Firm Creation, Firm Evolution and Clusters in Chile’s Dynamic Wine Sector: Evidence from the Colchagua and Casablanca Regions

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As Gwynne (2008a) says firms are also required to innovate as supermarkets nowadays,
instead of just reselling a product, actively seek out or demand a certain type or
characteristic of a product. For a firm of the semi-periphery to survive in this competitive
global market they need to respond from any diffusion of knowledge a distributor offers
about consumer demands (Gwynne,2008a). It is indisputable that innovation is important
in the evolution and survival of firms, shown by the fact that 70% of firms in Colchagua
think innovation in both process and product is important (Olavarria et al, 2008).

The innovations carried out by these companies can be split into three sections:
innovations to improve the product via product upgrading in the winery; innovations to
improve the product via process upgrading; and innovations to improve the product
through branding and marketing.

Product upgrading

The traditional style of Chilean winemaking was common as recently as the eighties. A
chronic lack of investment together with an insular mentality meant that winemaking for
many Chileans was a crude and haphazard business (Richards, 2006: 30). Pressing was
quick and brutal, fermentations were short and hot, maceration times were kept to a
minimum for fear of bacterial spoilage and filtering was conducted as early and
comprehensively as possible.

It was not until the eighties that things began to change. The man credited with the
change is the Spanish winemaker Miguel Torres, who imported modern winemaking
technology such as stainless-steel tanks and pneumatic presses. His example of rigorous

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