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JWE Volume 16 | 2021 | No. 1

Journal of Wine Economics Volume 16 | 2021 | No. 1

Introduction to the Issue

Karl Storchmann
Pages: 1-3
Full Text PDF
Introduction

This issue of the Journal of Wine Economics opens with “Brettanomics I: The Cost of Brettanomyces in California Wine Production” by Julian Alston, Torey Arvik, Jarrett Hart, and James Lapsley (Alston et al., 2021). The authors explore the various costs induced by the yeast Brettanomyces bruxellensis, short Brett, on red wine. While some winemakers and consumers may tolerate (and may even like) low levels of Brett, it is generally deemed a quality defect, in particular in premium wines.

Drawing on data of three wineries in California, the authors find a trade-off between the cost associated with preventing the risk of Brett infections on the one hand and treatment of infected wines and lost value from wines being downgraded to lower-valued blends on the other hand.

Further, a Brett survey among wine industry professionals from different regions, including from abroad, shows that all respondents most commonly report some Brett-induced negative quality effects; however, some also see benefits. Within the sample, “respondents from California—particularly Sonoma—are more likely than respondents from other regions to find an improvement in quality owing to Brett” (p. XX). While all respondents from different parts of the United States control Brett, respondents from outside of California are more likely to pursue a more rigorous anti-Brett course.

In “Merging One’s Way to the Top: AB Inbev v. Heineken,” Minh Phuong Doan and Piet Sercu examine and compare the effects of AB Inbev’s and Heineken’s take- overs (Doan and Sercu, 2021). While AB Inbev SA has become the world’s largest brewing group by far, critics claim it overpaid for its acquisitions and overdid the leveraging and subsequent cost-cutting. In contrast, the industry’s number two, Heineken, has not attracted similar criticism. The authors employ an event-study methodology to analyze whether AB Inbev overpaid.

Analyzing monthly data shows that AB Inbev takeover announcements caused a 1.3–2.5 percent price drop in the market. However, the devaluations were reversed and offset about one month later. For Heineken, similar patterns occurred but with a shorter reversal time of only one week. “Such V-reactions may actually reflect a temporary rise in uncertainty rather than overpaying” (p. 32).

In the third paper of this issue, Jackson Barth, Duwani Katumullage, Chenyu Yang, and Jing Cao examine the “Classification of Wines Using Principal

Component Analysis” (Barth et al., 2021). The authors want to produce an efficient classifier to shed light on the important features of wines in the classification. They draw on a dataset of 178 wines with various chemical measurements (alcohol, malic acid, ash levels, alkalinity of ash, magnesium levels, total phenols, flavonoids phenols, non-flavonoid phenols, proanthocyanins, color intensity, hue, OD280/ OD315, and proline) made from the varieties Nebbiolo, Grignolino, and Barbera. They employ principal component analysis (PCA) in the k-nearest neighbor (kNN) classification to deal with multicollinearity issues among the explanatory var- iables. PCA can identify the underlying dominant features and provide a more suc- cinct and straightforward summary over the correlated covariates. The study suggests that a combination of kNN and PCA yields a simpler and more interpret- able classifier than kNN based on all 13 variables. “Our final classifier is based on only two principal components, which can be interpreted as strength of taste and level of alcohol and fermentation in wines, respectively” (p. 56).

Ursula Landazuri-Tveteraas, Frank Asche, and Hans-Martin Straume analyze the “Dynamics of Buyer-Seller Relations in Norwegian Wine Imports” (Landazuri- Tveteraas, Asche, and Straume, 2021). Drawing on specific Norwegian wine import- ing companies and their foreign partners, the authors analyze how the duration of firm-to-firm trade relationships are affected by different factors in an 11-year period stretching from 2004 to 2014. The study finds that most trade relationships are short-lived, that is, more than 75% of trade relationships end after less than two years. In addition, the authors’ findings suggest a positive relationship between wine price and trade partnership durations. “Deeper firm-to-firm trade rela- tionships for more exclusive wines are likely due to higher search costs for high- quality products” (p. 83).

In the last paper of this issue, entitled “Do Whisky Investors Read the Bible? The Effect of Expert Ratings on the Vintage Single Malt Secondary Market,” David Moroz and Bruno Pecchioli find that quality scores of Jim Murray’s Whisky Bible are not powerful price predictors for whiskey ask prices (Moroz and Pecchioli, 2021). Their findings are similar to those in the wine literature (e.g., Ashenfelter and Jones, 2013) “in the sense that expert ratings are not efficient in explaining the price and can be improved. We show that distillery and bottler name, as a proxy for their respective reputations, are more accurate than ratings” (p. 99).

Karl Storchmann New York University

References

Alston, J., Arvik, T., Hart, J., and Lapsley, J. (2021). Brettanomics I: The cost of Brettanomyces in California wine production. Journal of Wine Economics, 16(1), 4–31.

Ashenfelter, O., and Jones, G. (2013). The demand for expert opinion: Bordeaux wine. Journal of Wine Economics, 8(3), 285–293.

Barth, J., Katumullage, D., Yang, C., and Cao, J. (2021). Classification of wines using princi- pal component analysis. Journal of Wine Economics, 16(1), 56–67.

Doan, M. P., and Sercu, P. (2021). Merging one’s way to the top: AB Inbev v. Heineken. Journal of Wine Economics, 16(1), 32–55.

Landazuri-Tveteraas, U., Asche, F., and Straume, H.-M. (2021). Dynamics of buyer-seller relations in Norwegian wine imports. Journal of Wine Economics, 16(1), 68–85.

Moroz, D., and Pecchioli, B. (2021). Do whisky investors read the Bible? The effect of expert ratings on the vintage single malt secondary market. Journal of Wine Economics, 16(1), 86–101.

Brettanomics I: The Cost of Brettanomyces in California Wine Production

Julian M. Alston, Torey Arvik, Jarrett Hart & James T. Lapsley
Pages: 4-31
Full Text PDF
Abstract

The yeast, Brettanomyces bruxellensis (Brett) is a significant cause of quality defects associated with red wine spoilage. At least some wine producers spend significant resources to prevent, detect, and mitigate damage from Brett, and many express concern about it, but some producers and consumers say they like it in small doses. Brett damage is especially of concern in premium red wine and has become more of a concern to producers in recent years as consumers have become better informed about it. We combine information from diverse sources to develop an initial understanding of the economics of Brettanomyces and management practices to mitigate its consequences. An analysis of detailed confidential data from three wineries in California reveals that at least some wineries are incurring signifi- cant costs to reduce the risk of infection with Brettanomyces. Some other wineries that opt not to spend so much on prevention are incurring higher costs in treating infected wines and in lost value from wines being downgraded to lower-valued blends. Results from an online survey of industry participants reinforce the analysis of the detailed data from the three wineries and suggest that the findings may be indicative of conditions more generally across the industry.

Merging One’s Way to the Top-AB Inbev versus Heineken

Minh Phuong Doan & Piet Sercu
Pages: 32-55
Abstract

Leuven’s Den Hoorn brewery, now AB Inbev SA, has become the world’s largest brewing group by far, but critics say the company overpaid for its acquisitions. In this article, we study typical stock market reactions to the many takeover announcements by AB Inbev and the industry’s runner-up, Heineken. Unlike Heineken’s, the market leader’s takeover announcements were met by, on average, a –2% price reaction in the stock market in the announcement month, but most of that is already undone in the next month. For Heineken, the same pattern shows up, only faster: the V-shaped reaction takes a few weeks rather than a few months. Such V-reactions may actually reflect a temporary rise in uncertainty rather than overpaying. The finding that reactions are reversed and heterogeneous across firms, raises issues of interpretation and optimal test design of event studies.

Classification of Wines Using Principal Component Analysis

Jackson Barth, Duwani Katumullage, Chenyu Yang & Jing Cao
Pages: 56-67
Abstract

Classification of wines with a large number of correlated covariates may lead to classification results that are difficult to interpret. In this study, we use a publicly available dataset on wines from three known cultivars, where there are 13 highly correlated variables measuring chemical compounds of wines. The goal is to produce an efficient classifier with straightforward inter- pretation to shed light on the important features of wines in the classification. To achieve the goal, we incorporate principal component analysis (PCA) in the k-nearest neighbor (kNN) classification to deal with the serious multicollinearity among the explanatory variables. PCA can identify the underlying dominant features and provide a more succinct and straight- forward summary over the correlated covariates. The study shows that kNN combined with PCA yields a much simpler and interpretable classifier that has comparable performance with kNN based on all the 13 variables. The appropriate number of principal components is chosen to strike a balance between predictive accuracy and simplicity of interpretation. Our final classifier is based on only two principal components, which can be interpreted as the strength of taste and level of alcohol and fermentation in wines, respectively.

Dynamics of Buyer-Seller Relations in Norwegian Wine Imports

Ursula Landazuri-Tveteraas, Frank Asche & Hans-Martin Straume
Pages: 68-85
Abstract

As for all traded products, aggregated wine imports build on numerous trades at the firm level. To ensure consumers access to a variety of wines with different qualities, importers need to connect to different wine exporters. Some of these relationships will last for a long time, while the duration of others may be short. In this article, we employ transaction-level data to analyze the duration of trade relationships in wine imports to Norway from 2004 to 2014. We find that most relationships are short-lived, as more than 75% of trade relationships end after less than two years. Furthermore, we find that higher-quality wines, as indicated by the import price, increase trade duration. Deeper firm-to-firm trade relationships for more exclusive wines are likely due to higher search costs for high-quality products. The results also show that the size of the initial trade between the partners, or degree of commitment, is a positive determinant for persistent relationships.

Do Whisky Investors Read the Bible? The Effect of Expert Ratings on the Vintage Single Malt Secondary Market

David Moroz & Bruno Pecchioli
Pages: 86-101
Abstract

This article aims to estimate the effect of expert assessments on the prices for single malt Scotch whiskies on the investment market. Our results obtained using an original dataset combining data from Jim Murray’s Whisky Bible and a web trading platform specializing in whisky investment show that the quality rating is not a powerful predictor of investor ask prices, especially when controlling for distillery and bottler reputation. This finding suggests that although the Murray score may embed information of use to unsophisticated investors, its effect on price can be outperformed by a detailed knowledge of the whisky industry.

Book & Film Reviews

Passions: The Wines and Travels of Thomas Jefferson

By: James M. Gabler
Reviewer: Robert N. Stavins
Pages: 102-104
Full Text PDF
Book Review

Having only recently read Ron Chernow’s excellent biographies of Alexander Hamilton (Chernow, 2004), George Washington (Chernow, 2010), and Ulysses S. Grant (Chernow, 2017), I was eager to read a biography of Hamilton’s great political oppo- nent, George Washington’s talented Secretary of State, and—of course—the third President of the United States, Thomas Jefferson. Instead, I “changed it up,” as my son would say, by reading this work by James Gabler that promised from its title to combine my armchair fascination with American history and my abiding interest and love of fine wine.

The book lives up to its title, as it provides what may be a nearly exhaustive (but sometimes exhausting) encyclopedic compilation of Jefferson’s travels and wines. Apparently, seven years were required for Gabler’s research and the writing, and it shows. The book draws on what I assume to be abundant original research and offers what must be the most complete and authoritative cataloguing of the wines Jefferson enjoyed (or not) from before the Revolutionary War, through Jefferson’s

time in Paris as ambassador, including extended travels to vineyards in France, Italy, and Germany, in the White House as President, and—of course—at his beloved Monticello.

Thus, the book can function as an excellent reference—presumably for someone who wants to check on Jefferson’s travels in this year or that, the wines he was trying at the time, and the details of his transport, accommodations, conversations, and meals. Hmm, I wonder, in April of 1787, where did Jefferson visit, how long did he stay there, where did he sleep, and what wine did he drink? OK, on page 97—we learn that Jefferson spent two days in Turin at the Hotel d’Angleterre, and drank for the first time Nebiule, made from the precursor of today’s Nebbiolo grape.

So, this is a remarkable reference, and the book’s reasonable cost may be justified by just two (of the five) appendices: one being a compilation of Jefferson’s favorite wines that are “available today,” that is, in their modern incarnations; and the other an inventory of Jefferson’s White House wine cellar with detailed annotations. But even a great reference work is not necessarily a book I can recommend trying to read from start to finish (unless you have committed to write a review, of course). In too many of the book’s 16 chapters, I felt like I was reading notes prepared for me by a very careful research assistant—from which I would then have to prepare a first draft of a chapter or article. Indeed, what I would love to read would be a long New Yorker article by Mr. Gabler summarizing some highlights of these 300+ pages.

For me, such highlights would include descriptions of dinners, dinner companions, cuisine, wine, and conversations at Jefferson’s Paris residence on the Champs- Elysées, at the White House, and at Monticello. Likewise, it was fun to read excerpts from letters in which Jefferson gave advice about which wines to buy to three Presidents: Washington, Madison, and Monroe.

Yes, Jefferson’s favorites from Bordeaux included Château Margaux, Haut-Brion, Lafite, and Latour, which I was surprised to learn were called “First Growths” even in 1784, fully 70 years before Napoleon III’s 1855 classification. But Jefferson was not the ultimate wine snob, and purchased and drank a range of slightly lesser Bordeaux, including Gruard-Larose, Leoville-Las-Cases, Leoville-Poyferre, Leoville-Barton, Calon-Segur, Pontet-Canet, and—of course—from Sauternes, Château Yquem, which I learned was a very different wine in Jefferson’s day, 60 years before infection with botrytis cinerea made d’Yquem the remarkable Sauternes it is today. Beyond Bordeaux, wines of roughly similar pedigree were Jefferson’s favorites in Burgundy, the northern and southern Rhone, and elsewhere on the Continent.

Jefferson enjoyed a long retirement from the Presidency at his beloved Monticello from age 66 until his passing at 83 years of age. Those years included some marginal involvement in the political world, but mainly via letters to his successors pressing for some favored policy. Just two years into his retirement, in 1811, Jefferson abandoned his previous view of international trade policy, which was essentially based on the

theory of absolute advantage of Smith (1776), and came to favor instead a somewhat isolationist policy, even more distant from Ricardo’s theory of comparative advan- tage (Ricardo, 1817), which had not yet appeared, let alone diffused. At a time of European wars, this meant—remarkably—that for a time, Jefferson favored wines from Maryland, which he claimed to be “of the quality of the best Burgundy” (p. 215).

Not long after Jefferson sent a long letter to President Monroe, shortly after his inauguration, advising the new President of the wines he should add to the White House wine cellar, Jefferson became an advocate for public policies that would be favorable to wine drinkers like himself. Interestingly, he did so in ways that would be perfectly familiar to today’s lobbyists. He argued in a letter to the new Secretary of the Treasury against a luxury tax on wine then being considered by Congress: “I think it is a great error to consider a heavy tax on wines as a tax on luxury. On the contrary, it is a tax on the health of our citizens” because it would reduce wine consumption and would be “in effect a condemnation of all the middling and lower conditions of society to the poison of whiskey …” (p. 224).

To the end, Thomas Jefferson was a remarkable man—statesman, diplomat, architect, inventor, farmer, viticulturalist, and passionate oenophile. In regard to Jefferson’s reputation as a “Renaissance man,” my favorite quote in the book is not from Jefferson’s many letters but rather is a quote from another President some 150 years after Jefferson left office. At a White House dinner on April 29, 1962, honoring Nobel laureates, President John F. Kennedy told the group, “I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered together at the White House, with the possible exception of when Thomas Jefferson dined alone” (Kennedy, 1962).

References

Chernow, R. (2004). Alexander Hamilton. New York: Penguin Group.
Chernow, R. (2010). Washington: A Life. New York: Penguin Group.
Chernow, R. (2017). Grant. New York: Penguin Group.
Kennedy, J. F. (1962). “Remarks at a Dinner Honoring Nobel Prize Winners of the Western

Hemisphere,” 29 April. Published by Gerhard Peters and John T. Woolley, eds.,

American Presidency Project. Santa Barbara, CA: University of California Press. Ricardo, D. (1817). On the Principles of Political Economy and Taxation. London:

John Murray, Albemarle-Street.
Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London:

W. Strahan and T. Cadell.

Which Winegrape Varieties are Grown Where? A Global Empirical Picture

By: Kym Anderson & Signe Nelgen
Reviewer: José F. Vouillamoz
Pages: 105-106
Full Text PDF
Book Review

Free eBook downloadable from https://www.adelaide.edu.au/press/titles/winegrapes

I wish we had Which Winegrape Varieties are Grown Where? on hand when Jancis Robinson MW, Julia Harding MW, and I published the reference book Wine Grapes (Robinson, Harding, and Vouillamoz, 2012). It would have saved us from cross-checking multiple sources and from contacting each and every country in order to obtain updated information on the bearing areas for each of the 1,368 grape varieties in our book. One year after our publication, Kym Anderson and Nanda R. Aryal opportunely provided comprehensive statistics on the wine grape varieties of the world in the first edition of Which Winegrape Varieties are Grown Where? We subsequently exchanged a lot of information among authors, and Kym most affectuously “acronymized” our book RHV, based on our initials.

For the revised edition of Which Winegrape Varieties are Grown Where?, Kym Anderson and Signe Nelgen have done a tremendous amount of additional research to put together statistical data for 1,705 varieties from 53 countries. In a constantly changing wine world, it is fascinating to compare data from 2000, 2010, and 2016, illustrating the evolution of what is called “encépagement” in French, which can be somehow translated into “vine populations.”

As a strong advocate for “vinodiversity,” I am fascinated to delve into the Varietal Intensity Indexes that indicate the importance of a variety in a region compared with the rest of the world. I am pleased to see that these indexes have the advantage of highlighting obscure indigenous or limited new PIWI grape varieties. On the oppo- site, the revised edition offers new features like indexes of internationalization of varieties, showing how many non-native varieties are cultivated in each region.

Climate change has become a hot topic—I am thrilled to see in the revised edition the addition of key climate indicators for each region, thus making it quite useful to know which grape varieties can be grown in a cool, temperate, warm, or hot climate.

The revised edition of Which Winegrape Varieties are Grown Where? is an almost infinite source of fascinating data on the past, present, and future of the wine world from a statistical point of view. And, the icing on the cake, believe it or not, it is free!

Congratulations to Kym and Signe for this groundbreaking compendium!

José F. Vouillamoz
josevouillamoz.com
jose.vouillamoz@gmail.com

doi:10.1017/jwe.2021.3

The Goode Guide to Wine-A Manifesto of Sorts

By: Jamie Goode
Reviewer: Neal D. Hulkower
Pages: 106-108
Full Text PDF
Book Review

Think of Goode’s fifth book as an assortment of short one-sided conversations on various wine-related topics. As such, this small volume, measuring 4 by 6 inches (10 by 15 cms) and containing fewer than 50,000 words, is a radical departure from his four previous books, and therein lies the challenge for those accustomed to the good doctor’s more focused and structured writing. His intended audience is “a broad spec- trum of readers, including interested consumers and those in the wine trade” (p. xi). He states that the first half is for the wine drinker and the rest is for the industry. But it is not until the last paragraph that Goode presents his reason for this free-flowing offer- ing: “It’s enough to say that wine is worthwhile, complex, and repays attention. It is special. We need to cling to the cultural richness that has its origin in a time and place, and celebrate this fabulous gift. That’s why I wrote this book” (p. 228).

By virtue of his decades as a “wine communicator,” as he prefers to be called, Goode has gained gravitas and earned the right to share his perspectives. The guide is “an attempt to gather together some of my thoughts about wine, in a series of short, targeted chapters” (p. ix) he explains in the Preface. “My approach to wine is a bit different, and I think it is unique… I was trained as a scientist, but I’m an artist at heart” (p. x), he emphasizes. Unlike the more left-brained I Taste Red and Flawless, which are important contributions to our understanding of neuro- enology and wine faults, respectively, this collection of musings emanates mostly from his right-hemisphere. The tone is frequently more emotional than educational, although there is at least one instance when he lets loose with technical terminology. Following the Preface are 55 2- to 9-page chapters in no obvious order or intercon- nection with titles like “Some wines are just wine,” “Framing: how words can get in the way,” and “Beer is better than wine.” A three-page, two-column index is included.

Goode accepts the fact that his views on wine may not be widely held. “I don’t expect everyone to agree” (p. xi), he acknowledges. Indeed, it did not take long for me to take issue. Chapter 1, “The heart of authenticity,” contains the assertion “…there is something unique about wine in that it is a product of a particular time and place…” (p. 1). While I certainly regard wine as a distinctive beverage, it is not for the reason Goode states. These days, coffee, tea, whiskies, and even canna- bis are sourced from specially designed sites and can be vintage-dated. Wine’s uniqueness stems from much more than the elusive notion of terroir that Goode

fully embraces. It is a product with a history going back to biblical times and a pres- ence and cultural impact across most of the world. It commands religious-like ven- eration like nothing else borne from the earth.

Chapter 2, “The skill of winegrowing,” encourages the use of the term “wine- grower” in place of winemaker. While this is fine if viticulture and oenology are prac- ticed by a single individual, but what if these responsibilities are divided, as is frequently the case?

The scientist makes a rare appearance in Chapter 19, “We are not programmed to like certain wines” (pp. 75–80). Dr. Goode presents a terse but technical analysis of the biological basis for flavor preferences peppered with chemical and genetic nomenclature.

In Chapter 20, “Scores can be useful, but are mostly stupid” (pp. 81–85), Goode rails against scores and tasting notes, which he calls horrible, yet admits to using both. “We experience wine, and then, because of the need to communicate, we have to translate these experiences into words,” he confesses. I like his suggestion to use metaphors to describe a wine, which could at least convey the emotional impact on the taster, rather than trying to dissect and then articulate its flavor. On the other hand, his reason for scoring wines, “because everyone else does, and I want my readers to see quickly how well I liked the wine” (p. 82), is insufficiently convincing, as even he admits he is “deeply uneasy with this practice” (p. 82).

One of Goode’s most important observations is in Chapter 28, “A mystical trans- formation” (pp. 117–121), which emphasizes the importance of microbes in making wine. “Terroir is latent; it’s the microbial activity that unfurls it and makes it a reality” (p. 118), Goode maintains in a noteworthy aphorism.

On the other hand, some chapter ledes, such as the one for Chapter 44, “Stop trying so hard and just be yourself” (pp. 184–186), try too hard to set the stage for the point he is about to make. Here Goode shares his experience buying a basic used car which he does not “pimp up” as a metaphor for not adjusting wines to try to make them great.

Chapter 37, “Segment or be damned” (pp. 149–152), begins with the ironic proc- lamation, given the lack of discernable organization in the book, “Many discussions about wine, the wine market, and ‘consumers’ are formless” (p. 149). Then Goode goes on to highlight the obvious: “There’s a big gap between the commodity segment and the fine wine/wine geek segment…with some wine geeks changing their purchasing behavior depending on occasion…” (p. 151).

Chapter 41, “Lead with your best” (pp. 167–169), contains an interesting juxtapo- sition regarding cheap wines of yore, like Chianti: “…they weren’t very tasty. It’s what the market wanted, though…” (p. 167). This begs the question: What, then, was the attraction? Surely it was more than the straw covered fiasco, many of which found a second life as a candle holder.

Goode offers a compelling defense of wine journalism in Chapter 54, “The impor- tance of stories” (pp. 220–224). “To suggest that the merit of a wine lies in how much you ‘enjoy’ the flavor, or how much hedonic appeal it has, is nonsense,” he concludes (p. 223). Instead, he suggests that the fact that stories wine journalists tell influence consumer sales of specific wines to confer a status and impose a responsibility on the profession.

Goode is obviously unafraid to stake positions on all vinous matters. By virtue of his background, his opinions are well informed and, hence, matter. The scope of the issues he addresses range from the obvious to the significant. So, whether a reader might rate a particular chapter bad or good will depend on his or her level of knowl- edge about wine and the degree of commitment to the industry and culture that have risen up around it. For me? Though I disagree with some of the opinions and with certain emphases and expositions, when it was good, it was very, very Goode.

Neal D. Hulkower
McMinnville, OR
nhulkower@yahoo.com

doi:10.1017/jwe.2021.4

Wine in Austria. The History

By: Willi Klinger & Karl Vocelka
Reviewer: Kevin D. Goldberg
Pages: 108-111
Full Text PDF
Book Review

Wine is intensely national and regional. Winegrowers and others in the trade regu- larly interact with state and local actors, from those who enforce the national wine law to the members of the village cooperative. Wine scholars have normalized this dualism by treating wine as a national or regional subject (say, e.g., a study on Italian wine, or a book about the region of Champagne). While approaching wine through a national or regional lens is organizationally satisfactory, recent scholar- ship has called out the limitations of both approaches, suggesting instead that a global lens is best suited to portray a trade that is, if nothing else, international in nature. This globalist critique of the dualist status quo has been convincing, with the national lens most prone to insufficient generalizations.

Enter Wine in Austria: The History. The national paradigm, for all its faults, has found its redeemer. Before embarking on a review of the book, which includes some minor criticisms, I want to make clear upfront my opinion that this book is a mas- terpiece. In fact, in almost 20 years of reading academic wine publications, I would consider this herculean effort to be the most ambitious, courageous, and interesting that I have encountered. Its 500 pages (including notes) of text from more than 40 contributors are of the highest pedigree, while its color images, luxury binding, and producer-bio inserts (more on these later) make this book irresistibly unique.

The origins of the book date back to 2006 when Willi Klinger was preparing to take over as CEO of the Austrian Wine Marketing Board (AWMB). Almost 15 years in the making, Klinger’s brainchild finally saw the light of day at the AWMB’s 2019 “Wine Summit,” an annual press event for the Austrian wine trade. Klinger’s quality-oriented marketing strategy necessitated strong academic partners to undertake the research required for the book. Klinger found such partners in Karl and Michaela Vocelka. Karl Vocelka, now retired, had served as Chair of the Institute of History at the University of Vienna, where he developed into a leading expert on Habsburg and Austrian history. Michaela Vocelka worked as the Chief Archivist and Head of Academic Research at the Simon Wiesenthal Archive/Documentation Center in Austria.

The bulk of the book consists of short but thoroughly researched essays on a wide variety of topics. Although most essays are narrow enough in their focus to remain coherent, it is clear that the broad scope of topics presented a challenge to the book’s organization. The result is a semi-arbitrary breakdown of the almost 500 pages into 5 general chapters, each of which is further divided into subsections that contain the authored essays. Describing each essay would turn this review into a full-length book of its own, so I will take the liberty here of summarizing each of the five chapters while only selectively addressing certain essays. It is worth noting that the editors’ intention was not to make a sustained argument about Austrian wine but rather produce a comprehensive account of the history of Austrian wine that can serve as a catalyst for further studies (the book’s subtitle confidently declares that this is the history of Austrian wine, not a history).

Chapter 1, “Environment and Nature,” brings together academic scientists and viticultural practitioners to address soils, climate, vines, and wine geography. For economists and historians, this chapter may be the most foreign, yet also, perhaps, the most fascinating. Dozens of images of rock strata animate relatively dense (for the non-specialist) text about loess, intramontane basins, and stratigraphic super units. The authors use colorful Huglin Index maps to show the warming of Austrian wine regions and to support the argument that winegrowers will have to navigate this rapid warming by adapting cultivation techniques. Ferdinand Regner’s contribution on autochthonous grape varieties marries ampelographic images to historical and ancestral descriptions of Austria’s major wine grapes. Although the last few decades have overseen enormous growth in viticultural know-how, there are still uncertainties and unanswered questions about grape par- entage and origins. In a contribution to wine geography, the reader learns that the Austrian Wine Act of 1929 was the pivot point when formerly unregulated geograph- ical designations were formalized into national law. This final section includes a number of pyramidal “systems of origin” charts and definitions for important legal terms (e.g., “Ried” and “Weinbaugebiet”). The book’s drawn-out incubation period unwittingly allowed for explanations of recent legal changes to be included in this chapter, including the 2016 creation of the Austrian Sekt pyramid.

Chapter 2, “Winegrowing through the Ages,” offers cursory introductions to wine during prehistory, Roman times, and the Middle Ages, and much larger sections on

wine and viticulture in the “modern era.” Michaela and Karl Vocelka’s section on the Middle Ages lives up to the editors’ desire for this book to serve as a thought starter for future research, as the section manages to cast a wide net geographically, climatically, religiously, socially, and culturally. Similarly, Erich Landsteiner’s essay, Cultivation, Operation and Organization in Austrian Viticulture, provides a fantastic introduction to field techniques, land tenure regimes, labor structures, and even top- onymic curiosities. In another essay authored by the Vocelkas, we are steered toward thinking about the challenges posed by the shifting borders of the crumbling, multi- ethnic Habsburg Empire. One of the intriguing figures during this tumultuous time was Sándor Wolf, heir to wine wholesaler Leopold Wolf’s Söhne in Eisenstadt (Burgenland). Another of the book’s highlights is Daniel Deckers’s (Frankfurter Allgemeine Zeitung) originally researched essay on Friedrich Zweigelt, former Director of the School of Viticulture and Horticulture at Klosterneuburg and chief creator of his namesake grape varietal, a cross of St. Laurent and Blaufränkisch, now Austria’s most widespread in terms of total plantings. Deckers delves into Zweigelt’s ideological and practical ties to Nazism, simultaneously por- traying Zweigelt as a dyed-in-the-wool ideologue and an opportunistic and self- serving functionary. The chapter closes with a too-brief essay on the notorious 1980s Austrian wine scandal (six pages) and an even shorter essay on the conse- quences of accession to the European Union for Austrian viticulture (four pages).

Chapter 3, “Production and Consumption,” is subdivided into three themes—pro- duction, sales/marketing, and consumption, each of which is supported by multiple essays. Roman Sandgruber kicks off the chapter with an interesting if somewhat unwieldy essay that traces wine production and consumption patterns over time. We learn of wine’s relative decline throughout the 18th and 19th centuries vis-à- vis beer’s upturn in the same period. Sandgruber posits several reasons for this, including the high cost of production, the decline of export markets, and the intellec- tual class’s gravitation towards beer in the 19th century. Informative essays by Peter Moser and Michael Moosbrugger introduce the reader to transformations in the field and cellar, respectively, including Lens Moser’s high training system for vine plantings and the various treatments and measures taken between fermentation and bottling (known as “schooling”). The current Zeitgeist for “non-intervention” is a far cry from the heavy-handed cellar approaches of the mid-20th century. The “Production” subsection of Chapter 3 also includes essays on organic, biodynamic, and sustainable winegrowing. Here we learn about Rudolf Steiner, the controversial pioneer of biodynamic agriculture.

Austria has had an out-sized impact on contemporary global wine culture, from the GrüVe marketing campaign of the 1980s and 1990s to the Tyrolean-born “super- star” sommelier Aldo Sohm. A series of essays on sales and marketing provides a fascinating glimpse into a notoriously difficult task—selling Austrian wine. Reproductions of advertisements add color and a visual component and make this one of the more fun sections of the book. Of course, one can argue that alcohol advertising has deleterious effects on consumers prone to addiction. Thus, I

commend the authors for including a section on problematic consumption and dependency and for allocating space to a description of the Anton Proksch Institute, one of Europe’s premier addiction treatment centers.

Chapter 4, “People and Wine,” brings the reader into the world of wine culture, including religious practices, folk customs, and architecture. Hannes Etzlstorfer’s essay on ancient and liturgical wine culture and another essay on the Jewish contri- bution to Austrian wine remind us how scholars use wine to examine or magnify larger social developments, including the cycle of privileges and bans levied on Austria’s Jewish population. Wine villages were also sites of “invented traditions.” Whether barrel sliding in Klosterneuburg, “grape cures” in Baden bei Wien, the swearing-in of “Hiata,” or grape-protectors before harvest, there was no shortage of such customs in the Austrian wine territories. Peter Rauscher and Barbara Thuswaldner’s essay on wine architecture is one of the more unique in the book. Although wine architecture is not uniform, the requirements of wine production necessitate certain features that architects try to creatively blend into a given land- scape. The Middle-Age farm and cobbled cellar lanes now split duty with modern aesthetic achievements, including Steven Holl’s “Loisium” in Langenlois, a hotel- spa-resort wine experience, and the F.X. Pichler Winery in Dürnstein, with its ambi- tious, wave-like aluminum facade.

Chapter 5, “Research, Teaching, Sommellerie,” also sheds light on today’s wine experience by delving into—in too short form—the effect of globalization on Austrian wine education and the growth of sommellerie, driven in part by AWMB’s commitment to popularizing Austrian wine.

Wine in Austria: The History, although decidedly national in its approach, embod- ies its own dualism; it is academic and accessible, beautiful and functional, compel- ling and a great work of reference. While it is certainly a book for academics who love Austrian wine, it is a treat for anybody interested in wine, academically or casually. Of particular interest are the two dozen or so half-page inserts that punctuate the book, each of which features an image and brief historical description of an Austrian wine estate or grower. Featured estates include Stift Klosterneuburg, Nikolaihof, Hirtzberger, Schloss Gobelsburg, Esterházy, and several others that wine consumers would be happy to encounter on store shelves.

Willi Klinger’s effort, along with that of his co-editors Karl and Michaela Vocelka, is a Gesamtkunstwerk in the truest sense of the word. Rigorous scholarship, zealous attention to editorial detail, an opulent aesthetic appeal, and eminent read- ability all factor into the total feel of the book, making it among the best wine books that I have ever read.

Kevin D. Goldberg
Savannah Country Day School
kgoldberg@savcds.org

doi:10.1017/jwe.2021.5

Wine Economics

By: Stefano Castriota
Reviewer: Kevin M. Visconti
Pages: 112-114
Full Text PDF
Book Review

When it comes to the study of the economics of wine, Stefano Castriota has compiled a comprehensive and interdisciplinary exploration of the world wine market and its social implications in his newly revised Wine Economics. Originally published in Italian, this recently released edition by The MIT Press investigates the production, distribution, and consumption of wine and the growing subfield of wine economics with a focus on English-speaking countries of the New World, particularly that found in the United States.

While academic in methodology, Castriota’s manuscript should find an extended readership across a wider and willing public as a heuristic for an increasingly com- plicated subject and crowded field. Drawing on an extensive review of literature from economic policy, management, finance, medicine and law, Wine Economics offers essential insights into the global wine market supported by extensive data sets and Castriota’s thorough research and analyses.

As mentioned in the Foreword by American Association of Wine Economists’ president Orley Ashenfelter, “Castriota has provided the reader with a look at the general nature of the subject of wine economics but with an eye to its applicability in matters of public policy.” To be sure, over the course of eight exploratory chapters, Castriota closely examines governmental regulation across world wine markets to unveil how industry directives impact trade associations, business organizations, and even influence the experiences and perceptions of wine consumers across social and international borders.

Starting with a historical perspective of world wine markets and concluding with a strategy to grow effective winemaking sectors and cultures across the globe, the book is divided into two segments: part one looks at mechanisms involved in the operation of the global wine arena while part two examines market regulation by public authorities.

In the initial chapter, Castriota explores production, consumption, and export in world wine markets, followed by a detailed explanation of the so-called “wine war” between New and Old World countries beginning with the “Paris judgment” of 1976 through the present day. With a litany of graphs, charts and statistics, and an exhaus- tive overview of the global wine market, this critical background could easily func- tion as a stand-alone article and serves as an important foundation for the remainder of the book and the promotion of his forthcoming policy arguments. Chapter Two exhibits an overview of wine consumption with an interesting and perhaps unex- pected concentration on alcohol abuse and negative health and social consequences that affect the quality and price of wine.

Chapters Three, Four, and Five turn to firm profitability, types of wine companies, and finance, respectively. Castriota fairly argues that wine market structure

determines competition and influences profitability by recruiting Porter’s Five Forces Model to evidence his assessment. He continues with an in-depth analysis of the many varied companies and strata that apprise the wine business and discusses organizational and institutional objectives that drive people in their work and con- tribute to local economies. Finally, to conclude part one of his book focusing on world wine market functioning, Castriota proffers detailed financial information and strategic guidance to hedge risk for expected return on investment of individual wine bottles and shares of wine companies listed on the stock exchange.

Chapter Six ushers in segment two of the book, measures taken by public author- ities to regulate the market and correct failures, by illustrating the concept of asym- metric information, which Castriota defines as “when traders do not have all the same (complete) information in a transaction that can give rise to two different sit- uations: adverse selection and moral hazard” (p. 163). Here, Castriota highlights possible solutions for these market failures and emphasizes the fundamental differ- ences between Old and New World wine sectors.

The penultimate chapter revisits the earlier theme of alcohol abuse and its conse- quences on drinkers and society at large. Drawing on medical literature, this section discusses economic and social externalities and subsequent policies and prevention campaigns adopted across countries due to the production and consumption of wine, including an international exploration of the prohibition of alcohol over the past century. Finally, Chapter Eight investigates the socioeconomic context and political and public intervention to shape the regulation of agricultural supply and market control by examining laws in Europe and the United States.

Ultimately, six economic policy conclusions are identified to survive the “wine war” outlined in Chapter One and discussed throughout the book: (1) quality of products, (2) changes to the tax system, (3) marketing and a clear wine classification system, (4) competition and support to small wineries, (5) economies of scale and competitive prices, and (6) promotion of the wine culture among consumers. Through acknowledgment and deliberate recognition of these variables, Castriota posits both Old World and New World wine companies can leverage their compet- itiveness to ensure the promotion of open and efficient wine markets that emphasize the protection of public health.

It takes frank determination and diligence to craft a tome such as Stefano Castriota’s 309-page Wine Economics; the level of research and advanced expertise that Castriota demonstrates through his substantial scholarship mark him as a leading authority in the field. Already a success with home audiences when published as Economie del Vino in his native Italy, this iteration of his work is an essential and immediate resource for any wine economics professional, scholar, or student. Rich in concrete qualitative detail and abundant quantitative evidence, Wine Economics aims to encourage the spread and study of the economics of wine. Indeed, through this meticulous and impressive offering, Stefano Castriota has provided the necessary material and knowledge for established members of the discipline as

well as newcomers to advance the subject, the reputation, and the world of wine economics.

Kevin M. Visconti
Columbia University
kv2305@columbia.edu

doi:10.1017/jwe.2021.6

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