Sweden--an emerging wine country--a case of innovation in the context of the "new rurality".
Sweden has been a wine importing country throughout its entire modern history, but commercial wine production is a relatively new phenomenon. From pre-industrial times until the beginning of the 20th Century wine consumption was reserved for the court, the nobility, the church and the wealthy population of the main cities. But over the course of the last century, wine consumption increased dramatically as the result of increasing prosperity and a century of changing consumption patterns (Rytkonen, 2011).
Today there are around 330 farms engaged in grape-growing, (1) a dozen of them are commercial vineyards with all the official permits to produce and sell wine. Only two decades ago, such a development would have been an utopia. But when Sweden became a full member of the EU in 1995 as a compromise between Sweden and the EU, four of five public alcohol monopolies were abolished and only the retail monopoly was preserved. This change of policy paved the way for a potential development of a wine sector in Sweden. This was however, not the only requirement to achieve such a development. The cold climate, lack of experience and the habit to import and consume wines from other countries can be considered as important obstacles to the development of a Swedish wine sector. However, many obstacles have been overcome and an emerging wine sector in this "vodka-country" is now a reality. The purpose of this article is to provide an overview of how Sweden has become Europe's latest "wine country". An important question to be answered is: Which are the main features of and challenges to the Swedish wine sector?
The article is divided into three sections. It starts with a short contextualization and theoretical discussion, followed by an overview of the preconditions for the development of a domestic wine sector. Finally the development of the sector is presented with an analysis of its main challenges and constraints.
1.2. Methods and sources
The research presented in this article was conducted using case study methodology. The study had a comprehensive approach and focused on finding the pre-conditions behind the articulation of the wine sector and entrepreneurial features. Between 2010 and 2012 several interviews with wine makers and visits to vineyards have been made and interviews have also been conducted with other key stakeholders, such as the National Food Agency, National Board of Agriculture, National Vine Growers Association, et cetera. Because of the previous lack of data on the sector, different available public statistics have been put together with internal branch statistics. Other relevant primary and secondary sources have also been used. The analysis has been made departing from the tools provided from entrepreneurial theories.
1.3 The new rurality--Context and theoretical frame
Contemporary agro-food globalization is characterized by a far reaching structural rationalization that caused a decline in the number of farms and firms at a global scale alongside with a sharp increase in productivity and output. This process is highly influenced by the emergence of a globalized supermarket sector, the articulation of global sourcing strategies in the agro-food sector, the increased use of financial instruments in food trade, increasing conflicts over land use, et cetera (McMichael, 2007). At the consumer end of globalization, due to recurring food scandals, there is an increased consumer demand for safe, local, healthy and culturally conditioned food (Bonow and Rytkonen, 2011). In Sweden, a century of structural rationalization in the quest for standardized and cheap food for the growing urban population almost eradicated small-scale food production. But in recent years this trend has been reverted.
In this context, the new rurality is characterized by many different parallel processes, such as (1) the wave of migrants searching for better residential conditions that equipped with economic resources and managerial and marketing skills that embark in the development of new rural firms; (2) the wave of migrants from the north of Europe (UK, Germany, Sweden, etc) to mainly Spain, Greece, Italy and Portugal that move in search for a better climate and that buy vineyards, start rural hotels and other activities as a way to find an income in their new country (Labrianidis, 2004); (3) the temporary waves of migrants that pick berries or plant new forest trees in Sweden and Finland; (4) the valorization of previously marginalized areas initiated by EU policies through the adoption of quality schemes that link products and their organoleptic characteristics to the territory, guaranteeing a superior quality for consumers, at the same time that they provide protection and support for small scale food producers in rural areas (5) the articulation of localized agri-food systems or short food chains in which production, know-how and consumption have strong connections to the local territory and its culinary traditions as a way to protect work opportunities and promote entrepreneurship in rural areas (6) combining agro-food production with rural tourism (London Economics, 2008, Canavari et al., 2007, Bonow and Rytkonen, 2011); (7) the emergence of short value chains as consumers response to food scares and a longing for rural romanticism (Anthopoulou and Kotsu, 2011); (8) finally, the articulation of Community Supported Agriculture (CSA) that in some senses is related to the former, because CSA responds to consumers desire to know where their food comes from. (Lamb, 1994, Cooly and Lass, 1998).
The sum of the above mentioned development is in the academic discussion denominated as the new rurality. The concept stands for a process in which rural and agricultural agents reinvent themselves by supplying not only products to fulfill nutritional demands, but also recreation and leisure opportunities in beautiful landscapes, secure future environmental sustainability, provide post-industrial job opportunities, promote growth, counteract depopulation of rural spaces, promote gender equality and offer regions and nations a sense of history and tradition. It is seen as "new", because the emphasis of economic activities is put on pluriactivities, multifunctionality and even on part time activities, in contrast to previous times the main goal was to achieve productivity increases. (Losch, 2004). The new rurality has emerged as a response to changing geopolitical food and agricultural relations that increased the level of competition in the global agro-food sector (McMichael, 2007) that forces agents to seek new ways, new institutional settings at global, regional or national level (Baldock et al., 2001), as well as a new socioeconomic landscape that not only grasps new patterns of demand (Rytkonen, 2011) but also helped new (many times urban) agents to capitalize and invest in new rural ventures (Labrianidis, 2004). Most previous research in this field has a strong empirical bias therefore the potential contribution that the field can make on theoretical development is still to be seen. In addition, the inclusion of changing drivers that were assumed to be constant endogenous factors of the current food regime (2), such as climate has previously been overlooked.
In Sweden the articulation of the new rurality has fallen behind the rest of Europe. This lag has mainly been caused by the degree of institutionalization and path dependency of the productivist paradigm. A wide spread mentality and the existing institutional setting--here understood as the same as the rules in society, or the restrictions set up by humans that dictate forms of cooperation in society (North, 1993) and infrastructure that is only appropriate for large scale operations are the main obstacles against the new rurality. The emergence of the wine sector in Sweden constitutes an excellent case to illustrate the essence of the new rurality.
Starting a new vineyard in Sweden can be seen as an innovation, especially at the beginning when few individuals realized that a new economic window of opportunity had been opened. In theory, innovations are seen as the result of entrepreneurial acts. Entrepreneurship as a concept is frequently used in a contradictory and imprecise manner. In modern economic policy the concept is often confused with starting a new firm, but most firms are not carriers of an innovation (Nutek, 2010, Henrekson and Stenkula, 2007).
Entrepreneurship can be defined as making something new in economic life, it is a dynamic and social process where individuals, alone or in collaboration, identify opportunities before anyone else and make something with them to transform ideas into practical and targeted activities in the social, cultural and economic context. According to Joseph Schumpeter, the concept of innovation includes qualitative changes in a wide range from the introduction of new products, qualitative technological changes in existing lines of production, the opening new markets and introduction of new sources of raw materials and new types of business organization. Innovations change the market in which they are launched and in that sense they shape and change the world and promote development (Schumpeter 2004, 1989). The articulation of the new rurality answers to a number of qualitative changes of both the supply and the demand side of the agro-food market, therefore analyzing the new rurality in general and the emergence of the wine sector in Sweden in particular makes sense.
2. Preconditions for the emergence of the wine sector
Some general preconditions for the emergence of a new trade are a suitable institutional setting, availability of capital, human resources with enough knowledge to start and develop the trade, as well as an entrepreneurial stock that has had the ability to perceive a future potential development before there are any successful experiences to follow. There is also a need for a demand. One specific precondition in this case is the existence of a suitable physical geographic environment in this case soil and climate to make wine production possible.3 (van Leuwen et al., 2010).
2.1 Wine production and climate change
Temperatures in Sweden have experienced a persistent increase since the middle of the 18th Century. These increases, especially since the 1950's are so significant that they lack parallel in history (Soderberg et al., 2008). The growing season has expanded, winters are milder now by almost two degrees, while summers are barely warm. Annual precipitation has increased mainly during the summer, also during the winter and spring seasons while autumns have become marginally drier. These changes are all beneficial for vine-growing (Rummukainen 2007). Future forecasts predict an even warmer and wetter climate in Sweden, while traditional wine producing countries are expected to get dryer. The geological base for wine production is determined by previous glacial epochs in which the soils have been mixed and remineralized by ice sheets at regular intervals. The soil is relatively mineral-rich and therefore suitable for viticulture (Andren and Rytkonen, 2011).
With few exceptions vineyards are located in southern Sweden, in the counties of Skane. Several wineries are located on the two big islands in the Baltic Sea, Oland and Gotland and the most northerly commercial vineyard is located in Sodermanland, south central Sweden. All vineyards are located within the Swedish farming zone I, i.e. in the zone where conditions for farming are most favourable (Andren and Rytkonen, 2011).
2.2 Domestic demand
Consumption has increased dramatically over the last six decades (Figure 1). First and foremost this is due to the increased wealth experienced by the entire population especially during the post war period. In addition, the shift in alcohol policy from an individually based to a general alcohol control model in the 1950's, the Swedish EU membership in 1995 that led to the abolition of four of five public alcohol monopolies (production, wholesale, distribution, import/export). Only the retail monopoly remained. In order to keep the retail monopoly, the service was improved and self service stores were developed to create a "shopping experience". Moreover, the introduction of the Bag-in-Box led to an increase in the number of liters purchased per occasion. Sweden has also been influenced by changes in global consumption patterns, that favour value added and experience-oriented products. (Rytkonen, 2011).
3. The wine sector
Sweden is since 1999 officially classified as a wine country by the EU and has a quota of 250000 liters of wine per annum. There is no exact knowledge about the number of vineyards, because only commercial vineyards are obliged to register their production to the Swedish Board of Agriculture (SBA). An inventory made by Skjoldebrand in 2010, estimated the number of vineyards to around 330 units, most of them produce wine on a hobby basis (Skjoldebrandt 2010).
The industry is still small, therefore the development of output is not monitored on a regular basis and hobby production is not monitored at all. In 2006, the total Swedish production summed up to 5617 liters (SBA 2010) and production estimates for 2011 show that production is now about 18,000 liters. Around 30 percent of all grapes used in commercial vinification are imported. The official estimates of the area under vine sum up to around 18 hectares (Wingard, 2011). Figures are though just estimates. Only a dozen of the existing vineyards have permission for commercial vinification (Livsmedelsverket, 2011). Production is still limited therefore investments in processing plants are therefore scarce. (Amnegard, 2010).
The Swedish production is subject to EU market regulations that include production rules and types of wine, labeling, protection of names, subsidies and foreign trade. The EU regulates total production by prohibiting the planting of vines, keeping registers for harvest, production and stock inventories. (SBA 2011) Limitations concerning total output and the area under vine are already applied in other EU countries, but Sweden is exempted from limitations because the total area under vine is less than 100 hectares (Martensson et al., 2008).
The establishment of a vineyard requires both a great deal of knowledge and a significant amount of capital. The minimum cost for establishing a vineyard in Sweden and buy the necessary equipment for wine processing is approximately 5.340.000 crowns (583.036 [euro] exchange rate of 7th of October 2011) for a vineyard of five hectares. The investment is expected to begin generating revenues four years after planting, but it will take another few years before the winery can start producing at full capacity. Estimations of total potential yields in Sweden ascend to 400 to 600 liters per hectare, compared to between 8000 and 10000 liters per hectare in other wine producing countries in Europe. The differences in yield were attributed to the climatic conditions (Martensson et al., 2008). At the vineyard in Klagshamn in Skane for example, the first wines were produced five years after the winery started and the yield amounted to 2000 bottles, that is a total of 1500 liters of wine (Dahl, 2006).
Wine producers can be divided into three categories. Commercial growers, hobby growers and berry producers (on a hobby or commercial basis) that extended their activities to include grapes. The origins of the producers are quite varied. Some are retired or former owners of small business, some are firm owners or employed in completely different business (for example doctors, computer experts, etc), and some are farmers (Svensson, 2011; Gustafsson, 2011). The largest 33 vineyards are listed on the external homepage of the grape growers association, but not all of them are commercial vineyards (Svensson, 2011).
Activities in the vineyards and wineries are often combined with other farm activities, tourism, conference facilities, farm stores, health activities, etc. This is one of the world wide characteristics of the "new rurality", where multi-activities and part-time farming are an important development (Losch, 2004). This reflects the new role that rural spaces and small scale farming and elaboration of food occupies in the wake of a post-industrial economy. A common denominator for all the vineyards, with the possible exception of the newly planted Horns vineyard on Oland, is that they all combine activities with the tourism and hospitality industry. A rather ingenious, yet representative example is winehouse in Ahus. They sell subscriptions to rows of vines in the vineyard. The subscribing customers work on "their row" as an alternative kind of recreation (Ahus Vineyard, 2011).
According to EU-regulations, Sweden is a wine country without regions, therefore Swedish wine produced can only be labeled as table wine. But there are currently two emerging wine regions (4), Skane, and Oland. The geographical proximity of vineyards and common climatic zones, as well as new emerging forms of cooperation between the producers is paving the way for the formalization of wine regions. In Skane, Sweden's most vineyard dense county, producers have organized a Wine Route through the internet in order to help tourists find the various wineries (The Wine Route in Skane 2011) and producers also cooperate through "Erfa-meetings" that provide a forum for solving problems and exchange of experiences. Erfa is a short version of the Swedish word erfarenhet that means experience. (Svensson, 2011). Skane is currently trying to become recognized as wine region by the EU. Formally becoming a wine region would allow producers to sell their wines as other than table wines. This is important because production costs force producers to charge a relatively high price per bottle. An overview of the wines listed at the retail monopoly in October 2011 shows that the average per liter amounts to between 261 and 368 Swedish crowns (28,6 [euro] to 49,4), while table wines from South Africa, Italy and Spain, the most important wine countries for Swedish consumers are sold at an average of 60 to 70 crowns (6 [euro] to 7) (Systembolaget, 2011). Since wines are only classified as table wines, producers are prevented from adding information about medals won at the competitions that are organized on a yearly basis (Bergstrom, 2008).
Collaboration at the national level is also conducted through the Association of Swedish winegrowers. They organize courses and competitions, and conduct lobbying to highlight the needs and problems affecting the growers (Swedish winegrowers association, 2011).
3.1 Sales and institutional constraints
Due to national alcohol regulation, the monopoly store, Systembolaget, is the only place where consumers can purchase alcoholic beverages to take home (5). Winery gate sales are not permitted. Systembolaget has a national coverage and its assortment contains more than 7000 different wines. The assortment is divided into the standard collection that is available in most stores, and the special collection, that is only kept in a few special stores or that can be pre-ordered. The scales of operation of Systembolaget is an important constraint for Swedish wineries, because their production is limited. Swedish wines can be sold through the special collection and thanks to a political compromise they can also be sold in the standard assortment of the shop/shops that are located closest to the vineyard in question (Systembolaget Information service, 2011). The number of wines available at Systembolaget varies from month to month, but in October 2011 there were 11 red and 9 white and one icewine. (Systembolaget, 2011)
Because of the comparatively high price of Swedish wines, it is important for producers to create an emotional relationship with their customers that is not based on the flavor/price relationship, but that rather leans towards a consumer/place relation. One way of doing this is of course to build up an effective storytelling. This is an established practice around the world.
Swedish vineyards work consciously to build their image using the name of the place as a vineyard name and building their story telling with a strong connection to the territory (See for example, Ahus Vineyard, Kullahalvons Vineyard). Research about how to build successful brands shows that building a brand based on the local market is a viable option, especially for new and small enterprises (Kafperer, 2002). Promoting products by connecting them to the origin can provide consumers with two stimuli, one where they feel affinity with the region and one where they feel affinity with the product (e.g. small-scale craftsmanship). Consequently, regional products can take advantage of both consumers' sense of belonging to the origin region and their involvement with the product category the product belongs, which can result in consumer loyalty and future survival for the producer (van Ittersum et al., 2003). Consequently, the prohibition against gate sales not only limits the possibility of selling at a specific moment in time, it also limits vineyards possibility to effectively build a strong brand.
In order to sell their wines some producers are forced to sell their wines to the Swedish market from abroad. Wines are sent to a foreign agent and re-imported when a customer has placed an order. Those wineries that have restaurants can serve their wines on sight but customers are now allowed to take them home (Amnegard 2010, Hallakra Vineyard, 2011).
In spite of the difficulties, producers try to sell their products through Systembolaget. This has however, not been easy. According to Goran Amnegard who has managed to sell wine through the standard collection of Systembolaget, he was asked a few years ago to replace the bar codes on the wine labels for an order that was ready for deliver. He was forced to buy new labels at a cost that far exceeded the returns on that occasion (Amnegard, 2010). This exemplifies the problems caused by the contradicting structures between Systembolaget and Swedish wineries.
Wine tourism is, by international standards, an important source of revenue for vineyards and especially for small ones. It improves cash flows and reduces distribution costs. In addition, it facilitates the establishment of an experience-based emotional relationship between the consumer and the wine. In light of the limited scale of operations, wine tourism and sales on sight can be a potential alternative for Swedish vineyards. But since gate sales are not allowed, Swedish winemakers have for years conducted lobby change current legislation (Amnegard ,2010).
In connection with the launching of the Government's project "Sweden a new culinary country", the state's reluctance to allow gate-sales became difficult to defend. The goal of the project is to promote rural development by strengthening the food sector and especially of small scale food production. Strategically this project is of great importance in a period under which the creation of post-industrial work opportunities is needed. A vehicle to achieve the goals is to remove all the obstacles against small scale elaboration of food and beverages.
The debate led to a government inquiry about gate-sales 2010. The outcome was in favor of gate-ales but says that sales must also include other foreign operators (Nordling 2010). The results divided political parties in two strands, the first that looks at a rural development perspective and that claims that wine and beer producers should not be treated differently than the other 700 farms that sell their elaborated products on sight. This strand is also part of the new National Strategy that aims to create 10,000 new jobs in the rural and the food sector (Ministry of Agriculture 2008). Gate sales are also seen as beneficial for the tourism industry (Motion 2010/11: So408). The second strand claims that gate-sales are negative for public health. This position can be illustrated by the Minister of Social Affairs, she expressed that "I will not participate in anything that could threaten the existence of Systembolaget" (SVD 2011). As a solution Systembolaget proposed that it should be possible to order the products when consumers are visiting the vineyard and that the products could be picked up at any of the 412 stores of the monopoly. This is of course not the same as gate-sales (Gergen 2009). The final decision of not allowing for gate sales was announced the 16th of September 2012. The reason stated was that it will endanger the survival of Systembolaget, even though experiences from Finland show that it is perfectly possible to allow gate sales without risking the monopoly. At this very moment the commercial vineyards are preparing to take action and force a test of the prohibition at EU-level. How this will end is still to be seen.
4. Final remarks
The emergence of the wine sector in Sweden answers to a real entrepreneurial development in which changed pre-conditions, such as warmer climate and changed legislation when the alcohol production monopoly was abolished made possible the emergence of commercial wineries. The main innovation involved is the introduction of a new product made possible by the production of a raw material that is new to Sweden, namely grapes. In addition, it is result of what the in theory and politics is known as the "the new rurality". The concept stands for the new trends that lead to farm diversification, complemented by tourism and other activities and services, run sometimes even as part-time agricultural activities. This in itself is an important novelty in Sweden, it breaks the general pattern of main stream agriculture, characterized by increasing productivity in conventional agriculture. The wine sector instead stands for low scale, quality oriented production and the diversification of the business. Even though quantities produced are still kept at a low level, production in Sweden is expected to increase, not the least because temperatures are expected to continue to rise during the coming decades. The immediate survival of the wine sector is challenged by an institutional frame that was developed hundred years ago to meet the demands of a rising temperance movement. In all its dimensions, this case illustrates how lands that were totally marginalized for wine production in the past, can become valorised for new ventures as the result of climate and institutional change.
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Rytkonen, P. *
Department of Natural Sciences, Environment and Technology, Sodertorn University
* Corresponding author: email@example.com
(1) Most grape-growers make their own wine but are not allowed to sell it. Some of them contract the vinification service from the commercial vineyards, while other process themselves. The production from non commercial vineyards is for self consumption.
(2) A food regime is composed by an institutional/structural power base; it has a mode of regulation and economic agents with varying degree of economic space, as well as endogenous forces of change such as geography and nature. It results in the production of certain food, a pattern of distribution and environmental effects.
(3) At this point it could be possible to conduct a discussion about terroir and the meaning of the term for the Swedish wine sector. However, such discussion would not be fruitful, due to the fact that Sweden lacks previous experience in wine production, there is no tradition and wine production is not embedded in the local culture. Moreover, the geographic link is also weak because vineyards are rather new. It is all the result of recent events.
(4) A wine region is here understood as a geographically demarcated area in which the final product is differentiated into different categories, linking the characteristics of the wine to the territory
(5) Alcohol purchased at restaurants must according to legistation be consumed within the establishment in which it is purchased.
Received: 26 June 2013 Accepted: 27 September 2013
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