WineInnovation Systems Research

NetworkSixth Annual Meeting, May 13-14, 2004

Caroline D Hickton, Simon Fraser University, cdh@sfu.ca

Tim Padmore, University of British Columbia, tim.padmore@ubc.ca

BC Industry Profile

• Approximate 100 wineries and “wineries in-waiting”

• Two thirds are in the Okanagan Valley

• Rapid expansion – 1988: about 3000 acres– 2002: about 5000 acres – 2004+: from 7000 to 8000 acres

Okanagan Cluster History

• Seed: 1925, first vinyard, foxy grapes

• Shoot: 1981, 14 wineries, handful of vinifera wineries, “I have a dream.”

• Shock: Free Trade Agreement 1988/89

• Sunshine: Pull-out program (2000 acres)

• Sugar: Love, money, imagination

Innovation: performance

0

5

10

15

20

Firmfirst

Regionfirst

Canadafirst

Worldfirst

Marketing –selling

Marketing –product design

Making

Growing

Innovation: impacts

0

100

200

300

400

500

Nu

mb

er o

f m

edal

s

0%

10%

20%

30%

40%

50%

Med

al Q

ual

ity

(#g

old

/#b

ron

ze)

Innovation: inputs

  Prestige Connectedness

Correlation of innovation with . . . - 0.131 0.585

R-squared of the relationship . . . 0.017 0.342

Princeton Penticton

Kelowna

Osoyoos3

Resources

• Land resources– warmth, aridity, soil, bench-lands, beauty

• Human capital

• Financial capital

• Technology

“If we could grow grapes in Alberta, we’d go there,”

Infrastructure

• Irrigation system• VQA• Institutions

– Association of British Columbia Winegrowers– BC Wine Information Centre – British Columbia Wine Institute– Ministry of Agriculture, Food and Fisheries– Okanagan University College– Okanagan Wine Festivals Society– Pacific Agri-Food Research Centre– UBC Wine Research Centre

• Regulation and government programs

Infrastructure

“Big wineries were not interested in VQA until the VQA proved itself. Now they are very interested.”

  PARC

BCWI

Wine Fest

OUC

ABCW

UBC Wine

Wine Info

MAFF

Reports of fruitful innovation linkages 14 11 6 4 5 3 1 0

Importance of links15 12 7 5 5 3 1 0

Related and supplier firms

• Farmgate sales half of all VQA sales

• “Asymmetrical symbiosis” with tourism

• Grape trade routes (next slide)

• Collapse of supply management

• Consultants as conduits

“All this paled compared to the knowledge we got from the consultant.”

Princeton Penticton

Kelowna

Osoyoos3

Firm structure and strategy

• Size: “very small” to “medium large”

• Investment phase in 1990s

• Recent consolidation– Benign (?) impact of outside owners

• Networks

“The Okanagan region has mostly new people in the industry and as a result must learn through experience and rely on other people in the industry as teachers.”

Markets

• Domestic (regional) market

• Access to external markets– Rest of Canada– Rest of World

“It’s been a honeymoon here to not have to look beyond the BC market at the world market.”

Future challenges

• Absorbing increased production

• Re-branding

• International competitiveness

Conclusion

Caroline D Hickton, cdh@sfu.ca

Tim Padmore, tim.padmore@ubc.ca