Previous studies on the value of terroir, or more generally geographical indications (GI), used hedonic techniques. We use historical data and exploit temporal and geographical variations in the introduction of wine GIs in early twentieth century France to study the impact on the price of specific wines in the years and decades following their introduction. We find large effects of GIs on prices of some Champagne wines, but no significant impact on Bordeaux or other Champagne wines.
Students of Economics 101 learn that in a market system prices, including wine prices, are determined by supply and demand. Further, on the supply side the intensity of the competition varies depending on the number of suppliers and the control they have over their own wines reflecting such factors as product differentiation and market penetration.
What the introductory student does not learn is that supply depends as well on other factors such as stealing, counterfeiting, and smuggling wine because those factors add to the cost of production.
Our intent in this working paper is to explore the extent of stealing, counterfeiting, and smuggling of wine without exploring in depth the extent to which such illegal practices specifically influence the price and quality of the wine that American consumers are purchasing.
This working paper originates in part from a personal experience some years ago when I imported a case of specially selected Italian wines from a friend’s winery in Valpolicello. It went through my friend’ regular distributor on the East coast and arrived at my home in Louisiana four bottles short of a full case. The distributor at first said that he thought the shipment contained samples. I had to hassle with that him for some time before the missing wine was tracked down and shipped to me. He admitted no wrongdoing for taking what belonged to me.
This paper also originates with the unmasking of Rudy Kurniawan who with charm and guile amassed a fortune manipulating elite wine collectors into buying bottles of cheap wine that he had altered in his own wine cellar, then rebottled and repackaged as high-end wine. Very high-end wine.
More than bottled wine has being stolen. In France, thieves have uprooted and taken plants along with grapes directly off the vine. In Italy a gang has been arrested for stealing fine wine along with wheels of Parmesan cheese.
In the following our attention focuses primarily on bottled wine produced in the United States or imported. We begin with two requisites that bear on our topic and must be addressed explicitly at the start.
This study provides preliminary insight into the challenges and opportunities present for wine in the process of adaptation to the modern business environment. This study is being conducted within the Swiss wine sector due to the unique characteristics and value of Swiss wine, culture, and the capacity to access key individuals within the Swiss wine sector and its supporting network. These specific features of the Swiss wine sector offer the potential to probe respondents for depth of information on digitization, whilst maintaining more control over extraneous variables that may otherwise impact research results.
This study utilizes the Delphi method for the purpose of investigating the opinions, ideas and suggestions of key individuals in the Swiss wine sector. Each respondent’s feedback is being collected for the convergence of ideas and process of implementation. Divergent responses will all be compiled and synthesized, before returning an anonymised compilation to every respondent for subsequent review and comment. Subsequent rounds of this process will continue until data saturation is achieved. The results of this study will be used to prepare a framework outlining the process and scope of considerations in the successful digitization of the Swiss wine sector.
Data was sought from all wineries producing more than 10,000 cases per year across all of California wine regions. 219 such wineries were identified yielding a representative sample of 106 producers across the state. Women were found to represent 38.1% of all leadership roles in the industry. As wineries grow larger, the percentage of women tends to decline. Women tend to be over-represented in staff roles and under-represented in line positions, which is consistent with other US industry. California’s wine industry has made significant progress in bringing women into management roles in the industry. Recommendations are offered for further improvement.
Does Blind Tasting Work? Investigating the Impact of Training on Blind Tasting Accuracy and Wine Preference Qian Janice Wan & Domen Prešern Abstract Blind wine tasting refers to the practice of tasting a wine without seeing the label, and deducing the grape variety, location of origin, and vintage of the wine based on what one perceives…
The growth of social media outlets in which individuals post opinions on publicly consumed goods provides an interesting and relatively unexplored area for examination of the role of crowd sourcing amateur opinions in areas traditionally relegated to experts. In this paper we use wine as an illustrative example to investigate the interaction between social media and expert reviews in the market for high end consumer goods. In particular, we exploit a novel data set constructed from the social media website CellarTracker, which is composed of the averaged individual reviews for 355 distinct wines on a quarterly basis from 2004 through 2017, and pair this with a similarly dimensioned panel of average auction prices for these wines as well as the reviews from three leading experts. We develop a signal extraction model to motivate the interaction between amateurs and experts in revealing a measure of the quality of the wine. The model is then used to motivate the adaptation of an empirical panel structural VAR approach based on Pedroni (2013) by embedding the expert reviews as an event analysis within the panel VAR, which is used to decompose information into components that signal the quality of the liquid in the bottle versus other aspects of the wine that are valued by the market. The approach also allows us to decompose the influence of the expert reviews into components associated with what we define as the quality of the wine versus the pure reputation effect of the expert. The results on expert reviews are consistent with the idea that experts can substantially impact prices through channels other than their signals of quality.
Using an original dataset hand collected on an online trading platform specialized in whisky investment, this article aims to estimate the main determinants of price differences for whiskies. We find strong evidence that distiller’s reputation, age of whisky and vintage affect positively the price. Other findings include a negative effect for independent bottling (i.e. not in-house by the distiller) and a positive “collector” effect for bottles identified as “extremely rare” by the website.
We investigate the effect of excellence on firm profitability focusing on markets where vertical integration is necessary to achieve product quality and there is limited business scalability. Using data from Italian wine guides, we show that excellence – as measured by wine quality – and vertical integration – as measured by private instead of cooperative ownership – do lead to higher prices of the bottles sold. However, in a second exercise we study the determinants of Italian wineries’ Return of Invested Capital (ROIC) and obtain mixed results. We show that excellence – as measured by firm and collective reputation – is irrelevant. Vertical integration – as measured by in house production of grapes and wine – ensures a better performance, but the most profitable firms are bottlers, which deliver the worst products. Results suggest that excellence and vertical integration are valuable assets, but also that their importance might heavily depend on the scalability of business.
When studying the emergence of new global markets it is essential to consider how countries and companies compete to obtain advantageous positions. Our objective is to study how France obtained an initial leadership position in the new global wine market which it subsequently consolidated. We will also analyse the main determinants of its exporting success. In order to do this we have quantified its exports and examined its evolution and its principal export markets. We have also used a gravity model for both ordinary wine and high quality wine in order to establish the key variables that explain this evolution. The article highlights the great efforts made by the exporters to improve the quality of their products and increase their sales using modern marketing techniques. Our econometric results also show some significant differences between the determinants of exports for the two types of wine. However, the exports of both products suffered the strong impact of a series of major events, such as The First World War, the Russian Revolution, the Prohibition in the United States and the Great Depression. The case of wine shows that the collapse of the first globalisation was not the same for all types of product.
The world’s first geographical indications (GIs) were in the wine sector and focused on the delineation of the location of production, the ‘terroir’: the Burgundy wines in the fifteenth century, the Port wines and Chianti wines in the eighteenth century, and the Champagne wines in the early twentieth century. We analyze the causes for the introduction of these GIs (‘terroirs’) and for changes in their delineation (expansion) later on. Our analysis shows that trade played a very important role in the creation of the ‘terroirs’ but not always through the same mechanisms. For the Port and Chianti GIs it was exports to Britain that were crucial; for Burgundy it was domestic trade to Paris; and for the Champagne GI it was not exports but pressure from wine imports and new wine regions that played a crucial role. For the expansions of the GIs later in history, other factors seem to have been equally important. Expansions of the GIs in the years and centuries after their introduction followed major changes in political power; the spread of a new philosophy in liberal and free markets across Europe; and infrastructure investments which opened up markets and made exports cheaper from “new” producers.