Wine has become a chic subject of study for economists. In 2006 the American Association of Wine Economists was formed and now publishes the Journal of Wine Economics. Its authors write knowingly of terroir and grape varieties, seeming to assume that it was forever thus. James Simpson's Creating Wine sets us straight by placing today's global wine industry in an historical and economic context.

Covering the period between 1840 and 1914, a time of rising incomes and increased international trade, the book is truly global in scope. Simpson begins by examining the French response to Phylloxera and the resulting changes in production of standard wine. He then turns to regional responses to the opportunity engendered by trade, focusing on Champagne, Bordeaux, Oporto, and Jerez and their attempts to increase value through appellation development. He concludes with chapters on three New World production areas, California, Australia, and Mendoza, and the problems each faced in producing wine for distant markets. Although each location has its own story, Simpson's methodology of examining the various actors in the wine commodity chain allows the reader to find similarities between economic groups in different areas.

Fittingly, Simpson begins in France, describing the preindustrial system of wine production and its peasant grapegrowers. Due to major annual fluctuations in yield and price, growers were not assured of fermentation space at wineries, and so most growers converted their perishable crop, grapes, into a semi-perishable good, wine, on their farms. Local merchants purchased these new wines straight from the fermentor and aggregated and aged the wines before selling them to other merchants (eleveurs), to wine merchants in the cities or to exporters. The nineteenth century was, broadly speaking, a period of rising income elasticity and French per capita consumption doubled while production was halved by Phylloxera. The predictable results were increased grape and wine prices, wine importation and the creation of substitutes through adulteration, and vineyard expansion in areas such as the Midi and Algeria. Some of this story has been told before, most notably by Leo Loubere (The Red and the White: A History of Wine in France and Italy. Albany: State University of New York Press, 1978), but Simpson turns this material into excellent economic history by supplying price and production statistics, analyzing numbers of producers, and providing technical details on wine production.

The subsequent chapters focus on winegrowing areas that had begun to differentiate themselves from common wine production. Each area is unique, but a common theme of exporters versus grape growers emerges. In Jerez, for example, the economic elite owned the exporting sherry houses. They successfully fought against attempts by growers to create an appellation, which would have limited the source of grapes for “sherry” wine production, and against laws that would have required that distillates used in fortification be derived from grape wine. At a time of grape scarcity due to Phylloxera, distillates from grain or sugar were much less expensive. Similarly, the Champagne houses in Epernay and Reims, although in favor of a defined appellation for their region, fought against growers who desired a limited area. After all, a broader region meant more grapes and lower grape prices for the buyers at the Champagne houses. And in Bordeaux, exporters not tied to specific Chateaus, were opposed to a definition of Bordeaux that would not allow them to blend inexpensive wine from the Midi. Only in Portugal, where the exporting houses were generally foreign-owned, were growers successful in creating a constrained definition of appellation.

In the New World, the natural endowments of warm and dry weather coupled with scarcity of labor to create a wine production system quite different from Europe. By and large, grape growing was a separate business from wine production in the New World and wineries were larger, with significant economies of scale. In Mendoza and California, rather than sell in bulk to importers who then bottled and sold to retailers, by the early 1900s large wineries attempted to collapse the commodity chain by creating brands and selling branded goods. Australian wine producers, with a tiny domestic market, exported to Britain, but found themselves separated from consumers and at the mercy of the British importers. The result was the creation of two major importing companies focused on handling branded Australian wine in the U.K. market.

By the First World War, the broad outlines of today's global business had emerged: Small and disaggregated producers in Europe and large, scale-efficient, producers in the New World. Simpson has done an excellent job in providing an entertaining and thought provoking history of wine during this first period of globalization. The book is serious economic history and is solidly based on production and price statistics that are beautifully laid out in 30 graphs and 53 tables. Princeton University is to be commended for continuing the practice of placing footnotes at the bottom of each page. They are worth reading!