Old World Versus New World: the Origins of Organizational Diversity in the International Wine Industry

12101 Words Jan 28th, 2011 49 Pages
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
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Section one argues that traditional grape and wine production favored small scale integrated production. From the mid nineteenth century producers had to adapt to three major exogenous events: the integration of national and international markets, the appearance of new vine diseases and production shortages that these provoked, and the major advances in the knowledge of fermentation and the development of wine making equipment that produced economies of scale and which allowed cheap table wines to be produced in hot climates. These changes encouraged an expansion of production in hot climates in the New World and a shift in the locus of production of cheap table wines from Europe’s centre to the periphery. Thus while the four Midi departments and Algeria produced the equivalent of less than 15 per cent of France’s domestic wine consumption in the 1820s, this figure had reached 50 per cent by 1910. Other regions, such as La Mancha in Spain or Puglia in Italy experienced similar changes, although at later dates. By the turn of the twentieth century, a combination of higher yields and increase in adulteration flooded wine

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