Divergent Pasts, Parallel Futures? Between Competition and Co-operation in the Argentinian, Chilean and New Zealand Wine Sectors

Abstract

The world of wine is frequently cast in terms of a distinction between the Old World (the producers of Europe) and the New World (those in USA, Australasia, South America and South Africa). Although this is somewhat of a false dichotomy, it does suggest that New World wine is qualitatively different from the Old; it is less constrained by tradition and regulation and it is characterized by modern methods of production. Furthermore, New World producers – many situated on the periphery of the global economy – compete with one another on export markets, differentiating their products on the basis of price and style. In this context, New Zealand wine producers face stiff competition from Chile and Argentina, as they do for a range of commodities that they produce in common, such as fruit and forestry products.

At first glance the wine industries studied here seem quite different. In a quantitative sense the three wine sectors are set apart. Argentina has a relatively large population approaching 40 million and this domestic market for wine explains why exports remain relatively unimportant there. In Chile with a population closer to 20 million, the domestic sector is important. Export orientation has been seen as a necessary strategy to break out of the confines of the domestic market and the wine sector represents a very clear example of such a strategy. In relative terms New Zealand is small with a population of just under four million and, although income per capita is significantly higher, its relatively diminutive size means that export orientation has played a central role in the evolution of the sector. Thus, the wine industries of the three countries operate at different scales.

Faced with different factor endowments in both an absolute and relative sense, the three countries have had to seek out ways of differentiating their wine on the world market. Although their economies inhabit similar competitive spaces in the global economy, this has not necessarily meant that they have clashed directly for market access. Instead we have seen the evolution of a strategy in the wine sector, and others, that resides somewhere between co-operation and competition where niche positioning has become a dominant strategy. This paper traces the trajectories of change in the wine industries of Argentina, Chile and New Zealand and shows that, despite divergent historical roots, the three economies now exhibit increasingly parallel sectors which actively target globally competitive, yet non-overlapping spaces. In this sense, we argue there may be further synergies to be gained in cooperation rather than competition on the periphery of the global wine sector. This contention may bear broader implications that can be applied in other sectors and economies in the semi-periphery.