Strategic Evolution of Chilean Wine Firms: Vertical Integration and Upgrading in Chile’s Colchagua Valley

• Main Author: Robert N. Gwynne
• Format: Article
• Language: English
• Published: Urbanistični inštitut RS 2012-01-01
• Series: Urbani Izziv
• Subjects: Chile; wine production; UK; political economy; value chain
• Online Access: http://urbani-izziv.uirs.si/Portals/uizziv/papers/urbani-izziv-en-2012-23-supplement-2-003.pdf

This paper argues that the favourable export trajectories for Chilean wine to global markets in general and the UK market in particular are partly due to the nature of the insertion of wine producing firms into global value chains. Much of the data in this paper comes from a two-year British Academy research project (2005-07) which examined the impacts of globalization on export-oriented wine firms in Chile’s Colchagua Valley and the record of collaboration between these firms and key purchasing companies within the UK market. The paper examines the political economy of value chains in agro-industry, retail concentration in core economy markets and the relevance of convention theory to value chains in the wine sector. The paper then analyses how value chains give context to the nature of upgrading within the Chilean wine sector by focusing on: the strategic example of the lead firm; firm upgrading as a response to the demands of and knowledge flows from retailers; and firm upgrading through the flying winemaker model. The paper will conclude by assessing the relevance of the Chilean experience for other countries wishing to rapidly expand their wine exports, such as those in S. E. Europe.