In November 2001, Michael Porter, the well-known economist from Harvard University and a world expert in competitiveness (both for individual companies and sectors and nations), spoke in Argentina (in Bs.As. how could it be otherwise) on the competitiveness of the economy of our country. And to the surprise of this Mendoza economist, who did not attend the talk but did obtain the material presented during it, one of the examples Porter gave to explain his world-famous model of competitive diamond was the Mendoza wine sector. What an honor, none other than our flagship industry used as an example at that prestigious gathering!
What did Porter contribute at this meeting about our wine cluster that we do not know here?
The most interesting to analyze are the defects that the specialist sees in the Mendoza wine cluster; generally the virtues or things that are working well are known to us. Before commenting on Porter's vision, for the reader who is not familiar with his sector competitive diamond theory, we can say that said specialist maintains that to compete successfully as a sector there are four basic determinants (conditions of production factors, quality of sectors suppliers and related parties, demand conditions and adequate business strategy and rivalry) that must function properly both individually and in their interaction,In addition, there must be a significant geographic concentration of companies in the specific and related sectors (the combination of both forms the cluster) to further strengthen the competitive advantage of the group.
How was the cluster of our flagship industry working in late 2001 in Porter's vision?]
We present here the brief outline that the specialist presented at the seminar (with a sign + what works well for him, with a sign - which in his opinion can be improved):
Determinants of competitiveness. The wine cluster in Mendoza
| Factor conditions | Suppliers and related industries (related to wine without being suppliers) |
| + Good quality of grapes available locally
+ Existence of local suppliers of labels and other inputs + Specialized enology departments in the wineries |
+ Relatively sophisticated local suppliers (bottles for example) |
| - Dependence on imported technology (eg irrigation systems, certain presses)
- Limited venture capital - Limited existence of locally conducted research |
- In general machinery suppliers not available locally |
| Demand conditions | Strategy and business rivalry |
| + Argentine consumers receptive to new products | + Income from some new companies in high quality segments
+ Investments in agricultural and winery technology |
| - Argentine consumers adapt to foreign tastes and preferences | - Traditional little rivalry between quality producers
- Most companies are still managed as family businesses |
Those that attract the most attention, among the aspects that we have in the debit as a wine cluster, and that are generally not the subject of local debate, are the subjects of local tastes influenced by foreign preferences, the little research (I would add for innovation) driven locally and little rivalry between high-quality wineries. The issues of the lack of machinery for the locally produced industry (and the consequent dependence on foreign technology), of the wineries still run as family businesses and of the limited or non-existent Mendoza venture capital for the industry (if available from Bs. As. or from abroad), are matters that generally concern winemakers and the government, that is, there is some awareness that they need to be improved.
The topic of local tastes influenced by foreign preferences is an important topic to discuss; Those of us who are familiar with Porter's ideas know that he maintains that a truly internationally competitive sector (in the stage of innovation -the ideal-) must have advanced consumers in its tastes compared to those in the rest of the world, for this way to allow our wineries to be avant-garde in the face of changes to come in international markets and innovate to achieve or maintain leadership.
It is then an interesting topic to debate how it can at least bring our local and national consumers closer to such a state of refinement in the demand for wine. About the little research conducted locally, Porter is likely to refer to research to innovate (whether business, university or government, both in product and process technology), this being also a topic to debate, the author of this note, with the information it manages, it is not in a position to affirm or deny said R&D deficit. And the issue of little competition between high-quality wineries really is a difficult point to accept, today there are a significant number of local wineries with high-quality products trying to place them outside and competing quite a bit for those markets,Competition that may not be too noticeable due to the growing demand from abroad for our products (it seems that many can sell what they propose), but we do not believe that there is a lack of competition in the high quality segment.
In summary, it may or may not coincide with all the statements of his exposition, but it is an analysis to be taken into account, especially coming from M. Porter and his team of specialists, who have revolutionized the theoretical analysis of economic development, incorporating the so-called micro foundations (competitive diamond, cluster theory, etc.) to economic development, a traditionally very macro-focused discipline.
Notes:
Surely it was someone from his team who did the work, otherwise we would have learned that Porter was investigating the wine cluster in Mendoza)
