AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 213 – Economics

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AAWE Working Paper No. 213 – Economics

Analyzing Barrel Purchasing Decisions on Winery Costs

Olena Sambucci & Julian M. Alston

Abstract

The California Grape Crush Report includes summaries of quantities produced and estimates of the average prices and value of wine grapes crushed in California, and serves as an authoritative source of information on production and returns per ton by variety of wine grapes. The data provided in the Crush Report are used to calculate the total value of winegrape production as reported in the annual Agricultural Statistics reports published by the United States Department of Agriculture and in major industry publications. We use the differences among crush districts in the shares of production crushed to growers’ accounts to show that the current mechanism of calculating average statewide returns per ton understates the true total value of the crush by 4–16 percent. We show that a more accurate estimate of the total value and average price can be obtained if the prices of the wine grapes that are sold are used to infer the prices of wine grapes that are not sold before computing the weighted averages.

This article was written by Karl Storchmann

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