Study: Government Critical to Wine Clusters

Survey finds that regions with winegrowing associations are more successful

by Peter Mitham
triple helix
The relationship between universities, business and government reflects the triple-helix model of economic activity.
Vancouver, British Columbia, Canada—Government policies are critical to the success of wine industries around the world, according to a three-year study of wine industries and winery clusters from Algeria to Washington state.

Earlier this year a survey of 33 of wine industry representatives from around the globe found that terroir and proximity to large urban markets were the top two factors in the success of global wine industries. The findings came as part of the final phase of a three-year research study associated with a $3.4-million research project into biomarkers (see “Attitudes Toward Wine Technology Studied.”)

But if the growing conditions and proximity to consumers are in check, the next most-significant elements in developing a strong wine industry are solid partnerships between industry, researchers and government.

Andy Hira, a professor in Simon Fraser University’s Department of Political Science, said successful industries are typically fostered by favorable government policies.

“We inevitably find that there’s a close connection between the evolution of that industry and the policies that were followed,” he said at a workshop last week marking the study’s conclusion.

Industry associations
When it comes to the wine industry in particular, a central organization typically harnesses the energies of the various stakeholders to develop a common vision.

“High performers all have mandatory membership in a single-industry association. They all have that central coordinating organization with mixed public-private partnerships,” he said. “That organization conducts marketing and research activities, using this mandatory levy fund, and it is a mechanism for trying to get wine producers and grapegrowers on the same page towards a long-term strategy.”

Key examples include Australia, New Zealand and Oregon, all regions that developed a strong focus on specific grape varieties to coordinate unified long-term research and marketing strategies.

“What this allows them to do is to specialize and build a reputation, regardless of what the individual company is, for a regional brand,” Hira said. “It gets them all on the same page, and it allows them to develop specialized knowledge that then creates a barrier for other producers to imitate without considerable effort.”

Triple-helix model
The industries reflect what theorists call a “triple-helix” model, which the Triple Helix Association of Turin, Italy, explains as the inter-relationship between universities, business and government. Under a triple-helix model of economic activity, “industry operates...as the locus of production; government as the source of contractual relations that guarantee stable interactions and exchange; the university as a source of new knowledge and technology, the generative principle of knowledge-based economies.”

Researchers began exploring the application of the triple-helix model to the wine industry following the second phase of the research project, which examined wine industry clusters in five regions around the world: British Columbia’s Okanagan Valley, Extremadura (Spain), Bolgheri-Val di Cornia (Italy), Australia and Chile (see “BC Grapegrowers Gather and Learn.”)

Traditional cluster theory didn’t fully explain the fortunes of each region, prompting Hira to dig deeper into the relationships between industry, research institutions and government.

The results were illuminating—as much in the failures as in the successes.

The wine industries of Algeria, the Middle East, Asia Minor and Eastern Europe lack a viable foundation for a triple-helix model, according to research from Hira’s team. Often, there is either no institutional support or a single state-run institution that dominates coordination efforts with little input from industry and the research institutions themselves.

“So they really have still ended up being stuck in the same place they were in the 1960s,” Hira said.

Back in North America
Closer to home, Baja California is producing good wine, but there is no government support for the industry. Wineries are largely left to fend for themselves.

The apparent lack of a dedicated extension worker serving British Columbia’s wine industry is a shortcoming of the industry in Hira’s home region, but he refined his previous criticism of the incomplete nature of the B.C. wine industry cluster by point to a lack of coordination between components.

“All the institutions are there for the triple helix, but in some cases one could say there is some evidence of lack of coordination across these institutions,” he said.

Challenges also exist in New York and Washington state. On the one hand, there is cutting-edge research taking place at Cornell University, but the industry’s dependence on year-to-year state funding hobbles the sector—despite the state being the second biggest producer (by volume) of wine in the country.

Washington state’s industry also faces obstacles, not because of a lack of industry collaboration or research infrastructure, but because no one has stepped forward to develop a focus for the industry—something that’s been the strength in Oregon, which has built its name on Pinot Noir and has garnered a higher per-bottle value for its wines as a result.

With the 2008 farm bill set to expire at the end of September, the findings of the report promise to bolster calls by the National Grape and Wine Initiative and other industry associations urging passage of a new farm bill to prevent grape and other specialty crop research from being left in the lurch.

Hira’s research is also set to be published as part of a boo k McGill-Queen’s University Press will publish in 2013, for which he’s serving as editor.

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