Abstract
The recent expansion of the global wine industry, especially in developing countries, has brought to light the apparent phenomenon of conspicuous production. This form of economic activity is characterised by investment decisions that seek status and reputation alongside or, in many cases, ahead of profits. This paper examines the wine industry and uncovers examples of conspicuous production occurring at different scales, from celebrities and individual investors through to national strategies. Although the empirical evidence is somewhat scattered, we argue this is a source of capital of significance in the wine industry, and possibly in other sectors of the economy.
‘Creating art is important to me. Making wine is creating art. I get enormous pleasure watching grapes grow and mature.’ Antonio Banderas, movie star and winemaker.
Wine and capital
Antonio Banderas, like his fellow movie stars Dan Aykroyd, Gérard Depardieu and Zhao Wei, the sportsmen Ernie Els and Wayne Gretzky, and musicians including Madonna, Bob Dylan and Cliff Richard, represents a novel, diverse, high-profile source of capital within the wine industry. The industry is marked by the dominance (in investment and production terms, at least) of huge multinational liquor conglomerates; and yet due to the complex nature of the product’s differentiation, the industry also has significant space for other, often much smaller, investors and producers. Celebrity wine makers (or more correctly ‘investors’, for in reality few actually make the wine) represent one, albeit novel, source of capital within the industry, and one that is typically not driven by purely economic concerns. In this sense, their involvement parallels others (individuals and institutions) whose interest in wine production transcends rational economic decision-making. Two other sources of such investment in the wine industry that can be identified are state-led forms of investment in the industry, and a brand of urban entrepreneurs who, in part, pursue involvement in the wine industry as an aspirational activity that reshapes their image and identity.
In this paper, we are interested in untangling the motivations and implications of such primarily non-economically-driven forms of investment. Following Polanyi (1960), we label such investment ‘conspicuous production’, and use this theory to provide a lens through which to examine the ways in which these varied sources of capital flow into the wine industry, reworking the existing patterns of production and industry structures and ownership in different parts of the world. These complex novel formations and articulations of capital, we argue, are playing a role in reshaping the geographies of wine, and with it, rurality in different parts of the world.
In conventional Marxist analyses, class formation is predicated on production and the ownership and control of the means of production. Surplus value is extracted and accumulated by the bourgeoisie, who amass individual wealth. For Veblen (1899), though, the expression of class for the bourgeoisie is then acted out through consumption. Consumption, in this sense, validates class and status, and consumption is an act that is ‘performed’ by the wealthy. We suggest in this paper that such consumption is sometimes paralleled by the construction of new production systems that serve a similar purpose: they are primarily about the display of status and the recreation of identity, rather than being for the prime purpose of surplus extraction. We outline how in the wine industry, there are forms of capital investment which construct these new, partially fictive production systems. Whilst there are implications for class formation within these forms of wine production (Overton & Murray 2013), the basis for the wealth and the class position of the owners/investors is derived from elsewhere, from more conventional capitalist production. The constructed wine production systems instead allow the investors to reconstruct their class identities through a form of conspicuous production (a performance of class that is similar to conspicuous consumption). In this way, they attach themselves to a production system that is putatively non-industrial and often pre-modern (in some cases, almost neo-feudal [Murray 2007]) – a fiction that is promoted as artisanal, sustainable and land-based, rather than (the reality of their wealth) industrial, urban and exploitative.
Wine is a global industry that has experienced significant growth and restructuring in the past decade, particularly in the developing world outside its established base in Western Europe. This, in part, involves an expansion and reorientation of production in long-established wine regions such as Chile, North America and South Africa, but it also involves significant development among new entrants to the industry, such as China and India. In this growth and reorganisation, the role of capital is critical, for significant investment has been required in vineyard purchase and development, in winemaking buildings and equipment, and in branding and marketing. This paper argues that such new capital has come from a variety of sources, but one of the most interesting is a form of capital investment from largely local sources that has as much to do apparently with the validation and enhancement of social status, identity and reputation (‘conspicuous production’) as it has with profit maximisation.
We argue that such forms of investment in the wine industry (but also in a range of other industries) are an under-researched and under-theorised element of the economies of many countries. Most economic theory and policy is predicated on the evolution of productive economic systems and institutions that valorise a rational, economically efficient system: the putative neoliberal free market is the epitome of this imaginary. There is also a tendency to see capital as relatively homogenous and solely concerned with seeking out least-cost locations and maximising profit (although see the recent critiques framed around ‘varieties of capitalism’ in this journal, including Weiss 2014, Jessop 2014 and Gough 2014). While the contribution of the informal sector and small-scale, family owned and operated businesses which offer more than economic value to the participants are recognised as important contributors to non-market-driven production (see de Soto 1989; Gerxhani 2004; Friedman 1978), the role of different forms of status-seeking productive activities receives little attention in connection with economic growth and development. In this paper, we will explore how the wine industry involves some producers who may be motivated by status-seeking behaviour rather than by pure profit maximisation.
We argue that these new sources of capital in the industry are linked in part to changing global patterns of wine consumption. Such a view lays emphasis on domestic markets and the rapid rise of wine consumption amongst both the expanding middle classes and the very wealthy, particularly in developing countries such as China, where wine consumption is increasing dramatically (Banks & Overton 2010). Whilst the very wealthy may demand higher priced wines from around the globe (and thus constitute a new market for global wine companies), these new middle classes are highly significant consumers as they shift their consumption towards wine away from other beverages such as beer or non-alcoholic drinks. In this sense, wine is regarded as a higher status product, akin to a favoured automobile marque or a brand of designer clothing, and associated with modern and western fashions and lifestyles: as David Harvey (2001: 401) argues: ‘Knowledge of wines and ‘proper’ appreciation is often a sign of class and is analyzable as a form of ‘cultural’ capital.’ Wine is a marker of new wealth and worldliness, and its consumption is conspicuous as a way of advertising the rising economic and social status of the consumer (Demossier 2004; Dewald 2003; Fang Liu & Murphy 2007; Overton & Murray 2013). Although such middle-class wine consumption may also tend towards the consumption of global brands, it is often wine as a product itself that is most important. Here, locally produced wines become a critical element, since these can often fulfil a form of status attachment, especially where there are high tariffs on imports in place, as in India (see Anderson 2004: 8). Locally produced wines become part of this new wine consumption culture, for there is also often a parochial loyalty to wineries in which the vineyards can be visited as part of a local tourist experience, where certain wineries gain reputations for quality or sophistication or, of particular interest to this paper, where a particular local celebrity is involved. This attachment to local products and producers has been noted as a counter-tendency alongside the broader processes of globalisation (Jackson 2004), and as an element in understanding the importance of locality in the comparative capitalism literature (Gough 2014).
Yet whilst this consumption-focused view of the industry is very important in understanding the growth and reorientation of the wine industry worldwide, it does tend to mask the role of investment and production in shaping the particular forms of the industry in different places. Similarly, a commodity chain approach to analysing wine production (see Gwynne 2008; also Ponte & Ewert 2009) is critical, but it too may obscure important local and specific relations of production. At one level, the picture of capital investment in the global industry is relatively clear. Although much of the marketing of wine draws on discourses of small-scale artisanal production and traditional winemaking and viticultural techniques, the dominant feature is industrial-scale production of an alcoholic beverage to compete with beer and spirits (Charters 2006; Colman 2008). From a base in established wine-growing regions in Europe and North America, large multinational beverage corporations, including Constellation Brands, Pernod Ricard and LVMH, have invested heavily worldwide buying up well regarded and established wine companies (Overton et al. 2012). They are joined by large, high-volume producers such as E. & J. Gallo, so that much of the world’s wine consumption, despite a plethora of labels, regions and vintages being available on supermarket or wine-shop shelves, has been captured by a small number of companies. Returns on this traditional form of capital investment depend on the position of the product in a crowded, diverse and highly competitive market. Here, profit can be derived through achieving economies of scale where a low-cost, high-volume mode of production seeks consistency of product, a global marketing presence and small margins from very high turnover. From another perspective and scale, considerable returns can be made from acquiring and developing a luxury brand (a champagne house, a Bordeaux chateau or a Napa Valley winery). And a third form of capital in the industry is the much smaller scale variety, invested in the more ‘romantic’, artisanal end of the industry. Such disaggregation, though, disguises the complex, myriad and (usually) symbiotic relationships between these different forms of capital (see Overton 2010). Thus, there appears to be a need for a more nuanced understanding of the nature, heterogeneity and variegation of capital (Jessop 2014) in the wine industry (see Lewis 2014 for the New Zealand wine industry), and it is to this understanding that we contribute here. In particular, this paper seeks to illuminate the way some local agents, including celebrities and the state, are often just as important, if not more so, than global corporations as sources of investment and leaders of production and branding in wine development. In some ways, we argue, it is the decisions and motives of these investors and institutions that construct particular manifestations of the wine industry in certain places, as much as it is either local consumption or global markets. In particular, we focus on a putative group of investors who provide capital in ways that seek to enhance personal status and recognition as well as, or instead of, turning a profit. This ‘conspicuous production’ is a phenomenon we believe is present across a range of sectors, and yet for a range of industry-specific reasons, is epitomised by activity within the wine industry.
The paper proceeds from here to examine the theoretical background to the notion of conspicuous production, then utilises case studies grouped broadly in three categories: the varied involvement of celebrities in the wine industry; those investors who seek to use investments in wine to polish their public image and persona; and finally, a discussion of the role of the state in places in which the enhancement of a certain national cachet associated with the wine industry has been pursued. The three categories of investment are linked through the concept of conspicuous production: that is, the investment in the industry occurs in the absence of a fixation with the economic returns on this investment. The cases offer three diverse settings for this type of investment, and while the last represents an example in line with Polanyi’s original formulation of ‘conspicuous production’, the former two deploy the term in quite novel ways to broaden our understanding of this form of investment by individuals, firms and/or the state for reasons that have little to do with economic motives. The case studies are also linked through other optics, in terms of the extent to which the capital deployed supports or creates new rural regions that are often simultaneously landscapes of conspicuous production and consumption. We then turn to some of the broader implications of this for the wine industry, and conclude with a discussion of the broader applications and implications of conspicuous production for understanding the role of diverse sources of capital in local and regional economies.
Theories of conspicuous production
The term ‘conspicuous production’ was first developed by Michael Polanyi in a 1960 analysis of Soviet production systems. Arguing against seeing the Soviet system as simply one of ‘central direction’, and interested in exploring why a production system that was widely seen in the West at the time as the epitome of economic inefficiency, when the available evidence suggested it was more productive than western market economies, Polanyi cogently described how the system of ‘target’-driven production could give the illusion of productive success even when the goods produced did little to meet the satisfaction, or indeed needs, of the recipient consumers. He wrote:
The illusion of increased productivity is also reinforced by the basic socialist urge to exalt collective achievements at the expense of individual interests. This urge suffuses the process of production by a satisfaction of collective pride which compensates people as citizens for the corresponding loss of their satisfaction as individuals. We may call this a system of conspicuous production. (1960: 96, emphasis in original)
Polanyi’s (1960) introduction of the term clearly drew parallels with Veblen’s (1899) concept of ‘conspicuous consumption’, a form of consumption which was status-seeking rather than simply driven by utilitarian needs. The term ‘conspicuous production’ has subsequently been employed by a number of other authors to account for other instances in which productive systems and services are clearly operating outside the bounds of profit-maximising behaviour or rational economic decision-making. Lee (1971; Lee et al. 1975) for example, has analysed the behaviour of decision-makers in hospitals and higher-education in utilising a notion of conspicuous production as a form of non-profit-focused, utility maximising economic behaviour. Based on the assumption that the maximisation of utility for hospital administrators was ‘a function of the hospitals in which they serve’, Lee (1971: 49) argues that the drive for status of the institution ‘plays a dominant role’ in influencing decisions around resource acquisitions (equipment, facilities and physicians), without a clear link to the productive capacity of these inputs, with the result that ‘hospitals use more resources than required to produce a given output stream’ (1971: 50). In a follow-up paper, Lee et al. (1975) similarly argue that efforts directed at the increase or maintenance of high status among universities – ‘status gap minimization’ – (specifically through the development of new graduate programmes) resulted in decisions around the allocation of resources that made little rational economic sense.
Around the same time, Musser et al. (1975) deployed a Veblen-inspired analysis of the Georgia Piedmont beef industry. They illustrated clearly that there was a significant utility maximisation element to the industry, rather than a straight profit maximisation, and concluded, ‘beef cows are a form of conspicuous production, resulting from their historical association with agricultural indicators of status’ (Musser et al. 1975: 93).
Later, Davis (1982, 1988) employed the term ‘conspicuous production’ in a similar way in a study of the early Detroit automobile industry. Through an analysis of the origins and motivations of the managers and owners of the fledging automobile industry in the city at the time, he showed ‘that their yearning for upward mobility reflected itself not only in their club memberships but also in their manufacturing policies, for as the middle-class firms grew richer, they flaunted their success by building ever gaudier, more expensive cars until they priced themselves out of the mass market’ (1982: 38).
The most recent use of ‘conspicuous production’ in academic work deviated significantly from the above interest in non-profit maximising behaviour, and instead focused more literally on activities and production which are highly visible. Spigel (2008) used the term in relation to new modes of architecture (‘the smart house’) in which ‘the postmodern luxury home has become the ultimate work terminal – a place where the resident is in a perpetually interactive state of preparedness’ and ‘meant to be seen working all the time’ (2008: 415). While this marks a departure from the meanings of conspicuous production outlined above, Spigel’s usage does share a focus on both status (the ‘smart homes’ of the wealthy) and the visibility of productive activities. In this sense, the lifestyles and the homes in which these people reside are sought as much for their status and utility value as for their productivity. It also shows that individuals, not just public institutions or private companies, may engage in forms of conspicuous production.
The notion of conspicuous production also links well with a study of the status-seeking behaviour of firms (Podolny 2008). In looking at the investment banking and retail jewellery industries, Podolny has argued that firms seek high status (as distinct from reputation) as a way of attracting high-paying customers attuned to conspicuous consumption. Thus, they will not always offer the most profitable goods for sale (whether junk bonds or turquoise jewellery) if these negatively affect the perceived status of their firms. Status enhancement, then, sits alongside profit-seeking in the underlying objectives of enterprises. This approach also links with Friedman’s notion of ‘fictive capital’ – the movement of capital, under globalisation, from productive industry into more culturally constructed arenas of accumulation. These arenas include the stock market, land, housing and art, and Friedman, drawing on Marx, uses the notion of fictive accumulation to refer to the ‘accumulation of paper values whose only effect is increasing stratification via differentiation of wealth’ (1994: 170). There are similarities, too, with Bourdieu’s (1984) understanding of the ways in which flows of ‘capital’ between its economic and social/cultural forms can be used to enhance the status or ‘distinction’ of an individual.
What this brief review of the genealogy of the term ‘conspicuous production’ shows is a historical interest in economic activities for reasons that may not be solely about the creation of productive value and profit maximisation. It calls for a more nuanced understanding of the variegated ways in which capital and capitalism operate in these circumstances. We draw from this genealogy and deploy a definition of conspicuous production as follows: investment in a productive enterprise without a primary interest in maximising profits from this investment. Highly visible, it primarily seeks to confer status or utility value on the individual, corporation or the state carrying out the activity.
Our use of the term ‘conspicuous production’ differs from Veblen’s original conception of conspicuous consumption in that Veblen’s concern (and the focus of much of the subsequent work that draws on this framework) was with consumption patterns that emulated those of individuals at higher levels in social hierarchies (Veblen 1998 [1899]; Trigg 2001): ‘The motive that lies at the root of ownership is emulation’. With the different sources of investment in the wine industry that we discuss below, the emulation is not necessarily or strictly the class-based emulation that Veblen described (Campbell 1995: 40), but more a creative, locally-based mimicry of ‘conspicuous production’ of – in particular – top-flight European wine producers. We will highlight this transnational emulation element further below, since it strongly suggests that emulation and status-seeking may be characteristic elements of capitalist production, not just materialist consumption.
Celebrities, industry, and the state: Case studies of the conspicuous production of wine
Data on capital investment and ownership in the wine industry is often lacking, and given the complexity of different brands and company structures, it is often not possible to form any sort of aggregate picture of ownership, sources of capital and the identity of investors in the industry. It is notable, though, that at the local level and particularly in small-to-medium-sized enterprises, the identity of investors and entrepreneurs is typically well known, and is even well publicised by the companies concerned. It is on the basis of this selective and scattered evidence that it is possible to begin to form a picture of the diverse nature of certain forms of investment in the wine industry.
Posh’s birthday present: Celebrities and the cult of the vineyard
Kung (2008) notes that for her 34th birthday, Victoria Beckham (aka ‘Posh Spice’ of the 1990s hit band the Spice Girls) was given a vineyard in Napa Valley, California, by her fellow celebrity (and footballer husband) David. This established her and David among the ranks of celebrity wine-makers, a trend Kung noted has ‘become the chic hobby of choice for the world’s rich and famous’. This group is not a particularly exclusive one: a dedicated Wikipedia ‘List of celebrities who own wineries and vineyards’ now has more than 70 entries. The origins of their celebrity status varies across many spheres:
Sports – golfers including Ernie Els, Nick Faldo, Greg Norman, Arnold Palmer; NFL players such as Joe Montana and Dan Merino; ice hockey player Wayne Gretzky; Formula 1 driver Mario Andretti. Movies – actors including Antonio Banderas, Drew Barrymore, Sam Neill and most obviously Gérard Depardieu, who owns vineyards in France, Algeria, Argentina, Morocco, Spain and the USA; directors including Francis Ford Coppola; the cinematographer Michael Seresin. Music – Olivia Newton John, Bob Dylan, Cliff Richard, Madonna and Sigurd Wongraven. Politics – former Speaker of the US House of Representatives, Nancy Pelosi.
As diverse as their celebrity status is – as is the extent of their involvement, from a share in a winery or use of their name on the brand, through outright ownership of vineyards and wineries through to hands-on involvement in the winemaking – it is clear that for most, their involvement is a deployment of their wealth and fame into the industry with sometimes little primary intention of economic returns. As Robert Smiley, director of wine education at University of California, Davis noted: ‘Fame brings them wealth and they can afford to invest in it … Although I don’t think any of them do it purely as an investment’ (cited in Kung 2008).
One high-profile example illustrates the complexity here, with Francis Ford Coppola originally using his movie-derived wealth to establish his now well-known wine label back in 1975. Coppola interestingly makes links between both wine and regional identity, and between the creative aspects of both industries: ‘Winemaking and filmmaking are two great art forms that are very important in the development of California’ (Levine 2012). We note, though, that unlike most celebrities involved in the industry, Coppola’s involvement in wine has had material as well as status payoffs, most famously when the winery business was used to underwrite Coppola’s film Apocalypse Now. More recently, his wine business has provided the time and resources to develop his movie career: ‘I’ve used all this to make a transition in my film career. The wine business is giving me the time to write, so one day I’ll be able to make another film that’s more my film’ (Novus Vinum 2009; see also Conaway 2002).
Celebrities, then, serve a role in investing both capital and fame into a wine region (Napa Valley, California, with its proximity to Hollywood, is a particular target), and this can bring greater exposure to particular wines and wine regions. Like celebrity involvement in development (West 2008; Cooper 2008) or conservation (Brockington 2008), there is a complex interplay at work between the celebrity ‘brand’ and the product association. While the celebrity brand can certainly help broaden the exposure of the wine (actor Sam Neill’s ‘Two Paddocks’ label from Central Otago, New Zealand would be one example), we are more interested in the ways in which the wine as a product can add to or reshape the prestige and image of the celebrity. Celebrity attachment to an industry and brand/product such as wine may well be seen as a way of securing a reputation for an activity that is perhaps more serious than that which initially gave them fame. Because the wine industry, and specifically high-end wine as a product, has significant cultural capital, there is an element of trading the wealth attained through celebrity status to secure enhanced cultural status. Furthermore, for sports stars and some actors, fame may be fleeting, and involvement in wine may provide a longer-term if lower-profile basis for a reputation.
Industry and wine
Although investment in the wine industry by celebrities is apparent in many regions, they are not the only conspicuous producers. Much non-corporate investment in wine comes from individuals and families who have gained wealth in urban-based activities and industries, and who see in wine the opportunity to diversify both their investment portfolios and their public image. Unlike celebrities, they may not have had a high public profile, or, if they have, it is not one with which they wish to be associated in the long-term. Direct and visible involvement in wine thus gives them the opportunity to construct or refashion their standing in the public mind. Here we present scattered and largely circumstantial evidence to gain some preliminary insights into the nature of such investment.
In the New Zealand setting, one of the most spectacular recent investments has been by the Peabody family. Their huge and architecturally stunning Craggy Range winery complex in Hawke’s Bay has been used to produce award-winning wines based on a multi-regional sourcing strategy from across New Zealand. Within a short period of time, the label ‘Craggy Range’ has become established as one of the county’s most significant premier producers. One of the interesting elements of this story is the origin of the investment. The Peabody family built its fortune in Australia from waste management, but in a move to build a more appealing family legacy, the wine industry was chosen, and hence a significant family investment made in developing the brand, the infrastructure and the vineyards across New Zealand. One commentator noted, ‘They could have snapped up a trophy Bordeaux chateau or a property in Napa. So while their fortune originated in waste management, their legacy to their children, grandchildren and future generations is wine’ (Sourgrapes 2011).
In a contrasting environment, Thailand (an unusual tropical country in which to find a nascent wine industry), much of the capital behind the development of the industry comes from affluent industrialists. Of the nine current wine operations, six are the private investments of a diverse group of wealthy individuals, including the founder of Red Bull, the owner and managing director of one of Thailand’s largest construction companies, the founder of Thailand’s largest brewer, a shipping magnate, and the Chairman of the Board of a significant Thai-owned refinery (Banks et al. 2013). The daughter of Thailand’s former deputy prime minister is among the other owners. With these individuals, a personal interest in and taste for wine was an important factor in getting involved in the industry, along with the association with high-end European products and lifestyles. Of the nine, none are run purely as a profit-making wine businesses: all depend on restaurants, resorts or funds from other parts of the broader business portfolio to survive (Banks et al. 2013).
Elsewhere, similar tendencies are evident: in Chile, the most striking example of personal wealth being directed towards visible investment in the wine industry is found in the Colchagua region centred on the town of Santa Cruz. Carlos Cardoen is an entrepreneur who hails from Santa Cruz. He built a business in arms manufacturing, safety matches and trading. This expanded rapidly, and was highly profitable. However, he was implicated in trading arms with the Iraq regime in the 1990s, including cluster bomb manufacturing, and was effectively banned from travelling internationally by the US authorities. Unable to pursue his armaments business overseas, he turned locally to the wine industry (Hibbard 2003). He bought and developed a wine company (Viña Tarapacá), with its own extensive vineyards, through his company Fósforos (Compañía Chilena de Fósforos). He apparently sold his holdings in Fósforos in 2003 to a Chilean investment company (Inversiones San Martin), and that company went on to establish the Southern Sun Wine Group in 2004. It now owns not only Viña Tarapacá but also Viña Mar in Casablanca and four other wineries, including one in Argentina. Cardoen has invested heavily in wine tourism. As well as a luxury hotel and casino in Santa Cruz, he also built a private museum (Museo de Colchagua) to house his extensive private collection of historical artefacts and founded a local Universidad del Vino. He also recently purchased and developed the Santa Cruz winery and tourist facility between the towns of Santa Cruz and Lolol. Thus, his personal imprint has transformed a small rural town into the centre of a modern and thriving wine region
Yet Cardoen’s public profile through his wine interests makes light of his shady past. On his vineyard’s website (Viña Santa Cruz 2010), his pen portrait talks of his education (including a Ph.D. from the University of Utah) and how his career ‘focused on the areas of metallurgy, industry, agriculture, forestry, mining, hospitality, culture, real estate, and investments’. It claims his ‘primary motivation has been positioning his native Colchagua and Chilean traditions on a distinguished pillar of tourism activity, giving life to a great development in the city of Santa Cruz’. His deep involvement in the wine industry seems, then, to have allowed him to launder his reputation and create a legacy far removed from his arms dealing past.
States and wine: Constructing national imaginaries around the vine
Polanyi’s conception of conspicuous production links the state with this form of investment. Despite the dominance of neoliberalism, which argues against state intervention, the state does play a critical role in wine production in a number of countries for reasons that range from economic protectionism, cultural mores, health, anti-social behaviour, road safety, landscape retention and links to national identity. Indeed, globally there are few economic activities which so consistently attract state interest and involvement.
Any discussion of the role of the state and wine must begin with France. Nowhere are the associations between the state, national identity and wine as pronounced as they have been, and continue to be, in France. There is significant investment in quality through the highly regulated and hierarchical appellation d’origine contrôlée (AOC) system, which also serves to provide forms of economic exclusion (Charters 2006). More than in most other rural industries, there is also substantial state investment through rural subsidies that seek in part to maintain wine landscapes and their links to particular local cultural institutions and economies. Wine is, after all, regarded as the distinctively superior national drink in France, intimately tied in to the question of national identity.
Another example, though, serves to illustrate that the French state is not alone in this. The Chinese wine industry exhibits an entirely different set of actors and motivations, but it provides evidence of strong non-economic motives underpinning the growth of the industry. There is a long history of wine production in China, although rice wine dominated much of this early history. Kjellgren (2004) traces three periods of Chinese wine grape history: the first is an indigenous cultivation of the vine from at least 3,000 years ago (some popular writers go back 6-7,000 years), in which associations were made at times between wine and wealth and royalty. Wine production continued with periods of growth in the late 19th and early 20th centuries, and later in the 1970s, to the point that in 1978, wine production was estimated at 15,000 tonnes with 100 operating wineries spread across the country (Kjellgren 2004).
Kjellgren (2004) highlights the significance of 1978, when the selective liberalisation of foreign investment saw the entry of foreign investment into the Chinese wine industry. Indeed the second joint venture established by foreign investors in any sector involved Remy Martin investing in a winery (Dynasty) with the state-owned Tianjin Agricultural Bureau in the early 1980s (Evans 2009). Other companies followed, although not all wineries established involved foreign investment; and significantly, the best-known Chinese wine label, Great Wall, was established in 1982 by the China National Cereals, Oils and Foodstuffs Import and Export Corporation. In the subsequent period, the wine industry has expanded rapidly, and recent production figures indicate that wine production is at more than 800,000 tonnes (China Daily 2010; Mitry et al. 2009).
There is marked concentration in the Chinese wine industry, and high levels of foreign investment. The three largest companies – Changyu, Dynasty and Great Wall – between them account for 39 per cent of total production, and an estimated 67 per cent of profits. Changyu alone controls over 40,000ha (100,000 acres) of vineyards (Zhang 2008). Of these, as noted earlier, Dynasty was a joint venture between a state entity and a French investor, while more recently Changyu has both launched public offerings on the Shenzhen Stock Exchange and internationalised through a ‘strategic alliance’ with the French Castel wine group (Mitry et al. 2009): the influence of the French industry runs deep in the wine industry here as well.
In large part, this increasing production and focus is driven by increasing consumption of wine by China’s expanding middle class. Again, while figures vary, Mitry et al. (2009) claim that annual consumption has been growing by more than 10 per cent per annum, and that it now accounts for approximately 6 per cent of the global wine market. Despite this, average per capita consumption remains low. As the Chinese economy continues to grow, and per capita incomes rise, so too will wine consumption. This observation has led a number of producers in established wine producing countries to focus on accessing the Chinese market, and the growth in imports has been significant, in recent years facilitated and encouraged by the dropping of import duties on imported wines: previous duties were 80 per cent (Boehmer 2009). It is now estimated that imports make up 11 per cent of total wine consumption by imports and, despite cautions by observers such as Veseth (2009), the growing Chinese market continues to attract the interest of producers facing chronic oversupply in their domestic and international markets.
A more nuanced reading of the development of the Chinese wine industry, though, would link it much more closely to Polanyi’s original conception of conspicuous production. We wish to briefly highlight how a focus on the shifting motivations of the Chinese state in facilitating the growth and development of the national wine industry is linked to a desire to reposition the image of China as a modern, sophisticated global power. Gray’s (2010) important analysis of labour struggles in China suggests that the state is not only positioning itself between global capital and new social classes in China but is also seeking, by implication, to project an image of prosperity, harmony and modernity in the face of rapid social and economic change.
Kjellgren (2004) provides a compelling argument that recent support for the industry is intimately linked to the project of reshaping of China’s national image, internally but also globally. As in other arenas (the staging of the Beijing Olympics in 2008 is another instance of this, see Xu 2006), this process has involved two dimensions: first, the development of national capacity and an international profile for the Chinese wine production, positioning it as a sophisticated modern industry, supplying a global product to the increasingly cosmopolitan, middle-class Chinese citizen. This reflects a desire by the state to have China and its production systems regarded domestically and globally as thoroughly modern and globally connected. At the same time, though, the uncovering and documenting of the long history of Chinese wine production has allowed the state to promote wine as a thoroughly traditional Chinese product. Together, these discourses – at once traditional and yet also tapping into the global discourses of wine as a sophisticated modern commodity – fit perfectly within the form of Chinese nationalism promoted by the state, which sees Chinese modernity and global ambitions as being founded on history, in a reclaiming of global connection and ambition that is inherently traditional and Chinese.
To fit this back into our argument, then, the state motivation for the support of the growth and development of the wine industry – like that of the celebrities and industrialists – has little to do with economic realities, and is instead grounded in the development of a wine production system that speaks of national abilities and the achievement of a commodity that holds significant global status.
Conspicuous production?
As yet, without more detailed studies and data on aspects such as the social-psychological motivations behind investment decisions by individuals and groups, or the extent to which capital investment in the wine industry is contributed by people who have accumulated substantial wealth in other sectors of the economy, the phenomenon of conspicuous production can only be explored through scattered examples. This paper has been able to draw on a few examples of possible conspicuous investment in the wine industry, but systematic studies are needed to explore, develop and theorise the concept further.
Nonetheless, there is enough in this scattered evidence to suggest that the phenomenon of conspicuous production exists, and that it is significant in some regions and sectors of the global wine industry. In South Africa, for example, a newspaper report (Nkomo 2010) quoted a wine industry figure as saying, ‘People buy wine farms like they own racing horses’, and that this could be seen as ‘a high return on ego … and a low return on investment or equity’.
To return to the theoretical strands we introduced earlier, the case studies above indicate that capitalist investment in, and support for, wine enterprises by individuals, families, companies and states is both common and complex. Whether celebrities or entrepreneurs, the cases cited typically involve investors who had made their wealth and reputations elsewhere, and investment in wine was a later and secondary source of income. Some remained relatively small-scale producers; others had greater ambition. Therefore, we argue (though it is difficult to quantify) that these forms of small-to-medium-scale capitalist wine enterprises form a significant element of the global wine industry. Yet why does such investment take place when larger wine companies may shy away? Why would successful entrepreneurs themselves tie up large assets in landholding and in an industry that is highly competitive and risky, in which costs are high and the returns frequently very uncertain? Small and medium-sized wineries are not able to develop the sort of diversified brand portfolios that the big transnational corporations have, and are thus highly vulnerable to the vagaries of harvests and consumer preferences.
In attempting to answer these questions, there is little to draw on by way of empirical data. There are few if any studies investigating the motives and investment decisions of investors in the wine industry. The case studies above provide hints that suggest some rather different approaches to investment – yet other variegations of capitalism – and that simple profit maximisation may not sufficiently explain the levels and direction of investment. Here, we speculate that it is social factors, not just economic, that drive much of the investment in wine production.
First, it is important to note that speculation and hopes of a fast-rising market in wine land and wine itself may be enough to attract investment. Another dimension of investment in wine is its value as a hobby for those who can afford to support it. Here, investors may not have the direct expertise in developing or managing a vineyard or making wine, but they may feel that by bringing management and marketing skills to the operation, they can contribute to the making of bottles of wine. Yet speculation or hobby wine-making in itself cannot explain the patterns of investment we observe. The examples of entrepreneurs above suggest that local sources of investment may not involve novice entrepreneurs borrowing heavily to engage in an enterprise on which they depend on solely for their income. Instead, we see investors who are experienced and successful in business, sport or entertainment, and people who have made wealth in a diverse range of activities. They may own profitable capitalist enterprises, but they may not involve activities or products that are highly regarded in terms of social prestige, be they waste management, supermarkets or, at the most extreme, arms dealing.
Wine offers a chance to balance and enhance these reputations. Wine, after all, is a product desired by the wealthy and middle classes, and is often seen as a symbol of sophistication and worldliness. To tap into the conspicuous consumption argument, a bottle of wine, especially if it carries the name of the winery’s owner, attaches a person or family to a product that has status. In addition, wineries, especially those with well-designed buildings and gardens that attract tourists and have restaurants and hotels attached, are also highly visible symbols of modern lifestyles and cultures of consumption (Carlsen 2004; Getz & Brown 2006; Lodziak 2000). Similarly, employing and publicising well-known, often foreign, wine-makers helps attach the brand of the wine (and its owners) to notions of supposed quality, authenticity, artisanal character and ‘craft’: a further form of cultural capital that is employed (literally) as a marker of status through strategic forms of conspicuous production.
Publicity for the wines and wineries owned by conspicuous producers helps fuel the process of status reconstruction. Many such wine producers – Cardoen, Peabody and many of the celebrities named above – are not shy about publicising their involvement in the wine industry, and their ownership of vineyards and wineries. Their profiles are visible on their wine company websites, many seem happy to give interviews to wine industry journalists, and their names and even short narratives appear on wine labels. These forms of publicity allow them to control the way in which they are portrayed: associated closely with the wine product, and with quality, craft and nature. Their audience is also more restricted, especially to middle-class wine consumers: those who would readily subscribe to forms of social distinction based on the idealised culture of wine production and consumption. However, we have also found, as in the case of some wine producers in Thailand, an apparent reticence to be too closely attached to the wine brand. Conspicuous production, then, may work through quite diverse cultural and social contexts, and involve varied audiences and nuanced performances.
Given these complex sets of possible motivations, the economics of the investment and the enterprise can be seen rather differently from a normal business operation and accepted characteristics of capitalism – and often from the other enterprises in which the entrepreneur may have been involved. The hope of one day producing a gold-medal-winning wine or building a solid reputation for quality may mean that there is less immediate concern for turning a healthy profit. Indeed, it may mean that investors are prepared to tolerate loss-making as long as their other enterprises remain profitable. Investment time horizons are also long, for profits may not come until many years after the winery and its brands are established and developed.
These considerations differentiate the conspicuous producer from other, more strictly profit-oriented wine enterprises. Large publicly listed companies have to answer to shareholders who demand continual and immediate profits. They are less likely to allow long periods before a return is gained, and less likely to allow heavy investment in icon brands that may not succeed in being established in the market. Instead, large companies will build a diverse range of wine operations and brands so that risk is spread and profit is maximised. At the other end of the scale, small wine companies dependent on borrowed capital are much more dependent on cash flow, and do not have the luxury of a buffer to absorb losses, or a pool of capital with which to build a luxury brand.
Therefore, it is argued here that there is a variety of capital investment evident in the wine industry that is characterised by a complex set of motives and engagements with wine production. It can come from explicit government involvement in, and promotion of, the industry, or from local investors who are already relatively wealthy and who have gained that wealth, together with business experience, from enterprises in other sectors of the economy. Their investment does seek a return, of course, but that return can come in a variety of ways. It can see wine as a source of cash flow, but it may also be used as a cash sink to lessen tax exposure. It can be about bottom-line financial profit; the satisfaction of helping to produce a high-quality, well regarded wine; or it might be a speculative gain from rising land prices. But in the cases noted above, it appears to also be about validation and celebration of wealth. When that wealth has been gained from economic activities that might not be highly regarded socially, ownership of a wine operation offers a symbol of status and sophistication to which one’s identity can be visibly attached instead. Investment and production are conspicuous in order to strengthen the attachment between an individual or family and a high-status product. It is a significant step beyond conspicuous consumption, but it shares many of its characteristics.
These investment decisions by wine producers are paralleled in interesting ways by the policies and strategies of the state. Notable is the grand scale of China’s transformation. Here, we saw wine production as part of a national development strategy with symbolic value much greater than the production gains to the economy. Wine consumption has become part of the rapid growth of China’s middle class. The conspicuous consumption of wine has, as a result, driven increases in domestic production. But at a higher level, the state has attempted to encourage the country’s wine production, in alliance with foreign capital, as a means of reshaping national identity. This development strategy may seem far removed from the investment decisions of status-seeking individual entrepreneurs as in New Zealand, Thailand or Chile, but it shares a number of important features, notably the use of wine to help reconstruct public image and the pursuit of status above or alongside the search for profits.
Conspicuous production helps to explain some of the patterns of capitalist investment and growth in the wine industry. It may explain why vineyards in some successful wine regions do not end up in the hands of global liquor corporations but instead are more locally owned, for these entrepreneurs make investment decisions that are somewhat different to large public companies (Overton & Murray 2014). With solid capital backing and cash flow from other enterprises, they can afford longer horizons between investment and return. They may be able to tolerate lower than normal profit margins, and they may even tolerate losses. In addition, on a larger scale, wine itself becomes an iconic product to help reposition national image, and contributes to building the identity and status of the aspiring modern nation.
Conspicuous production also raises questions about class and class formation. Effectively, the construction of new and complex wine production systems disguises – as a deliberative strategy – the underlying industrial forms of capitalist class formation for the wealthy. It enables them to attach themselves to an imagined world of small-scale, pre-modern and clean production of a high status good: in this instance, economic surplus drives capitalist diversity, to usurp Weiss (2014). The resultant wine production system as portrayed by these conspicuous producers in marketing material is fictive: the reality of wine production is far more about large-scale industrial production underpinned by global beverage corporations (sometimes in alliance with conspicuous producers); and the reality of class formation and wealth creation is much more about advanced capitalism and industrialism (Overton & Murray 2013).
Thus, conspicuous production as an element in the variegated landscapes of capitalism is a phenomenon that needs further analysis. Its full extent is unknown, but we have sketched here some of its boundaries within one sector, and would argue strongly that it is likely present in many other areas. Likewise, the extent to which it can contribute to economic growth is at this stage unclear, as is the case for conspicuous consumption (Rauscher 1997), but it deserves further treatment. Conspicuous production shapes local geographies, complicates the rural economy, and means that accepted economic principles to understanding capitalism, such as profit maximisation and primitive accumulation, have to be augmented by an understanding of social-psychological elements. It means also that the wine industry is often being driven and inflated by parties who openly seek recognition and status and/or wish to engage in a hobby alongside – and sometimes at the expense of – profits. Finally, we suggest that conspicuous production might not just be a feature of the wine industry, but that it might also be seen in the way wealthy investors buy into other industries, such as automobile manufacture, in which the high standing of a brand provides an opportunity for the investor and a country to gain from its reflected prestige.
Footnotes
Acknowledgements
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.