Introduction to the Issue
(FULL TEXT PDF)
This issue of the Journal of Wine Economics opens with “Wine Industry Campaign Contributions and Wine Excise Taxes: Evidence from U.S. States” by Shree B. Pokharel (Pokharel, 2018). Against the background of significant increases in campaign contributions from the wine industry to officials running for state offices, the author hypothesizes that wine-industry special interests influence state wine excise taxes. Drawing on state-level campaign contributions data, she finds stat- istical evidence that campaign contributions affect wine excise taxes and that wine excise taxes exhibit some degree of spatial dependence. “On average, the increases in campaign contributions from the wine industry in a state results in a decrease in wine excise taxes in the given state and its neighboring states.”
Building on a prior paper on the hedonics of fine water prices published in this Journal (Capehart, 2015), Kevin W. Capehart and Elena C. Berg analyze whether consumers can distinguish among different bottled waters in blind tastings in “Fine Water: A Blind Taste Test” (Capehart and Berg, 2018). They run various blind tasting experiments with about 100 subjects. One of their main findings is that subjects are not better than random at distinguishing various waters including tap water. When rating bottled waters and tap water, some subjects preferred the inexpensive tap water to the highly priced bottled waters. On average, more expensive waters were not rated higher than less expensive ones. In fact, the authors found the correlation between water rating and pricing to be slightly negative.
In the third paper of this issue, Olivier Bargain, Jean-Marie Cardebat, and Alexandra Vignolles draw on original survey data to analyze the determinants of “Crowdfunding in the Wine Industry” (Bargain, Cardebat, and Vignolles, 2018). Among others, their findings suggest that subjects that regularly use the internet and have a general interest in crowdfunding are more likely to invest in wine projects than people that only have an interest in wine. They also find that potential funders prefer equity over in-kind rewards.
The fourth paper, by Geir Wæhler Gustavsen and Kyrre Rickertsen, is entitled “Wine Consumption in Norway: An Age-Period-Cohort Analysis” (Gustavsen and Rickertsen, 2018). The authors estimate age-period-cohort (APC) logit models using data from a large repeated cross-sectional survey over the period 1991–2015 to model the rapid increase in Norwegian per capita wine consumption. The estimation results indicate substantial effects of the APC variables as well as income, availability, and attitudes. The simulation results indicate that wine consumption frequency increases by age, especially for younger cohorts. As a result, wine consumption in Norway is expected to increase.
This issue closes with two short papers or comments, respectively. Marc F. Luxen (Luxen, 2018) updates and expands Ashton’s paper published in the Journal of Wine Economics (Ashton, 2013). He finds that “critics agree more about what they do not like. … In wines more than 100 euro there is no correlation between ratings and price.”
Terence C. Mills (Mills, 2018) refers to a paper by Holmes, A. J., and Anderson, K.’s Journal of Wine Economics article on “Convergence in national alcohol consumption patterns: New global indicators” (Holmes and Anderson, 2017). He re-analyses the data using techniques appropriate for a composition and “introduces a statistic that can validly track the variation in national shares around the global mean through time. This variability statistic shows that such convergence of national alcohol patterns has clearly taken place over the period 1961 to 2014 and thus confirms Holmes and Anderson’s findings using a valid statistical approach.”
New York University
Wine Industry Campaign Contributions and Wine Excise Taxes: Evidence from U.S. States
Shree B. Pokharel
(FULL TEXT PDF)
Given the growing importance of the wine industry in the United States, wine special interests are on the rise. Data shows that campaign contributions from the wine industry to officials running for state offices have increased over time. Given this reality, one can expect wine excise tax to remain low in states that receive higher campaign contributions. In addition, there are theoretical and empirical reasons to believe that these tax rates are interdependent based on Tiebout competition and yardstick competition. Based on this reasoning, one can hypothesize wine excise tax rates to be spatially dependent. In this study, I test this hypothesis using state-level campaign contributions data from the National Institute on Money in State Politics and Distilled Spirits Council of the United States, Inc. and find that there is strong stat- istical evidence of spatial dependence between state wine excise tax rates.
(JEL Classifications: C12, C23, H71)
Fine Water: A Blind Taste Test
Kevin W. Capehart and Elena C. Berg
(FULL TEXT PDF)
To test whether consumers can distinguish among different bottled waters and, if so, whether they prefer some to others, we recruited more than 100 subjects to participate in a blind taste test that consisted of four brands of bottled water featured in a restaurant’s water menu and a guidebook to fine waters. The tasting involved three successive experiments. First, our subjects tried to distin- guish bottled waters in a sensory discrimination test. They were only slightly better than random chance at doing so. Next, they rated bottled waters and tap water on a 14-point scale used at an international water competition. Some subjects preferred the inexpensive tap water to any of the bottled waters, and there was no association or a weak negative association between a bottled water’s price and its rating. Finally, our subjects tried to distinguish tap from bottled water while matching the bottled waters to expert descriptions. They were no better than random chance at doing either of those things. Similar results have been found in previous taste tests of beer and wine. Overall, our results suggest consumers do not have strong preferences over different bottled waters to the extent they can even tell a difference.
(JEL Classifications: D12, Q25)
Wine Consumption in Norway: An Age-Period-Cohort Analysis
Geir Wæhler Gustavsen and Kyrre Rickertsen
The Norwegian per capita sales of wine have more than doubled over the past 20 years, while the sales of sprits and beer have declined. These changes are likely to be the effect of changes in economic, demographic, and attitudinal factors as well as the availability of wine. We esti- mated age-period-cohort (APC) logit models using data from a large repeated cross-sectional survey over the period 1991–2015. The estimation results indicate substantial effects of the APC variables as well as income, availability, and attitudes. The model was used to simulate wine consumption over the life cycle in different birth cohorts. The simulation results indicate that wine consumption frequency increases by age, and younger cohorts are expected to increase their consumption frequencies more than older cohorts, which suggests an increased wine consumption over time.
(JEL Classifications: D12, J10, Q13)
Crowdfunding in the Wine Industry
Olivier Bargain, Jean-Marie Cardebat and Alexandra Vignolles
Crowdfunding has recently emerged as a novel way of financing new ventures. It coincides with a growing interest in wine as an investment good and with a search for new funding opportu- nities by wine makers. In this study, we examine potential investors willing to engage in wine crowdfunded projects and the kind of revenue that would attract them. We presented an orig- inal survey where respondents were asked about their wine consumption and purchase, their knowledge about crowdfunding, their relation to the internet, their investment and project related to wine crowdfunding, and their expectations concerning the returns from this type of contribution. Our results suggest that among all forms of crowdfunding, the donation/vol- untary contribution side driven by intrinsic motivation is likely to remain marginal compared to crowdfunding as an investment or a form of early purchase.
(JEL Classifications: G11, G12, G21, L17, L66)
Consensus between Ratings of Red Bordeaux Wines by Prominent Critics and Correlations with Prices 2004–2010 and 2011–2016: Ashton Revisited and Expanded
Marc F. Luxen
Wine consumers and producers make decisions partly on ratings of wine critics. Research into reliability (correspondence of repeated ratings of the same wines by one critic) and consensus (correspondence of ratings between critics or competitions) have yielded low estimates. However, Ashton (2013), looking at the consensus among only prominent critics of red Bordeaux, vintages 2004–2010, found a correlation of around 0.60. Here, I revisit these data, and extend the analyses to the years 2011–2016 for the same wines, but with additional new critics. Agreement among the critics (r = 0.57) of these new years is comparable to those found by Ashton (r = 0.60), with a slight upward trend. Overall, critics agree more about what they do not like. Regarding prices and ratings, wines score below-average ratings when they cost less than 35 euro, and higher ratings between 35 and 100 euro. In wines more than 100 euro there is no correlation between ratings and price.
(JEL Classification: C99)
Is There Convergence in National Alcohol Consumption Patterns? Evidence from a Compositional Time Series Approach
Terence C. Mills
Holmes and Anderson (2017a) introduce two extensive data sets on world alcohol consump- tion and expenditure and with them investigate, among other things, the possible convergence of national alcohol consumption patterns using wine, beer, and spirit shares. Such share data define a composition, on which conventional statistical analysis using covariances and corre- lations is invalid. This note reanalyses the data using techniques appropriate for a composition and introduces a statistic that can validly track the variation in national shares around the global mean through time. This variability statistic shows that such convergence of national alcohol patterns has clearly taken place over the period 1961 to 2014 and thus confirms Holmes and Anderson’s findings using a valid statistical approach.
(JEL Classifications: C18, D12, L66)
KYM ANDERSON and VICENTE PINILLA (eds.)
Wine Globalization: A New Comparative History
Reviewed by Victor Ginsburgh
Pages 99 – 105
RUDI GOLDMAN (Director/Producer)
Burgundy: People with a Passion for Wine
Reviewed by Robert N. Stavins
Pages 105 – 108
JENNIFER SEGAL (ed.)
Reds, Whites & Varsity Blues: 65 Years of the Oxford & Cambridge Blind Wine-Tasting Competition
Reviewed by Richard E. Quandt
Pages 108 – 111
ANDREW W. M. SMITH
The Winegrowers of the Languedoc and Modern France
Reviewed by Zachary Nowak
Pages 111 – 113
The Wines of India: A Concise Guide
Reviewed by Rajeev Dehejia
Pages 113 – 115