Growth and Change

Vol. 37 No. 2 (June 2006), pp. 318–333

BOOK REVIEWS
THE WORLD’S WINE MARKETS: GLOBALIZATION AT WORK
Edited by Kym Anderson, Cheltenham: Edward Elgar. 2004. xviii + 335 pp. $110.00
(hardcover). ISBN 1-84376-439-3.

In terms of land under grape cultivation, share of global trade, and percentage of the
world’s employment, the viticulture industry is a decidedly small player. Long viewed as
an indicator of status, sophistication, and wealth, wine garners far more interest than its
contribution to the world’s economy would seem to warrant. Over the past two decades,
both consumption and industry growth have slowed and even declined in some regions,
especially in the old world countries of western and central Europe. Simultaneously, con-
sumption, production, and share of global trade have increased in new world areas such
as Australasia, North and South America, and South Africa. Asia, an obviously large and
tempting new market for traditional wine producers such as France, Italy, and the U.S.,
has yet to emerge as a major consumer, or producer for that matter; but that could change.
This book grew out of an international wine economics workshop held at the Univer-
sity of Adelaide in South Australia in late 2001. The more technically oriented papers at
the workshop were ultimately destined for publication in academic journals, leaving those
of a more descriptive nature to be collected in this volume “with the aim of providing a
comprehensive and contemporary picture of the impacts of globalization on the world’s
wine markets.” The chapters are organized around developments in either a national or
regional context, especially since the late 1980s.
In two introductory chapters, the editor presents both a context and a rationale for the
volume. The opening essay lays out the global picture for wine production and consumption
since the 1980s, focusing on falling consumption rates in the old world countries of Europe
under conditions of steady or slightly declining production, and on rapidly rising consump-
tion and production in the new world regions led by the U.S., Australia, New Zealand, Chile,
Argentina, and South Africa. As new world wines approach and even surpass the best-known
labels of France, Italy, and Germany in both quality and availability, European producers find
themselves with millions of hectoliters of surplus, mainly low quality wine. The second,
more analytical, chapter presents an array of statistical and graphical evidence in support of
the jump in international wine trade to one-quarter of total global production in 2001. Indeed,
one of the book’s strengths is the rich country-by-country statistical database compiled by
the editor and upon which most of the individual chapters draw.
The old world suffers from a number of exogenously and endogenously generated disad-
vantages. Globalization has led to industry concentration, such that the top five producers in
the U.S. and Australia, for example, account for 73 percent and 68 percent of national wine
production, respectively. Comparable figures for France and Italy are 13 percent and 5
percent. Small independent producers in Europe, often organized into cooperatives, are no
match for vertically integrated global companies with large marketing budgets which are
backed by aggressive government promotional campaigns. Steadily declining consumption
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rates in France, Italy, and Germany have forced domestic producers, including the best-known
labels, to ramp up their marketing efforts to new world consumers, where consumption per
capita has risen dramatically in recent years. The European Union’s common agricultural
policy mandates that countries adhere to maximums on grape acreage under cultivation, an
enormous economic and cultural shock to societies where wine can assume the status of
national icon. Rapid technological innovation, the mobility of knowledge and experts, and the
fall of tariffs have also contributed to a more globally competitive wine industry.
The bulk of the book’s chapters are collected under two main regional groupings, Old
World and New World. A final section contains a single chapter on East Asia under the
rubric of Other Emerging Markets. The quality of coverage is uneven, sometimes by neces-
sity. The Nordic countries, for example, produce no wine because of climatic limitations.
Hence, the focus is on consumption trends and importation of wine. The chapter on France,
arguably the world’s most important wine producer and consumer, disappointed this
reviewer by its relative brevity and overly general treatment of France’s contribution to
global trade in wine. The strongest chapters were those devoted to Italy, Germany, Aus-
tralia, and New Zealand. One gets not only a full statistical picture of each nation’s con-
sumption, production, and position in the global wine trade, but one also sees the forces
at work to restructure the industry in each country and the strategies developed by both
industry and government to adapt.
East Asia constitutes a growing region, where tradition, religion, protectionist tenden-
cies, and rapid economic development interact to yield more questions than answers about
the future. With a quarter of the world’s population but a mere 4 percent of its wine con-
sumption, China and Japan loom large as potential markets for exporting countries in both
the old and new worlds. China is developing an indigenous wine industry commensurate
with its population and rapid economic growth, whereas Japan imports most of its wine but
sells it as “bottled in,” or “produced in,” Japan or as “domestic wine.” The weak and frag-
mented regulation of domestic wine production in China and Japan, combined with their
protected markets, will inhibit the ability of exporting nations to make significant inroads.
Individual chapter authors come mostly from agricultural and resource economics and
marketing, with little input from industry figures or industrial and labor economists. This
tends to slant the volume’s emphasis toward inputs, outputs, and flows of grapes and wine
and less so toward the impact of globalization on industrial structure, labor markets, pro-
duction efficiencies or interindustry trade. The book makes little reference to trade theory
and lacks the geographer’s knowledge of spatial interaction and more nuanced under-
standing of the relationships between culture and economy. Nonetheless, this book is a
useful contribution to the literature on wine, in large part because it offers a global picture
of recent vintage. As a traded commodity, wine pales in importance to most other goods,
but it continues to fascinate both the expert and the merely curious.

Brian Holly
Center for Economic Studies
U.S. Census Bureau