AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org


Innovation and Technological Catch-up. The changing geography of wine production
Edward Elgar, Cheltenham, UK and Northampton, MA, USA, 2011, 232 pp.
ISBN: 978-1 84844 994 7 (hardback)
$ 115
Google ebook $31.20

Reviewer: Rolf A.E. Mueller

Wine was discovered in the Zagros mountains of northwestern Iran some 7,000 to 8,000 years ago. Greeks and Romans then spread grapes and wine around the lands bordering the Mediterranean. At around the year 200 the Romans promoted a wine industry along the Rhine and Mosel rivers. After that expansion of grapes and wine nothing much happened for the next 1,600 years until the California gold rush of 1848 stimulated the cultivation of wine in the New World. Shortly after, in the 1850s, the gold rush in Australia led to the establishment of a wine industry in Victoria. At present, we may be witnessing the peak of yet another period of significant wine grape area expansion and wine production growth in the “New World” wine countries of Argentina, Chile, South Africa, and New Zealand.

Significant changes in the spatial expansion of crops are attention grabbers, which call for explanation and understanding of their causes and impacts. The causes of the New World wine expansion are, according to the book, “. . . innovation in product and process, spurred by consistent investments and research efforts” (p. 2). Moreover, the editors of the book regard the wine industry as “extremely interesting from a development point of view because the late-comers in the international market have radically changed how wine is produced, sold and consumed” (p. 11). Finally, the editors believe that, “An investigation into the wine industry of countries such as Argentina, Chile and South Africa represents an extraordinary opportunity to show how a traditional agro-food industry can become highly competitive and catch up in the global market . . . ” (p. 2).

The book collects selected papers from a workshop organized by the Project “Innovation and globalization in the wine sector” which was held in 2009 at the Universita` del Piemonte Orientale, Novara, Italy. The contributions to the book are organized into an introduction and two parts. The introduction, authored by the editors of the book, explains the aim of the book, motivates the research questions, and it highlights the main concern of the book: to contribute to our knowledge about how economically and technologically lagging countries catch up.

Part I of the book comprises three chapters. The chapters are said to “adopt a macro-level perspective to analyze the process of catch-up in a variety of contexts (that is, both emerging and developed economies), with a focus on the role played by scientific research and innovation” (p. 2). More simply put, Chapter 2, describes how the New World wine countries, in particular the United States, Australia, Argentina, Chile and South Africa, but not New Zealand, have caught up with the Old World wine countries of Europe. Chapter 3 presents results from a bibliometric study that traces the growth of the contributions of New World wine countries to the international scientific literature on topics related to wine. And in Chapter 4 Kym Anderson explains how Australia organized its wine industry in order for collective action, which includes R&D, to be effective.

In Chapter 2, entitled “Catching-up trajectories in the wine sector,” Cusamo, Morrison and Rabellotti adopt a “Sectoral Systems of Innovation” perspective for their story of how the New World wine countries caught up with the Old World wine countries of Europe. Sectoral systems of innovation are conceived as an extension of “the traditional concept of sector adopted in industrial economics” and include more actors, non-market interactions in addition to market interactions, and “knowledge and learning processes” (p. 24). This perspective, the authors suggest, is useful to cope with the dynamic and complex interplay of firms, industries, markets, and countries. The authors conclude the chapter with the insight that innovative, scientific approaches to production, knowledge imports, universities, and R&D-organizations have all contributed towards the modernization of the wine industries in the New World wine countries.

Under the title “The changing geography of science in wine: evidence from emerging countries” Cassi, Morrison and Rabellotti report in Chapter 3 the results of their bibliometric investigation of (i) the contribution of New World wine countries to internationally published wine research and of (ii) the interconnections among productive wine researchers who publish. The data used for this purpose are derived from the World of Science edition of the Science Citation Index Extended (SCIE) of the Institute of Scientific Information (ISI), which has become the standard source for such studies. In total, more than 12,000 records of publications from the period 1992–2006 were analyzed. The chapter impressively documents the growth in the contribution of the New World wine countries to the international scientific literature related to wine and grapes. Moreover, analysis of co-publications, i.e., publications co-authored by researchers affiliated with different research organizations, reveals a trend toward more complex national and international networks of cooperation in the world of wine sciences.

In the third chapter of Part I of the book Kym Anderson provides a brief account of the boom-and-bust phases in the evolution of Australia’s wine industry. In addition, Anderson describes the main organizations and institutions of the innovation system that has provided the basis for the spectacular success of Australia’s wines in world export markets during the last 25 years. Advertising, brand building, and research are all concerned with the production of information, which is a non-rival good that invites free-riding. Apparently, the arrangements of the Australian wine industry succeeded in internalizing much of the information externalities, and in overcoming the free-rider problem associated with generic advertising and R&D.

Part II of the book collects case studies of the various ways in which New World wine countries have employed their sectoral systems of innovation – universities, public R&D organizations, and researchers – in their efforts to become competitive players in global markets for wine. In Chapter 5 Kunc and Tiffin compare the activities of two universities, one located close to the Mendoza wine region of Argentina and the other located in the heart of Chile’s Maule Valley wine region. The comparison includes wine-related research activities, training of wine industry personnel, consulting, and networking activities by the universities.

The relationship between product upgrading and the intensity of networking activities by oenologists in the Mendoza and San Juan wine regions of Argentina is the focus of Chapter 6, “The remaking of the Argentine wine sector” by McDermott and Corredoira. A sample of 115 firms was surveyed of which an extremely high proportion (97 percent) responded. Results of eight regression models are reported which explain levels of product upgrading in terms of some control variables and a battery of thirteen variables measuring the network linkages of oenologists to other firms and to government support institutions. No crisp and clear qualitative results emerge from this analysis.

In Chapter 7, “Bridging researchers and the openness of wine innovation systems in Chile and South Africa”, Giuliani and Rabellotti apply techniques from formal network analysis to identify “bridging” researchers and to investigate their characteristics. A “bridge” in a network is usually understood as the only link between two nodes. In this chapter “bridging researchers”, in contrast, are defined as “those researchers who are simultaneously well connected with both the domestic industry and the international academic community” (p. 156). Information on their networking activities were collected from 42 researchers in Chile and from 40 researchers in South Africa. Results suggest that researchers in Chile tend to entertain more links to researchers in the USA whereas their South African peers look more towards Australia and Europe. Moreover, the authors were able to show what many research managers and policy makers appear to know intuitively: “First, . . . there is a small number of researchers who at the same time have a prominent scientific openness as well as a significant degree of connection with the domestic industry”, and “Second, these researchers are significantly more ‘talented’ than the other researchers . . . ” (p. 165).

The fourth and last chapter of Part II of the book contains a description by Lorentzen of institutions and organizations which provide innovation support services to the grape and wine producers of South Africa’s Western Cape Province. In addition, the chapter contains a verbal summary of the results of extensive interviews of 23 members of Winetech, an organization which is at the center of many wine innovation activities in South Africa.

The book closes with Chapter 9, “What have we learned from the wine industry? Some concluding remarks.” Here the editors of the book return to the issue of catching-up and they summarize the results and insights from the individual chapter in four lessons and three policy recommendations.

The key lessons are (pp. 203–205):

. 1)  “Traditional sectors are not necessarily low-tech and characterized by low knowledge intensity; they can be knowledge intensive and highly innovative.”

. 2)  “Innovation is not just the result of formal R&D.”

. 3)  “Access to foreign knowledge and local capability building are complementary activities.”

. 4)  “Networks of private and public actors are key to learning and innovation.”

Lessons 1–3 are likely to be familiar to most scholars of innovation in agrifood industries. Lesson 4, in contrast, adds a novel and potentially seminal perspective to what earlier research might have called “spillovers”.

The policy recommendations submitted by the editors are (pp. 206–207):

. 1)  “. . . to invest in public universities, tertiary formal education and PROs [Public Research Organizations], paying special attention to the specialization and specificity of wine regions.”

. 2)  “to attract and support talent and to take advantage of international linkages to build domestic research and innovation competences.”

. 3)  “. . . to experiment with new forms of governance of public-private partnerships, so as to implement participatory mechanisms in setting research agendas.”

There are two weakness of the book that I would like to point out. First, the book neglects most of the vast and rich literature on catching up in agriculture. The big catch-up in agriculture was the Green Revolution in Mexico and South Asia some 40 years ago. This catch-up revolution also was science-driven and knowledge intensive. Moreover, in its wake came the founding of the CGIAR, which has evolved into a truly global non-profit research organization. The significance of the Green Revolution as a catch-up event would seem to exceed that of the New World wine revolution by far, but somehow the authors and editors have missed this story.

Whilst reading the book a nagging question emerged in my mind: Given that a R&D infrastructure or knowledge system is important, perhaps even indispensable for successful innovation in competitive global wine markets, why have the Old World countries not made better use of their own well-established research organizations? In Germany, the Geisenheim wine research station will celebrate its 140th birthday next year and the Oppenheim wine education and training facility on the other bank of the Rhine was founded some 115 years ago. But the German wine industry is not known for bubbling innovation. There are some hints in the book why this may be so: a double layer of domestic and EU regulation may be sufficient to suffocate many attempts at entrepreneurial innovation. But this only begs another question: Why did the wine industry in the Old World not acquire regulations that allowed it to make better use of its innovation potential?

Books that collect contributions from different authors can never be cut from one cloth, their style varies, and if the individual contributions are concerned with similar or related issued some repetition is unavoidable. This is also true for this book. But fortunately for its readers, repetition and overlap are small and tolerable.

Overall, the editors have produced a book that contributes to our knowledge of the significance of innovation for the success of the New Wine World countries. It helps us to better understand the drivers of the most recent episode of wine grape area expansion and wine production growth. The hardcover price is likely to dishearten some buyers. Fortunately, there also is a much cheaper ebook version available. Whatever the version, the book deserves a place on the shelves or data files of sociologists, geographers, economists, and policy makers concerned with the evolution of the global wine industry.

Rolf A.E. Mueller
Christian Albrechts University Kiel, Germany