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

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AAWE Working Paper No. 152 – Economics

AAWE Working Paper No. 152 – Economics

In this article we provide an overview of the extensive literature on the impact of weather and climate on grapes and wine with the goal of describing how climate change is likely to affect their production. We start by discussing the physical impact of weather on vine phenology, berry composition and yields, and then survey the economic literature measuring the effects of temperature on wine quality, prices, costs and profits and how climate change will affect these. We also describe what has been learned so far about possible adaptation strategies for grape growers that would allow them to mitigate the economic effects of climate change. We conclude that climate change is likely to produce winners and losers, with the winners being those closer to the North and South Poles. There are also likely to be some substantial short run costs as growers adapt to climate change. Nevertheless, wine making has survived through thousands of years of recorded history, a history that includes large climate changes.

AAWE Working Paper No. 151 – Economics

AAWE Working Paper No. 151 – Economics

The creation of new, sub-AVAs within Oregon’s Willamette Valley AVA may indicate a desire on the part of well-established wineries to “split” or separate their social grouping from those with lesser qualifications. Once their social cluster has been differentiated, we theorize that these wineries would be able to capitalize on their newly developed distinctiveness and collect a larger regional reputation premium. Based on 2,221 Wine Spectator rated pinot noir wines between 1984 and 2008, regression analyses demonstrate that indeed regional reputation premiums have significantly increased with the creation of sub-AVAs; and that the price-quality ratio gap between sub-AVAs and the rest of Willamette has widened. (JEL Classification: C20, Q12, Q13, L66)

AAWE Working Paper No. 150 – Economics

AAWE Working Paper No. 150 – Economics

This is the first known large-scale study in the literature to examine women in the wine industry. By investigating the top wine-producing states in Australia and using a unique database, women across CEO, winemaker, viticulturist, and marketing roles are tracked for the years 2007-2013, resulting in 16,763 firm year observations. By relying on social identity theory, a hypothesis is put forth that women’s representation in top roles is actually less than predicted. The hypothesis is confirmed. A hypothesis is also posited that women in South Australia have higher representation in top roles than women in any other wine-producing state. The hypothesis is partially supported. Finally, this study hypothesizes that were a wine firm has a woman CEO, the likelihood of women representation in the other roles studied increases, which finds support. The results are discussed, along with future research directions and limitations.

AAWE Working Paper No. 149 – Economics

AAWE Working Paper No. 149 – Economics

International collaboration among researchers is a far from linear and straightforward process. Scientometric studies provide a good way of understanding why and how international research collaboration occurs and what are its costs and benefits. Our study investigates patterns of international scientific collaboration in a specific field: wine related research. We test a gravity model that accounts for geographical, cultural, commercial, technological, structural and institutional differences among a group of Old World (OW) and New World (NW) producers and consumers. Our findings confirm the problems imposed by geographical and technological distance on international research collaboration. Furthermore, they show that similarity in trade patterns has a positive impact on international scientific collaboration. We also find that international research collaboration is more likely among peers, in other words, among wine producing countries that belong to the same group, e.g. OW producers or newcomers to the wine industry.

AAWE Working Paper No. 148 – Business

AAWE Working Paper No. 148 – Business

Recent studies about catching up are often focused on the emergence of high-tech sectors such as electronics, software, pharmaceutical and telecommunications. These industries are indeed globally known for having sparked economic growth in some selected countries, such as Japan and South Korea in the eighties and nineties, and India and China in more recent years. Nevertheless, there is little doubt that in a large number of emerging countries the agro-food industry still significantly contributes to GDP. Though often depicted as low value-added and with little innovation content, the agro-food industry is a sector with considerable opportunities for technological and rent upgrading. UNCTAD (2009) has identified a group of dynamic and competitive middle-income countries, including Argentina, Brazil, Chile Thailand and Malaysia, which have become exporters of high-quality processed primary products. Some authors have envisaged an undergoing process of de-commodification of primary commodities, which are increasingly transformed from standardized staples into high-quality, diversified, processed goods, with raising barriers of entry, high knowledge intensity and technological dynamism, increasing value added content and high export price per unit (Farinelli, 2012; Kaplinsky and Fitter, 2004; Kaplinsky, 2005; Perez et al, 2009).

AAWE Working Paper No. 147 – Business

AAWE Working Paper No. 147 – Business

In 1989, the Canada – United States Free Trade Agreement (FTA) was implemented and dramatically changed the course of the wine industry’s development in British Columbia (BC). The FTA forced the industry to make the transition from being highly protected, and inefficient, to a competitive market contender. Although considered initially to be a victim of the FTA, by 2010, the BC wine industry contributed $295.8 million to the BC economy, or 0.15% of provincial GDP, and provided 5,100 direct and indirect jobs; and is now considered by many to be a remarkable BC success story. This investigation traces the evolution of the industry from 2000 to 2010 by examining the structural changes that occurred in the industry’s value chain during that period.
The study employs and industry cluster model to identify the relationships between the firms located in the Okanagan region. Results from the study show the growth in value added from all sectors of the value chain and identify several sources of the industry’s competitive advantage: extensive vertical integration, and a strong relationship to the tourism cluster. Conclusions are provided regarding the future challenges and opportunities facing the industry.

AAWE Working Paper No. 146 – Economics

AAWE Working Paper No. 146 – Economics

Understanding the determinants of excessive alcohol consumption, especially binge drinking, is important for informed alcohol policy and evaluation (Gilmore et al., 2013; Xu and Chaloupka, 2011). High-intensity drinkers who consume several drinks within a short time- period increase risks of serious health, safety and social problems for themselves and others (Anderson, 2008; USDOJ, 2004). For the United States, binge drinking accounts for more than half of an estimated 80,000 annual deaths and three-quarters of $224 billion in economic costs resulting from excessive alcohol consumption (Bouchery et al., 2011; CDC, 2012).

AAWE Working Paper No. 145 – Business

AAWE Working Paper No. 145 – Business

This paper focuses on the magnitude, variety, and sources of innovation introduced by the Chilean and Argentine wine industries during the past two decades. It analyzes whether the prolonged export growth of Chilean and Argentine wines has been achieved by building the innovation capacity of local actors and creating domestic linkages with local grape producers, winemakers and input providers, or by relying exclusively upon FDI and knowledge flows generated abroad. In line with the evolutionary tradition, this study explores the hypothesis that, much as in the case of high-tech sectors, the ability of developing countries to enter knowledge-intensive natural resource-based sectors, such as wine, depends on their ability to access capital, technology and knowledge from abroad, that is, on what can be defined as “external” sources of innovation.

AAWE Working Paper No. 144 – Economics

AAWE Working Paper No. 144 – Economics

This paper attempts to understand the mechanism of an upward trend in wine consumption in Japan by analysing its trend and possible correlations with food-related consumptions. Through the panel and time-series analyses of wine consumption and food-item expenditures, and of wine consumption and food-service industry sales, we investigate whether wine consumption is correlated with food westernisation in Japan and whether wine is gaining its steady place in daily life of Japanese. Although not robust, we find supportive evidences for both, particularly for the second one. While on-premise consumption, in particular at reasonably priced diners, is estimated to be an important factor for growing wine consumption in Japan, there are possible evidences that home consumption of wine is increasing. It is also suggested that reasonably price wine, especially that of imported wine, are likely to be the key for future wine consumption in Japan.

AAWE Working Paper No. 143 – Economics

AAWE Working Paper No. 143 – Economics

This paper examines the impact of the recent high taxation policy on Anatolian wine production as well as the value added loss from the use of grapes for non-wine consumption. The results clearly indicate that the high taxation policy is significantly reducing the wine production in Turkey. The suggested policy option of increasing the wine production may create six times more revenue than the existing policy outcome. A possible feasible policy is to remove the lump sum tax from exports and encourage export-oriented ‘Anatolian Old World’ wine.

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