The Globalization (and Regionalization) of Wine
CIES Discussion Paper No. 0125
26 Pages Posted: 16 Aug 2001
Date Written: June 2001
Virtually all industries and households are affected by what has come to be called 'globalization', even though the term connotes different things to different people. On the one hand, economists think of it rather clinically as simply the lowering of transaction costs of doing business across space, and therefore a 'good thing' because it conserves resources. In the more-specific case of business across national borders, economists refer more precisely to 'internationalization': to the growth in international trade in goods, services and the various forms of capital (human, physical, knowledge) relative to national output or expenditure.
For a vocal minority in many countries, on the other hand, one or more of the perceived consequences of globalization is considered a 'bad thing'. People in that set of anti-globalization groups may be concerned about such things as homogenisation of marketed products, a growing dominance of multinational corporations, or the disappearance of small firms with their individualistic goods or services. When applied to wine, they worry that what for centuries has been characterized as largely a cottage industry, with its colourful personalities and wide variety of wines that differ from year to year because of the vagaries of weather or the vigneron's experimentation, will soon be difficult to distinguish from any other high-tech industry with a small number of large firms churning out standardized products for global rather than just local markets.
This paper explores the possibility that in the case of wine at least, the forces of globalization and consequent market responses will be such as to please both the pro- and anti-globalization groups, while at the same time allowing the industry to prosper. One of the necessary ingredients for such a win-win outcome will be a stronger 'regionalization' or localization of the wine industry.
The paper begins with a brief exploration of the forces of globalization in general. It then looks historically at the globalization of the wine industry in particular and Australia's place in that, before turning to the prospects ahead. It concludes with a discussion of the future role of regionalization of the industry and its impact on Australia's wine producers and consumers.
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