1. Toward an Understanding of Industry Cluster Development among New World Wineries: a comparative study of the Okanagan Valley, Canada and the Waipara region, New Zealand
AAWE, June 2018
Svan Lembke, University of British Columbia, Canada
Lee Cartier, Okanagan College, Canada
Joanna Fountain, Lincoln University, NZ
Nicholas Cradock-Henry, Manaaki Whenua – Landcare Research, NZ
Leo-Paul Dana, Montpellier Business School, France

2. Executive Summary
Two New World Winery Regions (Waipara, NZ & Okanagan, BC, Canada) are at a crossroads of change.
Model assesses maturity of wine region(s) to identify opportunities to positively influence cluster development, resilience and economic prosperity.
Strategic alignment across cluster stakeholders appears to have deteriorated ( ) and the model highlights specific areas for attention.

3. The Waipara and Okanagan Wine Regions
New Zealand
British Columbia
Okanagan Valley
Waipara
© 2016, Lee Cartier

4. Okanagan Wine Region Overproduction / Discounting Growing tourism
LDB ‘service plan’
Liquor Distribution Board (LDB) / Quality standard
Loss of government extension services
Industry-wide marketing organisation

5. Waipara Wine Region Out of region corporates Christchurch hospitality
Earthquake
Replanting to achieve quality
Water irrigation & low land prices
Loss of customer base
Estimated production

6. Porter’s Diamond Model (1990, 2003)
Cooperation
Competition
Firm Strategy, Structure, and Rivalry
Factor Conditions
Home Demand Conditions
Related and Supporting Industries
Regional clusters and relationships between cluster stakeholders:
Enable operational scale especially for small and midsize businesses;
Deliver innovation opportunities due to effective sharing of knowledge; and
Enhance resilience to unexpected events or threats.

7. Why don’t all Regions work as Clusters?
All clusters are different. Too many interdependent variables to extract and copy effective behaviour.
Quality of relationships, not specific activities, seem to determine the effectiveness of the cluster.
Porter’s diamond model provides a snapshot in time of a cluster and its relationships.
Okanagan and Waipara wine regions have been studied previously, confirming strategic alignment between stakeholders as a cluster (Dana, Granata, Lascha, & Carnaby, 2013; Lembke & Cartier, 2018)

8. Okanagan Cluster Inception (2000-2008)
Growing tourism
Actions towards Cluster Alignment
Cooperation / Competition
Home Demand Conditions
Firm Strategy, Structure and Rivalry
Related and Supporting Industries
Factor Conditions
LDB ‘service plan’
Agreed quality standard
Industry-wide marketing organisation
LDB (Government)

9. Okanagan Cluster Evolution (2009-2014)
Actions towards Cluster Alignment
Cooperation / Competition
Home Demand Conditions
Firm Strategy, Structure and Rivalry
Related and Supporting Industries
Factor Conditions
Trade liberalization?
Overproduction / Discounting
Loss of government extension services
Loss of strategic alignment and behaviours that define an effective cluster

10. Waipara Cluster Inception (2000-2008)
Actions towards Cluster Alignment
Cooperation / Competition
Home Demand Conditions
Firm Strategy, Structure and Rivalry
Related and Supporting Industries
Factor Conditions
Christchurch hospitality
Competition from other regions
Replanting to achieve quality
Water irrigation & low land prices

11. Waipara Cluster Evolution (2009-2014)
Actions towards Cluster Alignment
Cooperation / Competition
Home Demand Conditions
Firm Strategy, Structure and Rivalry
Related and Supporting Industries
Factor Conditions
Loss of customer base
Many grape growers sold their business
Out of region corporates
Earthquake
Break up and dilution of cluster relationships unique to the Waipara region

12. Conclusion: Challenges When Clusters Evolve
Relationships between cluster stakeholders in a new wine region can produce a regional competitive advantage based on:
Initial comparative advantage that enables production and/or sales
Cluster inception conditions conducive to cooperation.
Cluster stakeholders are not guaranteed to respond effectively to new opportunities or threats:
Changes in industry demand conditions can break previously effective cluster relationships.
Maturation of cluster requires strategic collective actions that maintain a balance between cooperation and competition across all four cluster determinants.

13. Why do we need a Cluster Development Model?
Assessment tool to enable other wine regions to better understand cluster development, enhance resilience and grow capacity for strategic responses to emerging threats and challenges
Decision support tool to prioritize strategy interventions designed to strengthen cluster relationships focusing on the balance between competition and collaboration in each of the four determinants
Invitation for research partners in established and new wine regions to test and refine the proposed cluster development model

14. Appendices Comparison of the wine regions
Graphics of planted area and grape production
Statistical comparison

15. Waipara and Okanagan Comparisons Planted Area and Grape Production

16. Waipara and Okanagan Comparisons Statistical Comparison