The author compared two methods for assessing the reliability of blind wine tastings of South African Sauvignon Blanc and Pinotage white and red wines.
The first method required the taster to rank each of the 8 white and red wines from 1 for the most preferred to 8 for the least preferred, with tied ranks permitted when 2 or more wines were equally preferred. The second used scores representing a taster’s perceived quality of wine as: 50%-‐69% =Poor/Unacceptable;
70%-‐79%= Fair/Mediocre; 80%-‐89%= Good/Above Average; and 90%-‐100%= Excellent to Superior. Results indicated that the two methods provided quite different results with respect to the critical issue of identifying replicate wines; while the identification of replicate white and red wines proved successful when wine scores were used, not a single wine taster could successfully identify replicate white or red wines when using ranking methods. This finding, plus the fact that very different scorings can produce the very same rankings, such as 1, 2, and 3 being given scores of 60, 64, 66 (Poor/Unacceptable); 70,72, 76 (Fair/Mediocre);
80, 83, 87 (Good/Above Average; and 90, 95, 98. (Excellent to Superior), led to the conclusion that such flaws in the ranking method render it of very limited usefulness in the evaluation of the results of blind wine tasting.
This paper aims to assess the role of wine as a financial asset in the diversification of French investors’ portfolios. Our 2007-2013 monthly database is composed of Liv-ex indexes and the WineDex indexes from iDealwine, an online platform for wine investment in France. We also include stocks, bonds and a risk-free asset and constitute several portfolios based on the degree of investor risk aversion, as proposed by Canner et al. (1997). Moreover, we compare wine to another alternative asset, gold. Using both mean-variance (Markowitz 1952) and mean value-at-risk (Favre and Galeano 2002) portfolio optimization, we find that portfolios with wine (or gold) are more efficient than portfolios without it. Moreover, we use the Sharpe (1964) and modified Sharpe (Gregoriou and Gueyie 2003) ratios to calculate performance and find that the higher the proportion of wine (or gold), from 5% to 50%, the higher the portfolio performance is. We also find that French wine indexes, particularly WineDex Bordeaux, are more profitable than gold or Liv-ex indexes. This suggests that French investors should invest in wine through iDealwine and not through Liv-ex.
The purpose of this research is to examine the relationship between market structure and performance in the wine sector using data from two Canadian provinces. Investigation is conducted on alternative hypothesis defined as the Structure-Conduct-Performance (SCP) hypothesis, the Relative-Market-Power (RMP) hypothesis and the Efficiency Structure (ES) hypothesis. The performance is measured by the number of awards gained by wineries. Using regression analysis, we find support to the ES hypothesis. The empirical findings suggest that more research should be done on the efficiency structure of wineries in their respective markets.
The use of oak barrels to improve the quality of wine and to aid in the maturation process has a long history (Garde-Cerdán and Ancín-Azpilicueta, 2006), and has become a core part of the expertise of wine makers globally. Wine barrels are expensive, and constitute a considerable share in the cost of making a fine wine – this is why it is estimated that only 4% of wineries world-wide use them (Anson, 2013). Yet there is not much in the literature on the financing models available to wine makers, or on how they decide on the optimal financing strategy, although some authors do address the issue tangentially (e.g. Carter, 2012; Monday and Wood-Harper, 2010; Blake et al., 1998). This is arguably because there are really only two financial models in use around the world: buy the barrels with own funds, or borrow directly or indirectly from a bank using a conventional loan instrument with collateral. This neglect exists despite the more recent emphasis on value chain financing in the literature (e.g. Miller and Jones, 2010).
Elsewhere in the world wine makers have the option of a) buying barrels with their own funds; b) of borrowing in the form of a collateralised loan or a lease from the traditional banking sector or from a wine industry-specific bank; or c) of taking out a lease in the form of barrel-specific lending. The second of these options represents a conventional financial model. The lease option works much like vehicle finance. The owner of the equipment (in this case wine barrels), also called the lessor, gives a client the opportunity to rent the equipment over a fixed time period against an agreed rental payment. The lessee has the option to return the equipment after the expiry of the agreed term, or to take over ownership in the event that there was a buyout option (Kirkham, 2011). The lessor typically gains a tax advantage in writing down the value of the capital asset. The lessee frees their capital for other uses, especially after the harvest when wine making incurs a host of other costs. In a lease the equipment itself is the collateral for the loan, unlike a regular loan, where additional collateral may be required.
The third option, barrel-specific lending, is found in different variations in France and in South Africa. The purpose of this paper is to describe the origins of the rental model in use in these two countries, and to describe the business model that has been put in place to gain access to the market. The attention then shifts to the identification of those characteristics of the market in wine barrels that make the South African version of the model suited to the needs of the local market. The paper ends with some information on international trade in wine barrels as an indication of market size and some reflections on how to grow the business.
We examine the degree of consensus in quality ratings of US among prominent wine publications. Ratings are an important source of information for both wine consumers and wine researchers. For the purpose of wine research, are ratings on the ubiquitous 100 point scale reliable, objective measures of quality? The value of expert judgment has been called into question by a number of studies, especially in the context of wine competitions and tasting events. Our study is part of a much smaller literature focusing on ratings by expert critics. We look at four publications: Wine Spectator (WS) and Wine Enthusiast (WE), which review a broad selection of the wine market, and Wine Advocate (WA) and International Wine Cellar (IWC), which are more selective and focus more on the high-end of the market. We find a similar level of consensus, measured by the correlation coefficient, between some pairs of critics regarding wines from California and Washington as Ashton (2013) does for critics of Bordeaux wine. However, among other pairs the correlation is much lower, suggesting almost no consensus. Consensus is not found to be related to the blinding policies (or lack thereof) of the critical publications. Our findings show that quality ratings have a substantial degree of objectivity to them.
“I am NOT drinking any fucking Merlot!”: these are the emphatic words pronounced by Miles’s character in the film Sideways. By that sentence, now famous, he contributed to spreading doubts about the organoleptic qualities of merlot grape variety as opposed to pinot noir. But, maybe more importantly, he opened the world’s eyes, and especially Europe’s, about the expertise some wine geeks can have in the United States (PICKET, 2004, p.8). The country is no longer regarded as one of savages (LUCAKS, 2000, p. IX), but as one of good wine and fine connoisseurs. A country believed to at last take to the pleasures of good food and of the wine culture. For the worldwide history of grapevine and wine can be seen as a cultural integration process that goes through civilisational and societal time and space (PITTE, 2009).
The relationships between cooperation and competition are a central element of geographically defined clusters. This article advances an understanding of the cooperation–competition nexus by examining how firms in three regional wine clusters in Australia engage in knowledge exchanges about climate change. The findings suggest that, in the main, firms across all three regions appear to be predominantly engaging in these specific knowledge exchanges within their own narrow sub-clusters. This so-called ‘liquid geography’ is suggestive of a somewhat competitive lock-out posture. However, firms in ‘elite’ sub-clusters appear to be cooperating more via external knowledge exchanges, albeit perhaps with self-interest in mind. The results also suggest that only with respect to adaptive climate change innovations (as opposed to mitigative innovations) do implementation rates differ. This appears to be advantaging firms in elite sub-clusters over all other firms in the regions. Implications are discussed along with future research directions.
The price of wine grew at a fast rate between 2001 and 2010 and has since been stagnating. The period of growth may be explained by the rise in the demand from emerging markets and from richest people (the top 1% and 10%), while the stagnation may come from the entry of new varieties causing a crowding/competition eject on the market. We estimate the gen- eralized model of ideal variety proposed by Hummels and Lugovskyy (2009) that combines these two elements and and support for this explanation. A 1% increases in GDP per-capita (income eject) generated an increase in price of 1.13% between 2001 and 2011. In contrast a 1% increase in market size (competition eject) reduced price by 1.10% over the same period. This paper also analyses these ejects by considering exports of wine according to mode of transport and indirectly evaluates economies of scale in transport of wine exported by plane, boat and road.
When cash-strapped Pierre Lafond opened Santa Barbara Winery, the first urban winery of its kind, in downtown Santa Barbara, CA in 1964, he did not realize that his model one day would become a global movement. Now, after 50 years, the urban winery and movement has burst beyond its initial urban dwelling to over 200 urban wineries on four continents. What initially began as a practical and cost-wise decision by Lafond, against the prohibitively expensive and traditional rural winery-vineyard combination, has ripened into a globalized phenomenon. True to its urban appellation, the urban winery and movement has converged with the recent and on-going gentrification and urban renewal taking place across America and abroad. More importantly, the urban winery and movement has not only captured the attention of world-renown wine critics, such as Robert Parker, but also the newest generation of oenophiles, the Millennials. Indeed, the urban wineries’ recent successes mirror those of their sibling industries: beer and spirits. Because the urban winery and movement has and will continue to grow globally, it needs to be adequately examined and defined. As such, an urban winery must meet two criteria: first, it is a premise in which wine is produced for consumption or sale within a defined territory or area of more than 2,500 people; second, it is categorized first into one of three “purist” or commercial winery models (proprietary, custom crush, or DIY), then, if applicable, a following “blended” model that incorporates one or more of these functions: gastro, entertainment, oenotourism, and education. Just as humans began to cultivate grapes in the first vineyards millennia ago, globalized grapes are being crushed under humanity’s monumental and historical migration from the rural environment into the urban one – a migration marked by the advent of the urban winery. In the end, the urban winery and movement reminds oenophiles everywhere that there is more than one way to crush a grape.
The implications of climate change for regional innovation remains understudied. Exploratory in nature, this study examines climate change innovations in two regional wine clusters in Australia. In South Australia, the evidence suggests firms in the wine industry are implementing climate change innovations at a higher rate than their counterparts in Western Australia, even though Western Australian firms appear to be experiencing more disruptive effects of climate change. To help explain these differences, key variables are examined. Knowledge exchanges (including types of knowledge) in the region and firm-level absorptive capacity explain the uptake of climate change innovations in South Australian firms, whereas knowledge exchanges alone (including types of knowledge) explain innovations in Western Australian firms. A discussion of the findings is offered along with future research opportunities for climate change research in regional studies.