodities are exchanged in proportion to the labour embodied, a commodity always produced by the same quantity of labour meets the requirements of a perfect measure of value” (Vianello, 1976, p. XVIII). Therefore in Ricardo, “The ‘absolute value’ of a commodity always produced by the same quantity of labour is invariable – even though its ‘exchange value’ or ‘relative value’ may change – in the sense that the commodity itself is not subject to that sole cause of variation of the value that acts on other commodities: the variation in the quantity of labour required for their production.” (Vianello, 1976, p. XVIII).
Ricardo’s labour theory of value made it possible – both in the early 19th century and today – to give clear solutions to the role of money (Vianello, 1976, p. XVIII) and rent (Vianello, 1976, p. XXII).
In Italy the lesson of classical economists, combined with the lesson of Schumpeter, was reworked by Sylos Labini both to provide an innovative answer to the theoretical problems of economic analysis (Sylos Labini, 1956) and to offer a direct study tool for the country’s industrial transformations from the 1960s up to today (Sylos Labini, 1972).

The food crisis of 2008 and the current financial crisis, coupled with concerns of climate change, have fueled a renewed interest in alternative food production systems, namely,
local, organic and sustainable food systems. In many countries, firms are revising not only their short run objectives, but also their medium and long term goals. Most developed economies have identified the adoption of environmentally sustainable technologies as a major building block of the strategy to exit the crisis (Agrisole, 2009). Therefore, the adoption of sustainable technologies and the production of environmentally friendly goods and services is poised to be a crucial competitive tool in the global marketplace in the medium-long run (Agrisole, 2009). Non-conventional production and processing methods – e.g. organic and biodynamic techniques – provide important positive social and environmental externallitiies, and may offer viable alternative to traditional production systems, particularly in terms of coping strategies in times of crisis.

Although South Africans are not predominantly wine drinkers, the industry is looking for ways to develop the local market to balance exports. The black middle class, increasingly referred to as the Black Diamonds are the most powerful marketing trend in the last 10 years as they have emerged as the strongest buying influence in the economy and making inroads in understanding this market presents a good opportunity. The study asserts that the key factors influencing the South African consumers’ behavior are age, gender, income, race and wine drinking history. The study also asserts that not only are the black middle class are different from the white middle class but within the Black Diamonds different segments exist. The industry should particularly focus on marketing to the women and the “Start me up” age group in the group as there is limited consumer knowledge about wines, but a high willingness to experiment. The study also suggests various new brand communication platforms that can be explored to reach this market as well as co-opetition between industry stakeholders.