Innovation and its uptake are two key ingredients in the Australian wine industry’s rapid rise from cottage industry to international success. The industry has a well-deserved reputation of leadership in the funding, coordination and adoption of both product and process innovation. This leadership continues to underpin its competitive advantage in oenological and viticultural practices, training, branding, and export. Empirical research, however, upon which this paper is based, suggests that this success may be disguising systemic flaws. One of the most threatening of these flaws is the relative lack of access to the industry’s dominant knowledge cluster by the myriad regional firms. The intensity of this cluster and inadequate transmission of knowledge beyond its parameters is undermining the vast majority of Australian wine firms’ ability to participate in the industry’s leading edge research and development. This, in turn, could well threaten the industry’s future leadership.