Microeconomics of Competitiveness - California Wine Cluster
CASES: The California Wine Cluster, HBS Case: 9-799-124
ASSIGNMENTS:
1. Why has California emerged as one of the leading wine – producing regions in the world? It was Californian first vintners in California who began cultivating grapes for use in sacramental wines in the mid-to-late 1700s. In the 1830s and 1840s the first commercial vineyards were established. Vintners survived by making grape juice and sacramental or medicinal wines.
2. How was California able to upgrade from producing low – quality wines to a dominant focus on premium wines over the last two decades?
In early 1900s the University of California at Davis shifted its research to fruit growing and renamed its viticulture department to be the “Department of Fruit
Studies”. The wine Institute, a trade association of 48 California wineries, was founded in 1934 in San Francisco to help re-invigorate the lobbying at the state and federal levels. As prohibition came to an end, the Depression hit the U.S. economy winemaking did not regain steam until the Second World War when the U.S. was largely cut off from European sources. Demand for low quality sweet and fortified wines such as Thunderbird fueled California production throughout the 1940s and
1950s.
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3. What is California’s competitive position versus France, Italy, and Chile?
a. California’s competitive position versus France:
California’s competitive position versus France is in wine prices and production cost. The competitiveness is varied by region and by quality. Labor costs in France were generally thought to exceed California’s. France had long-established apprenticeship programs at individual vineyards and winemaking establishment.
The French had an aversion to what they viewed as the “mechanistic” and overly scientific methods of Californian production, seeing the discipline much more as an art handed down over the generations. Despite this, the French had a wellestablished research network and base
ASSIGNMENTS:
1. Why has California emerged as one of the leading wine – producing regions in the world? It was Californian first vintners in California who began cultivating grapes for use in sacramental wines in the mid-to-late 1700s. In the 1830s and 1840s the first commercial vineyards were established. Vintners survived by making grape juice and sacramental or medicinal wines.
2. How was California able to upgrade from producing low – quality wines to a dominant focus on premium wines over the last two decades?
In early 1900s the University of California at Davis shifted its research to fruit growing and renamed its viticulture department to be the “Department of Fruit
Studies”. The wine Institute, a trade association of 48 California wineries, was founded in 1934 in San Francisco to help re-invigorate the lobbying at the state and federal levels. As prohibition came to an end, the Depression hit the U.S. economy winemaking did not regain steam until the Second World War when the U.S. was largely cut off from European sources. Demand for low quality sweet and fortified wines such as Thunderbird fueled California production throughout the 1940s and
1950s.
1
3. What is California’s competitive position versus France, Italy, and Chile?
a. California’s competitive position versus France:
California’s competitive position versus France is in wine prices and production cost. The competitiveness is varied by region and by quality. Labor costs in France were generally thought to exceed California’s. France had long-established apprenticeship programs at individual vineyards and winemaking establishment.
The French had an aversion to what they viewed as the “mechanistic” and overly scientific methods of Californian production, seeing the discipline much more as an art handed down over the generations. Despite this, the French had a wellestablished research network and base