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JWE Volume 6 | 2011 | No. 1

Journal of Wine Economics Volume 6 | 2011 | No. 1

The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices

Robin Cross, Andrew J. Plantinga & Robert N. Stavins
Pages: 1-14
Full Text PDF
Abstract

We examine the value of terroir, which refers to the special characteristics of a place that impart unique qualities to the wine produced. We do this by conducting a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes, such as slope, aspect, elevation, and soil types, or designated appellations are more important determinants of price. We find that prices are strongly determined by sub-AVA appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, although the reality of terroir – as proxied for by locational attributes – is not significant.

Reconsidering the 1855 Bordeaux Classification of the Médoc and Graves using Wine Ratings from 1970–2005

Gary M. Thompson & Stephen A. Mutkoski
Pages: 15-36
Abstract

This paper examines ratings of Bordeaux wines from vintages spanning 1970 to 2005. We use ratings from three popular rating sources – Robert Parker (The Wine Advocate), Stephen Tanzer (International Wine Cellar), and Wine Spectator – to examine differences and consistencies in ratings. Our study is based on over 3,100 ratings for château/vintage/rater combinations for the “classified growths” as identified in the 1855 Classification. We developed a regression model with rating scores as the depending variable and independent variables for raters, vintages, châteaux and rater-vintage. This model explains 64.6% of the variation in rating scores. We identify the performance of individual châteaux and use our findings to propose an update to the 1885 classification. Based on the ratings we examined, more than half of the 61 classified growths are misclassified, with some châteaux moving as many as three tiers upward or downward compared to the historical classification. While we believe it is unlikely that the classification will be changed, we believe that our proposed classification update (and our rank-ordering of the châteaux, particularly in relation to price based orderings) can help guide wine purchase decisions of consumers and the restaurant industry.

Why is there a Home Bias? A Case Study of Wine

Richard Friberg, Robert W. Paterson & Andrew D. Richardson
Pages: 37-66
Abstract

Domestic products have a disproportionately high market share on many goods markets. We examine the contribution of preferences to such “home bias”, using detailed data on wine sales in New Hampshire (weekly sales by brand by store for one year). In counterfactual simulations, where we use the same set of products as currently available, the U.S. market share falls from 58 percent to 38 percent if all country-of-origin effects are set equal. Home bias on this market is not explained by higher marginal costs for imports or by lesser store coverage of imported brands. The evidence rather points to higher foreign fixed costs of entry, coupled with a preference for U.S. wines, as the main sources for the high domestic market share.

Alcohol Consumption and Liver Cirrhosis Mortality: New Evidence from a Panel Data Analysis for Sixteen European Countries

Jan Bentzen & Valdemar Smith
Pages: 67-82
Abstract

Empirical evidence gives support to a close association between liver cirrhosis mortality and the intake of alcohol. The present analysis draws on a panel data set for sixteen European countries from 1970–2006 where both alcohol consumption and liver cirrhosis seem best described as trend-stationary variables. Consequently, a flexible non-linear functional form with country fixed effects including linear trends is applied in the analysis. It is argued that fewer restrictions on the relationship between liver cirrhosis mortality and alcohol consumption are appropriate for empirical modeling. The conclusion is that the total level of alcohol consumption as well as the specific beverages – beer, wine and spirits – contribute to liver cirrhosis mortality, but the present study also reveals that addressing the question of panel unit roots directly and in this case subsequently applying a trend-stationary modeling methodology reduces the estimates of the impacts from alcohol consumption to liver cirrhosis. Finally, more restrictive alcohol policies seem to have influenced the country-specific development in cirrhosis mortality positively.

Wine in Your Knapsack?

Jon M. Conrad, Miguel I. Gómez &Alberto J. Lamadrid
Pages: 83-110
Abstract

We pose several Knapsack Problems (KPs) to select the optimal subset of wines subject to budget and quantity constraints. The first problem seeks the subset of wines, from a single cultivar (zinfandel) that maximizes the sum of ratings subject to a budget constraint. We modify this problem by adding an equality constraint on the number of bottles that must be chosen. The third problem seeks to maximize the sum of ratings from three different cultivars (cabernet sauvignon, pinot noir, and zinfandel) subject to a budget constraint and then a budget and minimum bottle constraints for each cultivar. The rating maximization problem may have multiple solutions. We also pose two expenditure minimization problems, subject to achieving the maximum sum of ratings. We extend the model by defining an integer choice problem, that allows multiple purchases of the same wine, and by accounting for possible nonlinearities between wine ratings and utilities. Applications of this model include procurement decisions for tastings, special events or building a personal wine cellar.

When Does the Price Affect the Taste? Results from a Wine Experiment

Johan Almenberg & Anna Dreber
Pages: 110-121
Abstract

We designed an experiment that examines how knowledge about the price of a good, and the time at which the information is received, affects how the good is experienced. The good in question was wine, and the price was either high or low. Our results suggest that hosts offering wine to guests can safely reveal the price: much is gained if the wine is expensive, and little is lost if it is cheap. Disclosing a high price before tasting the wine produces considerably higher ratings, although only from women. Disclosing a low price, by contrast, does not result in lower ratings. Our finding supports the notion that price not only serves to clear markets, it also influences expectations that in turn shape a consumer’s experience. In addition, our results suggest that men and women respond differently to attribute information concerning wine.

Book & Film Reviews

Garden State Wineries Guide: The Traveler’s Handbook to the Wineries and Vineyards of New Jersey

By: Bart Jackson
Reviewer: George M. Taber
Pages: 122-125
Full Text PDF
Book Review

The dust jacket for the first volume of Thomas Penney’s excellent book A History of Wine in America: From the Beginnings to Prohibition has a picture of a group of men and boys around a wine barrel pouring glasses of wine from unlabeled bottles. Several of the men wear period beards, moustaches and goatees. It’s a jovial group that looks as if they had just put in a hard day in the harvest. The caption on the back says they are “enjoying the sparkling wine for which the firm was noted.” The date given is 1906. The picture was taken at the Renault Winery in Egg Harbor City, New Jersey.

While much of the wine world thinks all American wine comes from California, Oregon, and Washington, it is now produced in every state in the union, including Alaska and North Dakota. That doesn’t mean Texas or Rhode Island wine is made from grapes grown in those states. Many wineries buy grapes, unfermented juice, or even finished wine from California and then simply finish the winemaking process, if necessary, and bottle it as their state’s wine. Shipping conditions have improved greatly since Dust Bowl days, when in Steinbeck’s Grapes of Wrath the California produce was destroyed during transport after ice melted.

Bart Jackson has now written a useful tourist’s guide to the wineries of New Jersey, which calls itself the Garden State but has a much less glamorous reputation based largely on visitors’ transient impressions from the New Jersey Turnpike. The state is more than a toll road, and it didn’t get its name for nothing. This is the birthplace of Campbell’s Soup because good and abundant tomatoes grow there. It’s also home to some of the best blueberries in the country. One of the first American planned communities was Vineland in southern New Jersey, which was started in 1861. Dr. Thomas Bramwell Welch lived there and founded Welch’s Fruit Juice Company with the goal of making a non-alcoholic wine.

According to Pinney, the first vineyards were planted in New Jersey just before the American Revolution. Inspired by monetary awards offered by the Philadelphia branch of the London Society for the Encouragement of the Arts, Manufacturers, and Commerce, farmers planted vineyards in the nearby province of New Jersey. Edward Antill put in his first French and Italian vines in 1764 near the present-day city of New Brunswick. Pinney says Antill later wrote the “first specifically American treatise on viticulture.” It was entitled, “An Essay on the Cultivation of the Vine, and the Making of Wine, Suited to the Different Climates of North-America.”

If truth were told, many of the wines made in the forty-seven states not named California, Washington, and Oregon are not very good. I have tasted many at wine competitions, but I didn’t sample many that I would buy. They are more interesting for their curiosity, and remind me of Dr. Johnson’s blatantly sexist remark about women preachers: “A woman’s preaching is like a dog’s walking on his hind legs. It is not done well; but you are surprised to find it done at all.” I find Idaho or Arizona wines interesting because they actually exist.

Having lived in New Jersey for twenty-six years, I have tasted the state’s wines over a long time and watched their development from mostly bad to sometimes interesting and even quite good. Wine is made in the state from the very bottom near Cape May, which is south of the Mason-Dixon line, to the far northwest, where the climate in winter resembles New England. Nature is kindest in the area known as the Outer Coastal Plain, which goes east to west from the Atlantic Ocean to near Philadelphia on the west and from Cape May in the south to Asbury Park. It’s now an official American Viticultural Area. Wine is also made in Warren Hills and Central Delaware Valley further north.

Many fruits grow well in the Outer Coastal Plain, and some farmers unfortunately make wine out of everything but grapes. Consumers will find lots of products made from blueberries and a host of other exotic ingredients. Those are frankly not very exciting and usually sweet. Too many winemakers are also using hybrid grapes such as Foch that can survive the winters. I personally don’t like them.

A few New Jersey wineries, though, are making outstanding wines. The problem is that there are not enough of them. Perhaps the best of the over achievers is Amalthea Cellars in Atco. Founder Louis Caracciolo, who has an Italian heritage and a scientific education, planted his first grapes in 1976. He also owns a house in France and is a serious student of that country’s wine technology. Amalthea’s Legend wines are blends of Cabernet Sauvignon, Merlot, and Cabernet Franc, that are admitted copies of great French reds: Chaˆ teau Palmer, Chaˆ teau Margaux, and Chaˆ teau Latour. They can hold their own with the best in the world and have done so in blind tastings.

Wine tourism is a vital part of the business plans for all the wineries not located in California, Oregon, and Washington. Major distributors won’t handle minor brands, so they have to survive thanks to cellar-door sales and the few local stores that will carry them. That’s why Bart Jackson’s book is important because it may help bring in some wine tourists. The Wine Appreciation Guild, a San Francisco company that has a long list of wine books, distributes the New Jersey guide. I hope this will be the first in a series about visiting wineries in other states.

My only critique is that the author is too much of a gentleman and doesn’t give candid recommendations for wineries to visit from the point of view of either the quality of the wines or wine tourism. By careful reading between the lines, a visitor gets hints, but I hope future editions of this book and other state guides will include a Michelin-star system that tells the tourist that a winery is very good, worth a detour, or merits a special trip.

George M. Taber
Wine Writer
Block Island, RI

Summer in a Glass: The Coming of Age of Winemaking in the Finger Lakes

By: Evan Dawson
Reviewer: Jacob R. Straus
Pages: 125-127
Full Text PDF
Book Review

Wine books generally focus on the author’s personal wine experiences (Lynch, 1990), a grape variety (Kliman, 2010), a winery (Weiss, 2005), a wine region (Kladstrup and Kladstrup, 2006), or an event (Taber, 2005). Alternatively wine books often discuss the history of wine (Pellechia, 2006) or wine’s role in a socio-cultural event (Kladstrup and Kladstrup, 2001). While books about any of these single topics can make for a good read, when an author is able to combine the best of all wine book genres into one volume the book becomes a must read.

In Summer in a Glass, Evan Dawson has blended all these forms of wine writing into an entertaining, humorous, educational, and heartbreaking tale of wines development in the Finger Lakes region of New York State. Dawson examines the Finger Lakes wine industry and highlights some of the most colorful and important figures that have shaped the region and pushed it toward making world-class vino. Not only does he tell a good story about a wine region he knows so well, but he makes the reader want to trek to see and taste Finger Lakes wine firsthand.

Each chapter in Summer in a Glass highlights different individual wineries and winemakers. Each chapter begins with a short back story on its main characters. These stories recount happy moments, heartbreak, and the risk that many winemakers and winery owners take to follow their dreams.

The book opens with the story of Johannes Reinhardt, who left his German winemaking family for the more open and experimental wine community in America. Reinhardt’s story is in some ways a typical immigrant story – he came to the United States to try something new, but he brought the old world with him. He makes German style Riesling in New York State.

Additionally, Reinhardt brought with him a cooperative attitude that is sometimes missing from winemaking in America. He is willing to breakdown the silos that can develop between competing wineries and is willing to assist his fellow winemakers. Because of his generous spirit, Reinhardt’s story is weaved throughout the tales of other Finger Lakes winemakers and the other winemakers do everything in their power to assist Reinhardt’s battle with immigration officials who continually deny him permanent status (p. 5).

While Reinhardt’s story is one of cooperation, the story of Tricia Renshaw, a single mother of two, who gave up her teaching job to pursue an interest in winemaking, is a story of risk and reward. Dawson recounts Renshaw’s decision to cold-call Peter Bell, winemaker at Fox Run Winery, and ask him if she could volunteer at the winery. Whereas, Renshaw had never made notes when tasting wine, Bell tested her with tasting a series of wine and making notes on the scents and flavors present in each glass, a task at which she excelled (p. 131).

Renshaw’s story is both idealistic and realistic. Many wine writers throw around fancy terms and flavors when describing wine. Tricia Renshaw represents a breakdown of the language barriers that often divide “regular folks” from wine snobs. She had a natural ability to detect flavors in wine and won herself a job by being honest about the smells and flavors. It is hard to imagine the meteoric rise Renshaw experienced in the Finger Lakes – from school teacher to assistant winemaker – occurring in virtually any other wine making region.

The final story, indicative of the spirit of the Finger Lakes and other small wine producing regions, is one of cooperation. While wineries certainly compete with each other, both for sales and accolades, some also cooperate in an attempt to make wine better throughout the region. The Finger Lakes, like many other East Coast regions, suffer from unpredictable weather that impacts the quality and types of grapes grown. In an effort to promote the image of Finger Lakes wines, Johannes Reinhardt brought together two other winemakers, Dave Whiting of Red Newt Wine Cellars and Peter Bell of Fox Run Winery, to collaborate on a blended wine called “Tierce.”

Tierce white, initially released in 2005, blended the best white wines from each winery. As the conclusion of the Summer in a Glass, Dawson recounts being invited to the blending sessions of a 2007 Tierce red. Each winemaker brought their best red wines from 2007 and set about to meld them into a something special. Dawson recounts the process of tasting numerous blends until the perfect match was found. Perhaps Dawson’s most poignant recollection from this effort sums up the value that each winemaker placed on equality among wineries and making the best possible wine to represent the Finger Lakes. “They could easily have wrapped up the blending hours earlier, but no one in that room was going to waste the best harvest weather in a generation by settling for an inferior wine. A historic vintage does not mean that making great wine will be easy. It means, that, with focus, a good wine can become great” (p. 255).

These individual stories and the picture they paint of a close-knit and open community in the Finger Lakes wine world make Dawson’s tales irresistible. Where once the Finger Lakes was considered to be a backwater location for making wines, today it is at the cutting edge of up and coming wine regions that is known for world class Rieslings and ever improving red wines. The descriptions alone make me want to visit and meet these extraordinary individuals, soon.

Jacob R. Straus
UMBC, Shady Grove

References

Kladstrup, D. and Kladstrup, P. (2001). Wine and War: The French, the Nazis, and the Battle for France’s Greatest
Treasure. New York: Broadway Books.

Kladstrup, D. and Kladstrup, P. (2006). Champagne: How the World’s Most Glamorous Wine Triumphed Over War and Hard Times. New York: Harper Perennial.

Kliman, T. (2010). The Wild Vine: A Forgotten Grape and the Untold Story of American Wine. New York: Clarkson Potter.

Lynch, K. (1990). Adventures on the Wine Route: A Wine Buyer’s Tour of France. New York: North Point Press.

Pellechia, T. (2006). Wine: The 8,000 Year-Old Story of the Wine Trade. New York: Thunder’s Mouth Press.

Taber, G. M. (2005). Judgment of Paris: California vs. France and the Historic 1976 Paris Tasting that Revolutionized Wine. New York: Scribner.

Weiss, M. (2005). A Very Good Year: The Journey of a California Wine from Vine to Table. New York: Gotham Books.

Wine Myths and Reality

By: Benjamin Lewin
Reviewer: Mike Veseth
Pages: 128-130
Full Text PDF
Book Review

They say that you shouldn’t judge a book by its cover (or a wine by its label?), but does weight offer any clue to quality? Some winemakers apparently think so – they put their best wines (or at least their most expensive ones) in the heaviest imaginable bottles to give them physical heft to match their presumed sensory impact.

If you take Benjamin Lewin’s latest book as a sample of one, intellectual heft and physical weight are pretty highly correlated, too. At 634 pages and 1.9 kg this is indeed a weighty tome – and a very valuable one for anyone interested in wine.

Wine: Myths and Reality is a book for people (like me) with a geeky interest in wine. I like it so much, in fact, that I am going to make it required reading for the students in my university class, The Idea of Wine. They may not appreciate having to carry it around in their backpacks, but I guarantee they will thank me when they sit down to read it.

DIY Master of Wine?

I was tempted to title this review “Dr. Lewin’s DIY MW” (Do-It-Yourself Master of Wine). As I was reading the book I couldn’t help thinking about the Master of Wine exams and how closely the book seems to follow the syllabus. The Master of Wine was invented to help educate and prepare wine professionals – people who make their living in the wine business as buyers, sellers, advisors, writers and critics. I am sure that studying Dr. Lewin’s book isn’t adequate to pass the MW exam’s four-part written test, but I think it gives you a sense of the breadth and depth of knowledge that candidates are expected to master. The exam’s structure reflects the need to understand not just wine but its entire commodity chain.

The first two papers deal with the production of wine.1)

Paper 1 will examine candidates’ knowledge and understanding of ‘Characteristics of the vine and wine’ up to and including ‘alcoholic and malolactic fermentation’.

Paper 2 will examine candidates’ knowledge and understanding of ‘Wine maturation, blending and bottling’ up to and including ‘quality assurance and quality control’.

The first half of Dr. Lewin’s book does a rather masterful job of covering the material for this part of the exam. Clear, organized, detailed, interesting and provocative – just what the doctor (or wine trade professional or aspiring MW)

ordered.

Getting Down to Business

The third MW theory paper is on wine business, which makes sense since so many MWs are in “the trade.”

Theory Paper 3: The Business of Wine. The purpose of this unit is to assess candidates’ current knowledge and understanding of financial, commercial and marketing aspects of the international wine industry. Candidates should demonstrate the ability to apply their knowledge to a range of business situations including marketing and investment strategies, financial decision making, supplier – customer relationships and strategies for identifying and meeting consumer demand. Candidates will require a broad background knowledge of wine industry structures around the world and how these relate to one another.

Dr. Lewin is not quite as comprehensive in this part of his book, which is understandable since this material will be of less interest to a general audience, but his analysis of global wine market trends and issues is still a very interesting and useful overview, even for the well-informed readers of the Journal of Wine Economics.

The fourth MW essay is on “contemporary issues” and I think Dr. Lewin does a fine job of raising and analyzing important issues throughout the book. As someone who writes and uses textbooks all the time, I appreciate that Dr. Lewin provides us with his opinions (not playing the old “on one hand, on the other hand” game), but he does so carefully, citing specific evidence after having outlined the issues clearly.

The final third of Dr. Lewin’s book is a world tour – an introduction to the regions, the wines and the relevant controversies, with special focus on Burgundy and Bordeaux, which is understandable given their place in the world of wine and especially because of Dr. Lewin’s particular interests and expertise.

Breaking with Tradition

I was initially surprised by the organization of the regional wine survey chapters. Traditionally the Old World comes first and the New World trails along behind. Dr. Lewin reverses the order. Why? I believe that it has to do with the theme of the book. The title, Wine Myths and Reality gives a strong hint of the book’s overarching argument.

The myth is that Old World wines are unmanipulated natural products and that New World wines are highly processed industrial output. Dr. Lewin argues throughout the book that all wine is manipulated – how could it be otherwise? Left to itself, wine is just a brief stop on the fluid road to vinegar. It is hardly surprising that Benjamin Lewin would take this stand on wine. He is a renowned cell biologist who understands better than most the role of science in wine. To dismiss “manipulation” is to ignore wine science, which seems like a foolish, ignorant attitude.

Embracing Dr. Lewin’s argument raises the true question – what do we want wine to be and how best can we achieve this goal? Everyone manipulates (or else makes spoiled wine) – the question is how, how much, why and to what effect? Telling the story of the New World first puts this argument in context and highlights the issues effectively.

This book is certainly worth a place on any wine economist’s bookshelf – even if you have to reinforce it to bear the extra weight!

Mike Veseth
University of Puget Sound and wineeconomist.com

1) Information about MW exam papers taken from a 2008/2009 syllabus posted on the Masters of Wine website (accessed May 4, 2011): http://www.mastersofwine.org/filemanager/root/site_assets/documents/ exam/syllabi/syllabus_2009.pdf.

When Champagne Became French

By: Kolleen M. Guy
Reviewer: Victor Ginsburgh
Pages: 130-133
Full Text PDF
Book Review

2011 is a perfect year to praise and review a book concerned with Champagne. The Notre-Dame cathedral of Reims is celebrating its 800th anniversary. The church is known as the place where French Kings were crowned (though there are doubts whether Sarkozy’s coronation also took place there) and Champagne used to be served at royal banquets that followed coronation. This does not imply that this beautiful sparkling liquid is 800 years old, and there is no historical record testifying that Clovis I, King of the Francs, who was baptized in Reims in 499 AC, got drunk after sipping a few glasses of Dom Perignon. Indeed, due to the complicated and poorly understood “two-fermentation” process, most of the production was still and not sparkling until roughly 1840.

Guy’s book, subtitled Wine and the Making of a National Identity, tells it almost all. You will, however, not find much about Clovis, since the book starts in 1789 and stops in 1914, but the concluding chapter also briefly discusses what is happening today, and how France defends (again, as will be seen later) the notions of “terroir”2 and AOC (appellation d’origine controˆ le ́ e), as well as the word “champagne” itself that the two Frenchman, Pierre Berge ́ and Yves Saint Laurent, were prevented to use as name for a perfume. Being French is therefore not enough. . .

It is a highly learned book since it grew out from a doctoral dissertation at Indiana University, and starts with an epigraph by Friedrich Engels: “La belle France! What wine! What diversity, from Bordeaux to sparkling champagne!” which should remind us that Karl Marx was the happy owner of a vineyard in Trier, on the Mosel. Nobody’s perfect.

The author describes “the complex association of champagne with social distinction and fraternal union” since the wine became a must at every private or public event. Guy quotes a British observer who noted in 1882 that “we cannot open a railway, launch a vessel, inaugurate a public edifice, start a newspaper, entertain a distinguished foreigner, invite a leading politician to favor us with his views on things in general, celebrate an anniversary, or specially appeal on behalf of a benevolent institution without a banquet, and hence without the aid of Champagne” (p. 11) 3).

The most interesting part of the volume is concerned with the fight led by winegrowers between 1890 and 1910 to give an identity to their region, and define its boundaries. In 1891, Rene ́ Lamarre, a nineteen-year old winemaker issued a pamphlet suggesting that “within ten years, people will no longer be acquainted with the name Champagne, but with those of Roederer, Planckaert, Bollinger, and it will not matter from which grapes these wines are produced.” (Lamarre, quoted p. 40) Wine, he claimed, should not be distanced from the soil, and foreign grapes (that is from other French regions) should be banned from Champagne. Interestingly, Lamarre’s intention was to create a Champagne united producers’ cooperative that would sell the wine directly to consumers at 25 francs (instead of 10), of which 23 francs would go to producers. This would make it impossible for the Roederer’s of that world to buy wine from local producers. They would have to get their grapes from other regions such as Chaˆ lons-sur-Marne, to the east of the main winegrowing areas along the Marne river, which people would call “vin de cochon” (cochon means pig) and they would, supposedly, no longer be permitted to use the name Champagne. The fight for AOCs had started. Not bad for a nineteen-year old boy!

In January 1911, 3,000 bottles of wine from the South of France were to be delivered to Perrier, another Champagne producer. This spurred a new revolution that made some winemakers march and sing to the tune of L’Internationale (p. 159)

It is the final struggle in Champagne
Against fraudulent wines
Vignerons of the Marne
Defend our wealth!

proving that Marx and Engels (see above) can sometimes be invoked. . . It led to a new deadlock about the delimitations of the region where Champagne vines could or could not be grown.

Sadly enough, phylloxera also made its way to Champagne (though much later than in other regions), but some regional “specialists” believed that “the considerable differences that exist between the cultivation, planting and soil of the vines of Champagne and the vines of the Seine-et-Marne can perhaps preserve [them] from the invasion of the blight” (p. 92, Guy quoting a regional wine specialist). And indeed growers chose not to follow other regions, which relied on American rootstocks, and thought that chemicals could save the vineyards. Though the blight had started in 1875 in Bordeaux, in 1890, Champagne growers were still very optimistic and “issued a small brochure to assure English-speaking consumers that phylloxera was not a threat to quality or supplies of Champagne” (p. 97). Guess what? They were wrong.

And then came World War I, which stopped the AOC debate for exogenous reasons: “Champagne vineyards were pulverized under the relentless assault of modern armed combat” (p. 187). It fortunately killed phylloxera also, since at the time, there was still no agreement whether chemicals or American rootstocks could save the vineyards. The debate eventually ended with the creation in 1919 of the Syndicat ge ́ne ́ral des vignerons de la Champagne viticole de ́limite ́e, whose main goal was to repress fraudulent wines. Whether they succeeded is another story.

A very nice and readable book for those who like history, or wine, or both, but are also interested in understanding some details of how the French identity was built.

You will find no guidance about which wines to buy. This is not what the book is about. Just use the following rule of thumb that two editors of the Journal of Wine Economics, meeting in a restaurant during the third AAWE meeting in Reims in 2009, give you for free: “In case you have to choose, always go for the cheapest.”

Note that this goes very much against a dialogue imagined by Rene ́ Lamarre (whom we met earlier):

“‘Waiter, some Champagne!’ the customer demands. ‘At 40 or at 50 francs?’ the waiter asks. When the customer hesitates in disbelief, the waiter continues: ‘We have some Chablis at 6, 8 and 10 francs.’ Big spenders like the imaginary customer would respond with ‘Give us some Champagne, according to Lamarre. They could do no less, because ‘the true Champagne is never too expensive’.” (p. 83).

The two JWE editors are either small spenders, or know nothing about Champagne. Or – but the dialogue does not say so – the customer chose the 40 francs bottle.

And the AOC debate is still going strong, not only in Champagne but also in the whole country.

Victor Ginsburgh
ECARES Brussels

2) On the very debatable value of “terroir”, see Robin Cross, Andrew Plantinga and Robert Stavins (2011). What is the value of terroir. American Economic Review, Papers and Proceedings, 101, 152–156 and Olivier Gergaud and Victor Ginsburgh (2010). Endowments, production technologies and the quality of wines in Bordeaux. Does terroir matter? Journal of Wine Economics, 5(1), 3–21.

3) Page numbers refer to Guy’s book.

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JWE Volume 15 | 2020 | No. 2
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