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AAWE Working Paper No. 224 – Economics

AAWE Working Paper No. 224 – Economics

The aim of this paper is to analyze risk attitudes of winegrowers in France. An inter- esting feature of French viticulture is that most of the production is carried out under an appellation regime, bearing constraints in terms of maximal yield authorized. We estimate a translog cost function under the constraint of this maximal yield. We jointly estimate cost function parameters, factor share equations and winegrowers’ attitudes to the risk function. Our estimates are based on the FADN database (2005-2014), data from the National Cultural Practices survey (2006, 2010, 2013), data from the French National Institute of Origin and Quality (INAO) and data from guides on production costs in viticulture and œnology (from 2005 to 2014). We find that pesticide demand is inelastic and all types of winegrowers are risk-averse. For the majority of them, risk aversion declines with expected profit (DARA), but for the Champagne region, it is the contrary. Expected profit is far higher than in the other regions and these winegrowers are more averse to risk when expected profit increases (IARA).

AAWE Working Paper No. 223 – Economics

AAWE Working Paper No. 223 – Economics

The objective of this paper is threefold. First, we estimate the causal effect of wine medals on pro- ducers’ prices. Second, we calculate the expected profit obtained by producers from participating in competitions. Third, we investigate the efficiency of wine competitions by measuring to what extent the attributed awards are good quality indicators. Our dataset combines information on transactions be- tween wine producers and wholesale traders (these data are registered by a wine broker who acts as a middleman in this market), with the records from eleven important wine competitions. Our identifica- tion strategy exploits a particularity in our data, namely that medals are not only awarded before the transaction dates but sometimes also thereafter. Under weak restrictions, a regression of price on dum- mies indicating past and future medals (plus controls) allows to uncover two interesting features: i) the difference in the respective dummy estimates identifies the causal effect of a medal, ii) the estimate of the future medal coefficient identifies the correlation between unobserved quality and medal. We find a strong medal impact: our preferred estimate indicates that producers of medaled wines can increase their price by 13%. The impact for gold is much larger than for silver and bronze, but we cannot reject that the correlation with quality is the same across the three colors. Only a minority of contests attribute medals that are significantly correlated with quality (primarily the ones founded a long time ago, and whose judges are required to evaluate relatively few wines per day). Our profit calculations show that the incentives to participate in wine contests are high.

AAWE Working Paper No. 222 – Business

AAWE Working Paper No. 222 – Business

Concentrated or Competitive? An Overview of the Wine Industry in British Columbia, 2011-2015 Katarzyna Pankowska Introduction The fact that Canada domestically grows Vitis vinifera and produces various types of table wines may still come to some as a surprise, yet it is true. The geographic location and common association of Canada with a cold climate,…

AAWE Working Paper No. 221 – Economics

AAWE Working Paper No. 221 – Economics

Little empirical research has considered the impact of physical changes in the climate on firm behaver nor relied on natural stakeholder-based theory (NSBT) to explore such a relationship. For a sample of 2,348 wine firms operating in Australia, this study captures changes in both temperature and rainfall for the year 2012 relative to the year 1982 (30 years), and finds that these climatic changes are positively associated with organic products. Further, because of their sensitivities to the natural environment and positions of influence, the study predicts that women in leadership will moderate the relationship between climatic changes and organic products. This postulate finds support. The study advances research on climate change and the use of NSBT. Contributions of the findings are discussed along with limitations and future research opportunities.

AAWE Working Paper No. 220 – Economics

AAWE Working Paper No. 220 – Economics

This study explores a relatively little understood aspect of climate change: to what extent physical changes in the climate impact on firm behavior. To explore the impact of physical changes in climate, changes in both temperature and rainfall are studied with respect to adaptive behavior. For a sample of 207 wine firms operating in South Australia, this study finds that changes in temperature and rainfall are associated with adaptive practices. Further, because of the nature of acquiring and leveraging information and knowledge on climate change to affect adaptation, the study predicts that absorptive capacity will moderate the relationship between climatic changes and adaptive practices. This postulate finds support. The study advances research on climate change and firm behavior. Contributions of the findings are discussed along with limitations and future research opportunities.

AAWE Working Paper No. 219 – Business

AAWE Working Paper No. 219 – Business

The glass of wine that you are having with your dinner, whether in your own home, at a friend’s or a restaurant, is subsidized by the federal taxpayer whenever the growers who produced the grapes that went into the wine protected themselves from a financial loss due to crop failure by purchasing crop insurance. The subsidy has the effect of lowering the price of that glass of wine by reducing the full cost of growing the grapes provided the resulting economic gain is passed along at least in part to the winery and in turn to the vintner, retailer, and finally the consumer.

It follows that crop insurance is a blend of private and social insurance because the cost to the grower of insuring against a crop failure, which is included in the cost of production, no longer is entirely privatized. It is shared with the public through a taxpayer-supported subsidy.

Our objective in the following is to describe the need for crop insurance and its origins, the specific details of the protection for U.S. growers, the private and social costs of producing grapes, and the role of the Agriculture Department. In the following, we do not address table grapes, raisins, damaged vines, or federal area-wide crop insurance. That type of insurance protects the individual producer, not on the basis of his own personal loss, but on the average losses across the area where his vineyard is located. (ProAg nd, np).1 Much more research is needed for a more detailed account of insurance that focuses on wine grapes than is provided herein. To help facilitate that research we provide links to articles and books that examine in greater detail reinsurance, the history of wine grapes, licensing agents and brokers, the history of crop insurance prior to the New Deal, and written agreements between growers and insurers.

Our primary emphasis in the following is not on the grapes or the wine but on the human agents involved: the grower, the insurer, and the taxpayer.

AAWE Working Paper No. 218 – Business

AAWE Working Paper No. 218 – Business

Since the early 1990s, there has been a remarkable export boom of natural resource- based products from Chile, including wine, farmed salmon, forestry and wood products. This phenomenon is surprising, considering the monopolistic role played by advanced countries in these industries (e.g. Italy, France and Spain in the wine industry; Norway, Scotland and Canada in the salmon industry). It also raises questions on whether the conditions under which it is taking place are any different from those that in the past led to the repeated failures of a development model based mostly on the exports of natural resources. From a traditional sector totally oriented to the domestic market and in deep crisis due to political and economic instability, the Chilean wine industry has gained international recognition since the early 1990s. It has become a large export-oriented industry -over 60 percent of the production is currently exported- together with other non-traditional industries such as salmon. Chile has been gradually identified by international consumers as an ideal country for producing modern varietal (fresh and fruity), good-value-for-money wines, and it has won worldwide recognition in the wine community faster than any other country in modern history (Phillips, 2000). This is a striking achievement, considering that until the 1970s Chilean wines were confined to the niche of decent-but-not-great wines, based on few varieties cultivated and the relative homo- geneity of their taste. This paper analyses whether and how, under the globalizing trends that began in the last quarter of the twentieth century, Chile was able to transform some of its primary commodities such as wine into high-quality, diversified, processed goods, with increasing value-added content and export price per unit, thus becoming a platform for development. In particular, as a complement to previous studies, this paper looks specifically at the role of knowledge intensive services in the Chilean wine sector. It is based on the hypothesis is that these services have allowed Chilean wineries to add value to their wine exports and constantly improve their operations along the different stages of the value chain. This paper is structured as follows. Section 2 describes Chile’s remarkable wine export performance and reviews previous studies regarding the main factors that explain this expansion. Section 3 provides a description of the five main segments of the wine value chain and the multiple service inputs within each one of them. The motivations to produce these services in-house or subcontract are discussed in section 4. The results of a survey, carried out in the context of this study, to assess which services are produced in-house or outsourced are discussed in section 5. The last section concludes and provides suggestions for future research.

AAWE Working Paper No. 217 – Business

AAWE Working Paper No. 217 – Business

Little research has considered the potential influence of distant, external pressures on the implementation of firms’ ‘green’ innovations, nor how internal firm resources might moderate this relationship. By combining institutional and resource-based theories and examining 649 firms in Australia, I find that export intensity is positively associated with green innovations. Further, as women in leadership roles increases in firms, the relationship strengthens between export intensity and green innovations. The results also suggest that greater levels of absorptive capacity among firms strengthens the relationship between export intensity and green innovations. Contributions of the findings are discussed along with limitations and future research opportunities.

AAWE Working Paper No. 216 – Economics

AAWE Working Paper No. 216 – Economics

The aim of this study was to identify which attributes impacted the dynamic liking of cheese and wine individually as well as when consumed together. Three wines (a white one, Pouilly Loché; and two red ones Maranges and Beaujolais) and three cheeses (Comté, Époisses, Chaource) were individually evaluated by a group of 60 consumers using mono- intake Temporal Dominance of Sensations (TDS) with simultaneous hedonic ratings. The same data acquisition screen was used for all products showing a unique list of 14 descriptors (covering cheese and wine perception) and a hedonic scale for dynamical rating of liking. The dynamic hedonic data was associated to the TDS profiles obtaining Temporal Drivers of Liking (TDL). The nine wine-cheese associations were evaluated by multi-bite and multi-sip TDS, consumed in a free manner. Individually, Chaource had practically no TDL, in Comté mushroom flavor was a positive TDL, and in Epoisses salty was a negative TDL. All wines presented TDL, but negative were only present in the red ones: bitter, sour and astringent. In wines, the positive TDL were: fruity, spicy and woody. Dynamic perception changes had a bigger impact on liking in wine compared to cheese. For the associations, the negative TDL were only three and mostly wine related: sour (for 7/9 combinations), bitter (6/9) and astringent (5/9). Positive TDL were more varied (a total of 10 descriptors) and were related either to wine or cheese. As opposed to what was found in cheese alone, salty was a positive TDL in two of the combinations. It was observed that the dynamic sensory perception had a more important impact on liking in wine-cheese combinations than when consumed separately. This shows that TDS and TDL have a big potential in the study of food pairing which should be further exploited.

AAWE Working Paper No. 215 – Economics

AAWE Working Paper No. 215 – Economics

It is obvious that exchange rates in􏰆uence exports since they add a 􏰆uctuating component to the costs or rather to the price in the destination country and therefore in􏰆uence the international competitive ability. Whether this in- 􏰆uence on exports is of a special non-linear path dependence, called hysteresis, is investigated in this paper. To identify hysteresis, three methods are pre- sented and compared. First, the spurt method developed by Belke and Göcke [2001], second, the Preisach addition method which was used by Hallett and Piscitelli [2002] and third, the Preisach replacement technique which can be found in de Prince and Kannebley Junior [2013]. Both Preisach approaches use an algorithm provided by Piscitelli et al. [2000] to derive the so called Preisach variable from the exchange rate time series. After 􏰅nding hysteresis in export values the question arises if the hysteresis descends from hysteresis in prices or quantities, see Göcke and Werner [2015]. Therefore, the study analyses values, quantities and prices, i. e. unit values, of European wine exports to the USA. As the entry into the US market requires sunk costs, for example for dealing with the extensive regulations, see e. g. Beliveau and Rouse [2010], FTA [2015], the requirements for the appearance of hysteresis are conformed. Indeed, the esti- mations revealed hysteresis for values in case of Italy and Spain and for prices in case of Italy and France.

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