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Wine’s belated globalization, 1845–2025

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Why was wine globalization so belated? Why did it take so long for wine exports to take off even in the New World regions of European settlement? Kym Anderson these questions and also seeks to explain the bilateral patterns of wine trade.

Image courtesy of interviewee. December 7, 2023

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This video video discusses the history and globalization of wine production, highlighting its evolution from ancient times to the present. Wine production began around 6000 BCE in regions like Georgia and Armenia, spreading through the Mediterranean and into Europe. For centuries, trade in wine was limited primarily to Europe until the first wave of globalization in the 1830s, which increased global trade.

This video video notes how the new world, particularly countries like Australia, Argentina, and Chile, started exporting wines in the late 20th century, driven by demand and marketing. This video video period introduced "commercial premium" wines that were accessible and affordable. Factors like favorable exchange rates, advancements in shipping (the container revolution), and effective marketing strategies allowed countries far from traditional markets to succeed in exporting wine.

Moreover, the piece touches upon climate's role in wine production, emphasizing that optimal growing conditions are typically found in certain latitudes. Wine grapes are sensitive to climate changes, and current shifts, such as warming temperatures and altered precipitation patterns, pose significant challenges for traditional wine-producing regions. Some areas may decline in quality, while others, like Tasmania and parts of the Nordic countries, may emerge as new wine-producing regions.

This video video concludes that climate change will have varying impacts: some regions may thrive, while others may struggle, compelling producers to adapt to new conditions or shift to different grape varieties.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

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There's a, a number of ways one can think about it.

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But, one obvious way is how production

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of wine has spread around the world.

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Um, and, another is to think about

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how much it is exported or imported by different countries.

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If you think about production, it's something

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that's spread from about 6,000 BCE, eight, eight,

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millennia ago from places like Georgia

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and Armenia in the South cor Casas to,

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Eastern Mediterranean, about 2,500 BCE.

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Then it took about until the early, maybe four

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or 500, CE or ad,

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before it reached, much of southern Europe.

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And then nothing much happened for another thousand

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or more years, until European settlement,

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began in the new world.

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So-called in, south America, north America, Asia,

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South Africa, and so on.

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Um, and with those, folks who were used

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to wine moving into those territories,

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they began to grow wine.

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So they were taking the technology and the vine cuttings

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and so on to that region and beginning production,

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but it never traded internationally outside of,

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Western Europe, Europe, right up until, the beginning

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of the first globalization wave, which was,

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starting in the 1830s, the first globalization wave,

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which followed the industrial revolution, led

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to a lot more products being traded, around the globe,

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not just, within nearby areas.

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And, so that happened for many, many products.

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Um, but in the new world,

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those countries exported only a couple of items each.

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So the North Americans, it was predominantly,

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or the us it was predominantly cotton and wheat.

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For Chile, it was copper.

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For Australia, it was gold and wool.

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For Argentina, it was wool and hides,

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and any other product was, too expensive to ship

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relative to its value.

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And so almost nothing else got traded, including wine.

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There was a little bit of Australian wine, got into Europe

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by barrel and was blended with European wines

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by London merchants and so on.

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But that was very minuscule compared with,

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what's been happening since the,

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the first globalization wave ended with the first World War.

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And the second one didn't start until

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after the Second World War.

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So there was another few decades of lost,

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trade opportunity there.

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Um, and then there was a bit of an opening up of,

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wine trade, but it was not, not, by design.

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It was, the, the three big European producers, France,

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Italy, and Spain, store the, the consumption

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of wine declining rapidly in their countries.

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And so to get rid of the surplus, they began

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to export it at low prices.

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So that happened through the sixties, seventies, into

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The, the eighties. And

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it was only in the nineties that the new wave

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of globalization of wine took place.

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And that was deliberate.

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That was export driven, expansion of wineries,

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great growing in initially Australia,

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but then it spread to, Argentina, Chile,

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South Africa, New Zealand.

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Up until, that second globalization wave,

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the world was really, world

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of wine was divided into two groups.

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There was fine wine, and there was, jug wine.

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Jug Wine was locally, sold in bulk.

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Often people buy ev each day, drink it that day,

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go back the next day, get a bit more.

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That was typical in Southern Europe.

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Um, and, and the fine wine was eaten.

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It was drunk by the elite in Europe, including

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the u the British, the Britain.

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So the UK was really the biggest importer of

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that fine wine early on,

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but it was a minuscule share of global production

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that they imported and drank.

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So, so that was the norm up until the 1970s.

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And then as Australia got into this,

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for reasons we can talk about, they developed a third

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category of wine in between this non-premium, bulk wine

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and bottled fine wine.

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And we, we might call it commercial premium wine.

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It was bottled, it was labeled according to variety, also

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by region if it came from a particularly well-known region.

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Um, and it was sunshine in a bottle.

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It was very accessible wine.

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It was faultless in a technical sense,

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and it was relatively cheap.

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So that that changed wine globalization

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because it suddenly became possible

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for countries like Australia, halfway

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around the world from the main market for wine to,

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wine to export.

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And it was, it was possible for several reasons.

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One was, super marketing began.

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You could sell this stuff

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through major supermarket chains like in the uk

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where there's only five main chains.

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They could advertise nationally, large volumes available

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of this product, to, to

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get economies of scale by having that, large throughput.

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Secondly, there was, there was exchange rate,

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favoring there.

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The, the, exporting countries like Australia, Argentina,

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Chile, were facing very low exchange rates in the,

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mid eighties.

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And that made it very easy for much easier, more competitive

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for, countries to, to export products

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that previously were too expensive to export.

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Thirdly, it was the container revolution,

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the lowering of trade costs.

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So it was much cheaper to, cheaper

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to ship this stuff around the world.

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So I think those are, are, some of the reasons why,

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why we saw that that happening.

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And we've, we've then seen these,

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other new world countries.

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First copied Australia, and then the French

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and others started copying Australia from their low end,

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no non-premium product.

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They started raising the quality of that

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and converting it into this commercial premium product.

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So what, is required

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for high quality wine production is the sort of climate

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that we've been used to having in the 30

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to 50 degree latitude, north or south of the equator.

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So for the northern hemisphere,

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that means the Mediterranean region is,

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has been a traditionally high quality area

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to grow wine grapes, starting with Georgia,

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right over there on the east side through to Spain

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and Portugal on the western side of that.

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Um, in America, in North America at least, it wasn't so easy

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to do that apart from in California

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because it was more humid.

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Uh, and so efforts on the east coast early on in whites, in,

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in, European settlement

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of North America were unsuccessful in creating wine.

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Um, it was only after California got absorbed into the US

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with a climate not dissimilar to the Mediterranean climate

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that we saw it take off there,

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but it took off earlier than that in South America

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and South Africa, south America from the mid eight,

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mid 15 hundreds South Africa from 1655,

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and then Australia from 1788

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and New Zealand a few decades later.

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Um, so that, that belt is where you can grow that stuff.

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Well, that product well,

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and there are places in China where you can do that,

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and we're starting to see that happening now, for example.

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Um, but it is true you can grow them in the tropics,

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and there's a little bit of wine grape growing in the

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tropics, but it's typically very difficult

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and different style of wine.

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Um, so, so Australia has,

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has the right climate in a small number

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of areas of the continent.

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Um, it's, only a small fraction of 1%

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of our crop area is under wine grapes.

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That's true for the world as a whole.

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Only 0.5% of the crop area

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of the world is under wine grapes.

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So it's a, it's a very small product in that sense,

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but it's very local, very specifically, settled in areas

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where it can be grown best.

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And you soon find out that if you can't compete, you get out

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of it and grow something else.

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Well, climate change definitely is having an impact

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because, wine grapes are,

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the canary in the coal mine, really, they are one

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of the more sensitive plants that respond

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to changes in, in climate.

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So as we see warming take place, we're going

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to see the quality of wine grapes in regions

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where they're at their optimal point at the moment.

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In terms of, the average growing season temperature,

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they're going to decline in quality.

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And so nerons will either have to move to,

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fuller climate or more

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Temperate regions if they want to keep

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with the current varieties of wine that they're growing

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or they will have to,

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change their varietal mix towards products, then can cope

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with a higher temperature.

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Precipitation is also part of the story.

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Uh, and so if precipitation changes,

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that might mean you need to irrigate more,

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if a region becomes drier.

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So in countries like Australia

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and regions as, as in the US for California,

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we are seeing the, the regions becoming drier

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and hotter, in the, in the hottest parts

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of both of those regions.

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And that's going to be very difficult for those.

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So in Australia, half of the wine grapes are grown

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in the hot irrigated area, river irrigated areas

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in California, it's similar with the Central Valley.

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And if we, if we have water markets

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as both those regions have, the price of water is going

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to rise as precipitation drops the price of irrigation water

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and the temperature's going to be hotter, probably

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beyond the optimal for each variety.

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And so those areas are going to really struggle.

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Meanwhile, cooler areas are going to expand.

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And we are seeing that in Australia for Tasmania,

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for example, is becoming a high priced,

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premium wine region.

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Now, in, in Europe,

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we're seeing the low countries

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and the Nordic countries begin to focus on wine grapes.

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We are seeing Australia

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and Germany focus beyond white varieties,

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toward red varieties like pinot noir, and that's

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because they're getting warmer.

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Um, so it's going to be a, a win for some regions

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and a loss for some other regions.

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