Old World Versus New World: the Origins of Organizational Diversity in the International Wine Industry
Old World versus New World: the origins of organizational diversity in the international wine industry, 1850-1914
James Simpson
Universidad Carlos III de Madrid. Departamento de Historia Económica e Instituciones
Instituto Figuerola de Historia Económica
Abstract:
Wine production in Europe today is dominated by small family vineyards and cooperative wineries, while in the New World viticulture and viniculture is highly concentrated and vertically integrated. This paper argues that these fundamental organizational differences appeared from the turmoil in wine markets at the turn of the twentieth century. As technological change endangered existing rents, growers, wine-makers, and merchants lobbied governments to introduce laws and create new institutions that regulated markets in their favor. The political voice and bargaining power of the economic agents varied greatly both within, and between, countries, leading to the introduction of very different policies.
Key words: wine history, farm organization, vertical co-ordination, agricultural commodity chains, cooperatives, appellations
JEL Classification: L14, N51, Q13 Wine production in Europe today is dominated by small family vineyards and cooperative wineries, while in the New World viticulture and viniculture is highly concentrated and vertically integrated. As a result, 70 per cent of the nation’s wine in the United States and Australia is produced by the top five wine companies, 50 per cent in Argentina and Chile, compared to figures of only 10 per cent in countries such as France, Italy, or Spain. This paper argues that these fundamental organizational differences have historical explanations that date from the turmoil in wine markets at the turn of the twentieth century. Technological change radically altered the nature of the industry before 1914, in particular creating economies of scale in wine making and allowing the commercial production of drinkable table wines in geographical
James Simpson
Universidad Carlos III de Madrid. Departamento de Historia Económica e Instituciones
Instituto Figuerola de Historia Económica
Abstract:
Wine production in Europe today is dominated by small family vineyards and cooperative wineries, while in the New World viticulture and viniculture is highly concentrated and vertically integrated. This paper argues that these fundamental organizational differences appeared from the turmoil in wine markets at the turn of the twentieth century. As technological change endangered existing rents, growers, wine-makers, and merchants lobbied governments to introduce laws and create new institutions that regulated markets in their favor. The political voice and bargaining power of the economic agents varied greatly both within, and between, countries, leading to the introduction of very different policies.
Key words: wine history, farm organization, vertical co-ordination, agricultural commodity chains, cooperatives, appellations
JEL Classification: L14, N51, Q13 Wine production in Europe today is dominated by small family vineyards and cooperative wineries, while in the New World viticulture and viniculture is highly concentrated and vertically integrated. As a result, 70 per cent of the nation’s wine in the United States and Australia is produced by the top five wine companies, 50 per cent in Argentina and Chile, compared to figures of only 10 per cent in countries such as France, Italy, or Spain. This paper argues that these fundamental organizational differences have historical explanations that date from the turmoil in wine markets at the turn of the twentieth century. Technological change radically altered the nature of the industry before 1914, in particular creating economies of scale in wine making and allowing the commercial production of drinkable table wines in geographical