Competitiveness and the Market for Central and Eastern European Wines: A Cultural Good in the Global Wine Market

Abstract

The shifting locus of international wine production reflects the impact of ‘New World’ wines from the Southern hemisphere and the United States. A region which, oenologically, had an historic and traditional advantage over these new sources—the Central and Eastern European countries—has lagged behind these young competitors. This paper examines some recent history of the international wine market and this region's status in it. It suggests an unconventional interpretation of the nature of wine in the marketplace—as a cultural good—and discusses how this understanding of wine might define a market niche not yet served by current producers.

Acknowledgments

I appreciate the comments, suggestions, and additional references from two anonymous referees and suggestions for resources from Dr Bernard Hoeter. Heather Goodall provided able research assistance in preparing Table 1. An early version of this paper was presented at the 25th World Congress of the Czechoslovak Academy of Arts and Sciences (2010) in Tabor, CR.

Notes

In the context of the global wine market, we shall consider the wine-producing CEEC to be the six former Soviet-dominated countries that have joined the European Union (EU) (Bulgaria, Czech Republic, Hungary, Slovakia, Slovenia, and Romania) and five Balkan countries (Bosnia and Herzegovina, Croatia, Macedonia, Serbia, and Montenegro). Excluding Greece, Malta, and Cyprus, these are the countries included in Hugh Johnson's coverage of “Central and Southeast Europe” in his annual Pocket Wine Book. In 2008, these countries accounted for about 5% of global wine production. However, Bosnia/Herzegovina, Serbia, and Montenegro had very small production; and, of the remaining countries, only Slovenia had increased production (+17.2%) over the period 2004–8 (http://www.wineinstitute.org/resources/worldstatistics/article87).

A more explicit endorsement of wine as a cultural good has come from personal correspondence with Prof. Throsby: “[Wine] has the hallmark characteristics that have come to be accepted as defining a ‘cultural good’'' (personal correspondence, 16 May 2011). In particular, he cites three widely accepted characteristics of cultural goods, namely 1) embody creativity, 2) convey some symbolic meaning, and 3) embody at least potentially some form of intellectual property.

The characterization of wine as a cultural good is distinct from the idea that most or all goods have ‘cultural content’. In this sense, a cultural good is a technical category of goods with defined production and consumption characteristics drawn from economic theory (analogous to the technical definitions of public goods, private goods, durable goods, club goods, etc.): some of these characteristics contribute to market failure and argue for state support as indicated later in the discussion. The cultural role and meaning of consumption is the basis for a large literature drawn from anthropology, sociology, and economics which explores questions of the meaning of consumption (e.g., status, marking, public versus private) (see, for example, Douglas and Isherwood, 1996) and, in focusing upon why people buy, is less concerned with market failure. As of now, these two approaches to the relationship between culture and goods seem to have developed largely independently.