Journal of Wine Economics
Volume 3 | 2008 | No. 2
An Examination of Judge Reliability at a Major
U.S. Wine Competition (FULL TEXT PDF)
Robert T. Hodgson
ABSTRACT | Pages 105-113Wine judge performance at a major wine competition has been analyzed from 2005 to 2008 using replicate samples. Each panel of four expert judges received a flight of 30 wines imbedded with triplicate samples poured from the same bottle. Between 65 and 70 judges were tested each year. About 10 percent of the judges were able to replicate their score within a single medal group. Another 10 percent, on occasion, scored the same wine Bronze to Gold. Judges tend to be more consistent in what they don’t like than what they do. An analysis of variance covering every panel over the study period indicates only about half of the panels presented awards based solely on wine quality. (JEL Classification: Q13, Q19)
Wine Quality, Wine Prices, and the Weather: Is Napa “Different”?
Carlos Ramirez
ABSTRACT | Pages 114-131This paper uses a large longitudinal database (nearly 6,000 observations) of all cabernet sauvignon wines rated by Wine Spectator from 1970 to 2004 in the Napa Valley region of California to investigate whether a quality–weather relationship and a price–weather relationship exist and, if so, whether they occur in a linear, quadratic, or log-linear fashion. The paper examines three different models of wine rating and wine prices to study the effect of weather variations. The results suggest that the weather affects both quality and wine prices, but the results are much stronger for prices than for ratings. A log-linear model can explain nearly 92 percent of the variation in wine prices, but only about 28 percent of the variation in wine ratings. (JEL Classification: C23, Q54)
The Agricultural and Food Trade in the First Globalization:
Spanish Table Wine Exports 1871 to 1935 – A Case Study
Vicente Pinilla and Raúl Serrano
ABSTRACT | Pages 132-148 The objective of the present study is to analyze the overall trajectory of Spanish table wine exports during the period 1871-1935 and provide convincing explanations of the pattern. Thus, we employ an approach that takes all of the possible explanatory factors into account, instead of adopting a narrower approach which focuses on a single principal factor. The methodology employed consists of using a gravity model to explain trade flows in Spanish table wine. Our results highlight the key role of trade policies in the determination of export possibilities and the difficulties derived from the export of products which are characterized by the low or non-existent change in demand when income changes. These results may shed a little more light on the determinants of trade in the first phase of globalization. (JEL Classification: F14, N73, N74, Q17)
Hedging Adverse Bioclimatic Conditions Employing a Short Condor Position
Donald Cyr, Martin Kusy and Anthony B. Shaw
ABSTRACT | Pages 149-171Weather derivatives are a relatively new form of financial security, providing firms with the ability to hedge the impact of weather related risks to their activities. Participants in the energy industry have employed standardized temperature contracts trading on organized exchanges since 1999, and the availability and use of non-standardized contracts designed for specialized weather related risks is growing dramatically. The primary goal of this paper is to consider the potential design and use of a weather contract to hedge the risks faced in viticulture as measured by bioclimatic indices. Specifically we examine the Winkler and Huglin bioclimatic indices over a 43 year period for the Niagara region of Ontario, Canada’s largest wine producing region, and identify a mixed jump diffusion stochastic process for cumulative growing season index values. We then employ Monte Carlo simulation to derive a range of benchmark prices for a “short condor” contract employing the Huglin index as the underlying variable. The results show that valuable hedging opportunities can be provided by such contracts. (JEL Classification: G13, G32, Q14, Q51, Q54)
Estimating the Demand for Wine Using Instrumental Variable Techniques
Steven S. Cuellar and Ryan Huffman
ABSTRACT | Pages 172-184The demand for wine is generally estimated on an aggregate level as a single commodity. However, as recent history shows us, the demand for wine not only varies considerably by varietal, but also by price point within each varietal. As a result, although estimates of the demand for wine may be beneficial to the wine industry as a whole, they provide little benefit to individual wine producers. Using scan data of purchases from US retail chain stores, this paper uses store keeping unit (sku) level data to overcome the limitations of prior research on the demand for wine by providing estimates for the demand for wine by varietal and price point. We also provide estimates of own price effects, income effects as well as cross price effects by color, varietal and price point. Problems of endogeneity inherent in demand estimation are corrected by utilizing a novel instrumental variable technique using grape prices as the instrument. (JEL Classification: C23, D12)
Shorter Papers
From Bayes to the Just Noticeable Difference to Effect Sizes: A Note to Understanding the Clinical and Statistical Significance of Oenologic Research Findings
Domenic V. Cicchetti
ABSTRACT | Pages 185-193The objectives of this paper are (1) to broaden the concept and importance of differentiating statistical significance from clinical or practical significance that was introduced in a recent oenologic application that appeared in this Journal (Cicchetti, 2007); (2) to highlight the major contribution of Economics to the clinical-statistical significance differentiation; (3) to provide oenologic researchers with the tools to accomplish this objective; and (4) to provide examples of oenologic applications using these biostatistical tools. Results indicate that the terms clinical significance, effect sizes, the just noticeable difference between stimuli, and the economic term marginal utility are conceptually related and when applied to the results of oenologic research, offer a richness of interpretation that levels of statistical significance alone cannot provide. (JEL Classification: C0, C1)
The Importance of Australian Corporate Brand and Grape Varietal Wines:
Hedonic Pricing in the British Columbia Wine Market
Richard Carew and Wojciech J. Florkowski
ABSTRACT | Pages 194-204A hedonic analysis is applied to a unique data set of Australian wines imported by the British Columbia Liquor Distribution Branch. The data included the important corporate red wine brands produced in Australia. Hedonic price functions are estimated for red Australian wines to show how price premia associated with the attributes of wine brands including the grape variety and alcohol content differ by corporate brands. Results show the positive effects on price of highly reputable brands, positive effect of grape variety Shiraz, and premia for alcohol content. (JEL Classification: D49, L15, L66, Q11)
Book & Film Reviews
Book Review
ALICE FEIRING
The Battle for Wine and Love or How I Saved the World From Parkerization
Reviewed by Stephen Chaikind
Pages 205-209
Book Review
BENJAMIN WALLACE
The Billionaire’s Vinegar: The Mystery of the World’s Most Expensive Bottle of Wine
Reviewed by Orley Ashenfelter
Pages 210-211
Book Review
TYLER COLMAN, WINE POLITICS
How Governments, Environmentalists, Mobsters and Critics Influence the Wines We Drink
Reviewed by Michael Veseth
Pages 212-213
Film Review
RANDALL MILLER (DIRECTOR)
Bottle Shock
Reviewed by Rob Valletta
Pages 214-216
Book Review
TADASHI AGI (writer) and SHU OKIMOTO (illustrator):
Kami no Shizuku: Les Gouttes de Dieu
Reviewed by Peter Musolf
Pages 217-222
Book Review
FRITZ ALLHOF (ED.)
Wine & Philosophy: A Symposium on Thinking and Drinking
Reviewed by Joshua Hall
Pages 223-225
Letters to the Editors
Robert T. Hodgson
On Rating Wines with Unequal Judges
Pages 226-227
James J. O’Donnell
2008 Wine Valuation Analysis
Page 207
Obituaries:
David Lett
Mark Miller
The Editors
Page 228
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