What Makes Clusters Competitive? by Hira Anil;

Author:Hira, Anil;
Language: eng
Format: epub
Publisher: McGill-Queen's University Press

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Competitiveness of the Wine Industry in Extremadura, Spain

FRANCISCO J. MESÍAS, FRANCISCO PULIDO, AND ANGEL F. PULIDO

Translation by Elisa Ferreira and Anil Hira

INTRODUCTION

This chapter is based on a 2010 study of thirty wineries in Extremadura, Spain. It analyses the competitiveness of the Extremaduran wine industry, focusing on the advantages and disadvantages that have affected the development of this sector. We examine the role of private and public regulatory bodies in creating competitiveness. We apply the framework developed by Hira, Howlett, and Giest in chapter 1. Their approach focuses on the potential role of public and collective support institutions to promote competitiveness.

Our analysis reveals that the lack of public-private and private-private interactions is a key factor for explaining the partly unsuccessful and incomplete expansion of the Extremaduran wine sector in international markets. Even though the sector enjoys advantages in climate, soil, and the price of grapes, these have not been translated into a fully competitive wine sector.

Extremadura is one of the main Spanish wine regions, with 88,000 hectares of vineyards and an average production of around 3 million hectoliters. It is located in south-western Spain. It is a zone of low population density, with just over 1.1 million inhabitants spread through 41,600 km2. The climate is continental Mediterranean, and the annual average temperatures vary between 16 and 17°C. The summers are long, hot, and dry; the average temperature in July is usually over 26°C, with the maximum often surpassing 40°C. The winters are normally mild with an average temperature of 7.5°C. Rainfall is irregularly distributed and varies between 300 and 800mm annually, with large variations between years.

Extremadura has traditionally been a supplier of non-bottled wines, bound for other regions that place greater emphasis on the sale of bottled wine. While commercial channels have evolved with the increased sales of bottled wines directly from processing industries to hotels, restaurants, consumers, and retailers, sales of non-bottled wine still compose the majority of total sales in Extremadura.

Among the problems faced by the productive sector is the use of a quality label (Designation of Origin Ribera del Guadiana) in which just over 20% of the wineries in the region currently participate. In addition, structural problems have resulted from an inadequate selection of grape varieties, with great weight on the production of white wine in relation to market demands.

One of the most striking aspects is the commercial behaviour of wine companies, which show fairly homogeneous groups, both in terms of size and legal form. Medium-to-large companies stand out, with great importance given to co-operatives and relatively limited attention to non-bottled sales. Small wineries base their business on selling bottled wine, utilising different channels of commerce. The limited commercial development of the larger wineries, along with a weak relationship between companies that could generate synergies, are the major bottlenecks of the Extremaduran wine industry.

THE EXTREMADURAN WINE SECTOR

The wine sector is particularly important in Extremadura, with an average turnover of 50 million euros (2008–09), representing 5% of crop production in the region. It is also quite important on social

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