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Value chain analysis is very much framed by the nature of the particular sector as it
develops at the global scale (Friedland, 2005). Unlike global value chains in agriculture,
wine provides an example of an agro-industrial value chain in which significant value-
added can occur in the processing plant (winery). In contrast to such agricultural products
as wheat or grapes where global exchanges tend to set prices, the wine sector has much
greater flexibility in price setting and can potentially generate a huge variety of products.
Prices have to be negotiated between producers and retailers rather than set in an
exchange. The role of technological upgrading (through both product and process)
becomes important as this can act to differentiate the final products of an exporting firm.
Innovation has been critical in a large number of areas in Chile’s wine industry growth
over the past eighteen years. The newer companies (those established in the last two
decades of the twentieth century) have had a remit to go for organizational success in
their overseas policy - starting by focusing on supermarkets and then gradually going up
market. With this, these firms have also gone up market in many “new” areas of the
world.
At the same time, the companies have become less and less integrated with other
producers in their area. With increasing vertical integration, all leading companies have
been linked to a significant growth in planting and private sourcing, at least of their
premium, super-premium and ultra-premium wines. With this result, the number of
contracts with other producers has gradually lessened. Some of these producers are now