The sugar content of California wine grapes has increased significantly over the past 10–20 years, and this implies a corresponding increase in the alcohol content of wine made with those grapes. In this paper we develop a simple model of winegrape production and quality, including sugar content and other characteristics as choice variables along with yield. Using this model we derive hypotheses about alternative theoretical explanations for the phenomenon of rising sugar content of grapes, including effects of changes in climate and producer responses to changes in consumer demand. We analyze detailed data on changes in the sugar content of California wine grapes at crush to obtain insight into the relative importance of the different influences. We buttress this analysis of sugar content of wine grapes with data on the alcohol content of wine.
This paper reports an analysis of data from the “Judgment of Paris,” the 1976 blind tasting of California and French wines that revolutionized the wine world. Using both empirical and analytical methods, I demonstrate that the wine quality judgments of the renowned experts who participated in the Paris tasting would have been improved simply by averaging the quality ratings of two or more of the judges. Moreover, I explore both how many of the Paris judges should be included in the average and which ones they should be. The results have implications for the practical issue of choosing judges to include in tasting panels that award prizes or provide expert advice to consumers, as well as for better understanding the variability in the price-quality association across hedonic wine pricing studies.
Using a canonical model of signaling, we show that if the cost of organic viticulture is strictly increasing in the quality dimension, then the use of eco-labels as a signal for quality cannot possibly occur as an equilibrium outcome. Conditions for the existence of such a signaling equilibrium as well as some general properties regarding its configuration are herein characterized.
This symposium in the Journal of Wine Economics contains a series of articles on various aspects of the economics of beer and brewing. Today, wine and beer are the two most widely consumed alcoholic beverages in the world. Beer consumption is larger than wine consumption both in terms of volume and value. In 2007 global beer consumption reached 174 billion liters compared to 24 billion liters for wine.
The global value of beer amounted to 153 billion US dollars, which was roughly double the global value of wine – around 75 billion US dollars (Colen and Swinnen, 2011).
This article reviews beer production, consumption and the industrial organization of breweries throughout history. Monasteries were the centers of the beer economy in the early Middle Ages. Innovation and increased demand later induced the growth of commercial breweries. Globalization and scientific discoveries transformed the beer industry and increased competition from the 16th through the 19th century. The 20th century was characterized by dramatic (domestic and international) consolidation, major shifts in consumption patterns, and the re-emergence of small breweries.
The U.S. Beer industry has undergone two periods of major structural change in the post- World War II period. The first period, 1950–1980, was one of consolidation in which concentration increased dramatically. Since this period, combinations among leading brewers took place that would not have passed antitrust scrutiny earlier. The second period, from 1980 on, is one of fragmentation, marked by the entry of many craft brewers and increased product heterogeneity. The fragmentation has brought about consumption complementarities between wine and beer that never existed before. The wine and beer industry both face distributional inefficiencies sustained by state regulatory provisions that were a consequence of ending prohibition in the United States. Each of these topics is explored in this paper.
Data on U.S. state-level beer shipments from 1970 to 2007 provided by The Beer Institute are used to estimate pooled time-series models of annual consumption regressed on economic and demographic variables, using the common correlated effects (CCE) estimators to control for unobserved common effects and to allow for heterogeneous responses across units. Beer is found to be a procyclical good, varying negatively with the state unemployment rate. Previous findings for the negative effect of excise taxes on consumption are supported, though the estimated elasticities are smaller than those reported in earlier research. Demographics have a significant and material effect on consumption, with larger shares of young adults in the population implying greater consumption of beer per capita.
Student’s exacting theory of errors, both random and real, marked a significant advance over ambiguous reports of plant life and fermentation asserted by chemists from Priestley and Lavoisier down to Pasteur and Johannsen, working at the Carlsberg Laboratory. One reason seems to be that William Sealy Gosset (1876–1937) aka “Student” – he of Student’s t-table and test of statistical significance – rejected artificial rules about sample size, experimental design, and the level of significance, and took instead an economic approach to the logic of decisions made under uncertainty. In his job as Apprentice Brewer, Head Experimental Brewer, and finally Head Brewer of Guinness, Student produced small samples of experimental barley, malt, and hops, seeking guidance for industrial quality control and maximum expected profit at the large scale brewery. In the process Student invented or inspired half of modern statistics. This article draws on original archival evidence, shedding light on several core yet neglected aspects of Student’s methods, that is, Guinnessometrics, not discussed by Ronald A. Fisher (1890–1962). The focus is on Student’s small sample, economic approach to real error minimization, particularly in field and laboratory experiments he conducted on barley and malt, 1904 to 1937. Balanced designs of experiments, he found, are more efficient than random and have higher power to detect large and real treatment differences in a series of repeated and independent experiments. Student’s world-class achievement poses a challenge to every science. Should statistical methods – such as the choice of sample size, experimental design, and level of significance – follow the purpose of the experiment, rather than the other way around?
Does alcohol have a flavor? Definitely, but not a well defined one. Try a nonalcoholic beer and there is clearly something missing. A person’s flavor perception has three components: tactile, gustatory and olfactory. Alcohol has a pronounced tactile effect in your mouth, the familiar burn. Indeed, consuming very high proof alcohol is quite painful. In addition, alcohol is capable of activating sweet and bitter taste receptors on the tongue. Some people get a distinct sense of sweetness from vodka. It may not be possible to have a completely “dry” wine even if the sugar levels are well below detection threshold because the alcohol gives it some sweetness. Alcohol has also been described to have a bitter taste (Scinska et al., 2000). Some people who are labeled “supertasters” possess genes that cause them to experience the taste of bitterness much more powerfully than others. These people also drink less alcohol (Duffy, 2004).
Whether the flavor of alcohol has an olfactory component is hard to say but at best, it is very mild. Many people feel that vodka has an aroma but that is probably from traces of congeners left over from distilling. “Pure” alcohol is so strong that the discomfort from consuming it prevents any reflection on whether it has flavor or not. I suppose someone could mix 99.9% alcohol and distilled water and nose it but I have seen no references to such a trial.
It is no secret that in the last 20 years or so the alcohol levels in wine have been rising across the world. Could it be due to climate change? Probably not. Some vineyard areas that experienced little increase in average temperature had large increases in alcohol levels over the last 20 years and vice versa. By comparing the increase in alcohol content in vineyard areas around the world which have experienced different degrees of warming, it is possible to estimate the contribution of global warming to the rise in alcohol in wine (Alston et al., 2011). It accounts for only a minor portion of the increase.
Actually, the reason for the increase in the percentage of alcohol in wine is pretty clear. It is a byproduct of changes in grape cultivation brought about by increased scientific understanding and perceived market demand. In short, the definition of grape “maturity” has changed. Ages ago people judged the ripeness of their grapes by tasting them. More recently it has become possible to measure the actual sugar content so you could aim to harvest at, say, 23.5 Brix, the old California standard. Multiply the Brix by 0.55 and you get an approximation of the resulting alcohol content of the wine (0.55r23.5 = 12.925%).
In the old world, where nature was not always cooperative, viticulturalists always felt pressure to harvest as soon as possible because a heavy rain could ruin a whole year’s production. Now that we have meteorological forecasts for a week in advance it is less dangerous to allow the grapes to mature further. In California, which depends on irrigation, harvesting can be put off as long as you want. The theory the winemakers work on is that longer hang time will result in greater concentration of the “phenolic” contents of the grapes, the compounds that give wine its flavor. In addition, the tannins become “softer”, which means less harsh. Of course, the sugar content continues to go up, hence more alcohol. Another casualty is the acid content which decreases. A low acid wine tastes dull. Adding natural grape acids, however, is simple.
So what do high alcohol wines taste like? It’s hard to divorce the alcohol component from the other excesses in these wines. The major difference is in the sense of irritation of the mucous membranes. That is why such wines are referred to as “hot”. The difference in sweetness between a 13% and a 14.5% alcohol wine, low to begin with, is probably undetectable as is the change in bitterness. Same for the olfactory component, whatever that is. So it is just the burn that makes these wines seem unbalanced but you can get used to that. It is probably not the increased alcohol in newer wines but the style of the wine itself that is controversial. Of course, higher alcohol causes you to get tipsy faster. You may or may not approve of that.
It is possible to remove excess alcohol from wine by a process called “reverse osmosis” (Vinovation). Under pressure, the wine flows past a fine filter which allows only the water and alcohol plus a few other minor things to get through. The “goodness” of the wine is left behind. You then distill the alcohol off and return the water to the wine. (Returning water from another source would be illegal under the law.) The opposite is possible, too. You can return the alcohol and discard the water in order to correct an overly dilute wine. The whole process is extremely high tech and seems intuitively to be beyond the permissible boundaries of manipulation of a natural product. But my objections have become muted since I learned that one of my favorite Bordeaux chateaux uses reverse osmosis and I love their wines.
Clark Smith, who runs Vinovation, the most prominent California provider of reverse osmosis and other high tech services, can line up somewhere around 18 glasses that contain the same wine but differ only by the amount of alcohol in gradations of 0.1% (Schneider, 2007). Smith maintains that a taster will find about 3 or 4 “sweet spots”, alcohol levels at which the wine tastes best. The winemaker must choose which of these is the style he wants to distribute to his segment of the market. Tasters claim to notice different qualities in wines as close to one another as 0.1% alcohol. This sounds like nonsense to me. If the wines are truly the same except for a slight difference in alcohol content I would expect neighboring samples to be indistinguishable.
Admittedly, it is possible that different levels of alcohol may affect the release of volatile compounds. Respectable claims have been published which state that diluting alcoholic beverages may have the paradoxical effect of accentuating rather than diminishing the aroma (McGee, 2010). The principle is that many of the volatile odor compounds are held in the solution by the alcohol and dilution frees them up. This trick is usually performed with spirits and the degree to which the drink is diluted is substantial. I can’t see that changing the alcohol content of wine by 0.1% could possibly produce any such effect.
Wine can only be brought into the province of Ontario, Canada by the Liquor Control Board of Ontario. Each wine is tested for various characteristics including alcohol content. Alston et al. used the LCBO figures covering the years 1992–2009 to analyze trends in the changes in alcohol content in wines from around the world (Alston et al., 2011). Unsurprisingly, red wines are more alcoholic than white, New World wines more so than Old World wines and hot climate wines more than cool climate ones. Overall, the alcohol in wines has gone up an average of 0.23% a year, so a wine of 13% alcohol 20 years ago will have become 13.5% today, but this can vary between 0.2 and 2% depending on the region.
Alston’s group was also interested in looking at the actual alcohol content of wines compared to what was printed on the label. The misrepresentation of alcohol content was systematically skewed towards what producers felt would be the levels the public would find desirable. Thus, high alcohol wines were reported as lower than they actually were while low alcohol wines were reported as higher. Since there were more of the former than the latter, the overall trend was to underreport the alcohol content by 0.13%. This varied significantly by region. The biggest fibbers were from Argentina, Spain and the United States.
Alcohol is the reason we enjoy the flavor of wine. Very few people like the taste of wine at their first sip. If its flavors were not reinforced by the mood-altering effect of alcohol, we would not find them pleasant. Certain basic tastes have a built in affective component. Sweet is good; bitter is bad. This is not true of the olfactory components of taste, which we learn to consider pleasant or unpleasant depending on the conditions under which we first encounter them1 (Herz, 2007). Learning to appreciate flavors occurs as early as in the womb and with breast-feeding and possesses a large degree of cultural specificity. Japanese eat stuff for breakfast that would turn our stomachs while, on the other hand, they cannot understand how we enjoy something as disgusting as cheese. Let us not forget that alcohol is why we have wine. No one would bother to ferment grapes if alcohol didn’t have a pleasurable psychological effect. Let’s be grateful that it does.
Mount Sinai Medical Center
1) The one clear exception is cilantro where whether you like it or hate it seems to be genetically determined. If one identical twin likes or dislikes cilantro, most likely the other will feel the same way. This is much less so of fraternal twins.
Alston, J.M., Fuller, K.B., Lapsley, J.T., Soleas, G. and Tumber, K.B. (2011). Splendide mendax: false label claims about high and rising alcohol content of wine. American Association of Wine Economists, AAWE Working Paper No. 82.
Duffy, V.B., Davidson, A.C., Kidd, J.R., Kidd, K.K., Speed, W.C., Pakstis, A.J., Reed, D.R., Snyder, D.J. and Bartoshuk, L.M. (2004). Bitter receptor gene (TAS2R38), 6-n-propylthiouracil (PROP) bitterness and alcohol intake. Alcoholism: Clinical & Experimental Research, 28(11), 1629–1637.
Herz, R. (2007). The Scent of Desire: Discovering our Enigmatic Sense of Smell. New York: HarperCollins.
McGee, H. (2010). To enhance flavor, just add water. New York Times, July 27. Schneider, D. (2007). What does it mean now that a winemaker can select the structure of a wine? The Art of Eating, 73 & 74 (20th Anniversary Issue).
Scinska, A.S., Koros, E., Habrat, B., Kukwa, A., Kostowski, W. and Bienkowski, P. (2000).
Bitter and sweet components of ethanol taste in humans. Drug Alcohol Dependence, 60(2), 199–206.
Vinovation (2011). Custom Equipment Manufacture www.vinovation.com/custequip.htm, website accessed on 6/14/11
Mount Sinai Medical Center
The Finest Wines of California is the fourth title in a series of “illustrated guides” to major wine regions developed by the team responsible The World of Fine Wine, a serious, ultra-glossy, “cultural journal” launched in 2004. The author is Stephen Brook, an accomplished UK-based writer on wine and related topics whose works include very good books on Sauternes, Pauillac and Germany interalia. More relevant in this context, he is also the author of a hefty, authoritative survey of California wines published in 1999 by Faber & Faber, which is now out of print. That Mr. Brook is both outsider to California and a student of its wines since the 1970s are assets: in both books he demonstrates an unusual ability to paint the California wine scene sympathetically, objectively, and in an implicitly global frame. That twelve years have passed since The Wines of California appeared in 1999 makes the new title especially welcome.
Like the series’ sibling titles devoted to Champagne, Bordeaux and Tuscany, The Finest Wines of California is heavily and handsomely illustrated; I counted the equivalent of 110 (of 320) pages devoted to photos and label facsimiles. The text is split between overview information on the macro-region, its history, culture, vintages, wine styles and dominant varieties, and a large number of producer profiles organized by sub-regions. Each of the profiles is an engaging combination of essential history, human-interest material, some quite serious notes on viticulture and winemaking, brief reader service information, and nicely written tasting notes. Although any selection of “finest” producers will inevitably be subjective, Brook’s choices seem appropriate and defensible overall. The text makes clear in most cases why he chose his targets, and he admits honestly that not all wines covered in the book should necessarily be counted among his personal favorites. I confess that by my lights Napa gets more than its fair share of attention – more than a third of the book’s total page count – while regions like Mendocino, the true Sonoma Coast and the Santa Cruz Mountains seem underrepresented. (Is this because I am pinot-oriented, and not a heavy consumer of cabernet sauvignon?) One is inclined to miss Flowers, for example, the first modern winery in the true Sonoma Coast, and a virtual revolving door for extraordinary winemaking talent. Conversely, Brook’s excellent and quite detailed profile of Kistler, the consequence of a rare and fortuitous interview with this winery’s eremitic founder, is a welcome contribution to the available literature.
The seven introductory chapters seem an excellent survey of California’s fine wine country, which is essentially the state’s coastal valleys plus the western foothills of the Sierras. There is good attention here to the tension between terroir and winemaking, winemakers’ interventionist practices, the importance of mesoclimates, the jumble of confusion that results from America’s idiosyncratic approach to appellations, the impact of phylloxera and Prohibition on the California wine story, and the challenges associated with marketing wines from regions whose reputations are young. Occasionally, the differences drawn between American and European orientations seem a little stark. Why, for example, should nested appellations in California (“Green Valley” is an AVA within the Russian River Valley AVA . . . [p. 30]) be any more “confusing” than Listrac inside HautMedoc inside Bordeaux? Nor have I noticed that most modern Bordelais vintners are much less infatuated with phenolic ripeness than their Napa Valley counterparts (p. 50.) Kudos are due for the currency of volatile information. Foxen’s move to a new winery in 2009 is noted, as is Kosta Browne’s sale to a private equity firm in the same year.
I confess to some discomfort with two pages of a short chapter on “Significant Others” headed “The Ne ́ gociants” (pp. 306–7.) Of the ten non-estate producers described briefly here, most are landless boutique operations with a significant stake in California pinot noir, including Arcadian, Capiaux, Copain, Ojai, Patz & Hall, Radio Coteau, Siduri and Testarossa. (Oh dear, my pinot bias is showing again!) Mr. Brook explains that he decided to cover these producers as a group, rather than give them individual profiles, because their fruit sources “tend to fluctuate” and “present an ever-shifting pattern,” making them different from the non-estate producers he opted to cover individually. The “intention” of the latter, he writes, is “to maintain long-term contracts with those they buy from.” My reading of “owners’ intentions” may be different from Mr. Brook’s, but I cannot discern much difference between a non-estate producer like Testarossa (summarized as a ne ́ gociant) and a non-estate producer like Kosta Browne, which earned a separate profile on pp. 224–5. There is ironic dissonance too: Copain, summarized as a ne ́ gociant, actually does own 13 acres of vineyard, but does not use the fruit; currently they sell grapes to a handful of small producers; in the past buyers have even included Kosta Browne! More serious than the who-is-and-whois-not problem, however, is that the quasiparenthetical treatment given to these ne ́gociants understates the enormously important role that small, non-estate, winemaker-owned brands have played, at least since about 1985 (but arguably earlier, viz. Lee Stewart’s Souverain brand) at the qualitative pinnacle of the ultrapremium segment of California wine. Again and again, these brands have built the reputation of vineyards (like Hirsch and Pisoni) which, in due season, have spawned estate brands of their own. In some cases they have been essential to the reputation of entire regions – consider what vineyard-designated wines made by exogenous, landless brands like Littorai and Williams Selyem did for the establishment of Anderson Valley’s reputation for top-quality pinot noir. Conversely, consider the drag against reputation that has been displayed when a region’s large vineyards have sold exclusively to large ne ́ gociants, leaving no fruit to satisfy local, boutique-sized non-estate players. Santa Barbara County until late in the 1980s is a case in point. Like Mr. Brook, I find estate producers easier to appreciate, easier to explain to non-specialists, easier to classify geographically and, well, more like Europe. And in a perfect world maybe all winemakers would be winegrowers, and all winegrowers would, like the Burgundian vigneron, work their own vines. But in this case one of California imperfections is also part of its special wine story and a critical part of its ultra-premium story. A bit tighter focus here might have been helpful, especially to those without much previous experience with California wine.
On balance, this is an extremely attractive, well-researched and well-written introduction to the best wines of the Golden State.
John Winthrop Haeger
Alimentary globalism – Tokyo sushi in New York, Chilean grapes in wintertime Seattle, Coca-Cola in Trinidad, Big Macs in Beijing, and so on – disrupts established foodways, as anthropologists call the complex of behaviors surrounding the way we produce, acquire, cook, and eat our food. This, in turn, reshapes who we are. An article on wine might have fit in well here. Still, Watson and Caldwell’s collection of nineteen wide-ranging essays nicely documents the spread of such change and the various ways in which communities react to it.
For instance, just growing green beans in Burkina Faso, where they are raised for export, has been enough to change the diet and meal patterns in that poor, underfed country by altering land use and work habits. Consequently, as Susanne Freidberg’s contribution explains, the notion of a good sauce, a local dish closely tied to the social identity of women, has also changed. Without even eating the alien beans, the Burkinabe ́ became different people. In a similar vein, Jeffrey Pilcher discusses how the modernization of tortilla production in Mexico, once exclusively the patient labor of housewives, is damaging health and harmfully redefining femininity.
Things don’t have to turn out badly, however. What was surprising and heartening to discover in this collection is how resilient some communities have remained, though pressed to adapt. The Chinese, in a process anthropologists term localization, have forced a compromise between endemic needs and what a novel mode of food demands. Beijing double cheeseburgers taste the way they do in Berlin and Los Angeles. But to the young Chinese who eat them, it is the jolly and well-mopped social space surrounding those succulent disks of minced cow that offers something new and useful, the reader learns, and keeps the customers coming back. As Watson, Eriberto Lozada, and Yunxiang Yan show in their articles, McDonald’s and other fast-food vendors have been less agents of change in China than indicators of a diffusely triggered social transformation there.
Not so cheering is the attitude of the capitalists. Kentucky Fried Chicken, Lozada points out, doesn’t care particularly how it sells chicken, as long as it sells a lot of it. If Colonel Sanders freaks out Chinese youngsters, replace him with Chicky, the child-charming mascot who decorates KFC’s 3,400 Chinese stores. Chicky is emblematic of KFC China’s willingness to change, even if that has meant replacing coleslaw with bamboo shoots, and mashed potatoes with porridge. Capitalism is a human enterprise, after all, and if humans are resilient, it only follows that capitalism will be so too.
And not just capitalism. Hans and Judith-Maria Buechler describe in their article on German bread how independent artisan bakers survived profitably under the extreme anti-capitalism of the German Democratic Republic. In contrast, the West German baking conglomerates who forced most of these little guys out of business after the Wende were cooperative market socialists before they invaded the East. Like culture and politics, the business world, too, is prone to modern ironies.
Harriet Ritvo reminds us in “Mad Cow Mysteries” (an article I’d like to ask the volume’s GMO defender Robert Paarlberg to study) that the governments we expect to protect us from bad food can be conflicted and dangerously unreliable. Ritvo’s depiction of the British leadership’s tardy conversion from human BSE deniers to prion experts makes plain the rarest rosbif may be a politician who understands anything but politics. Yet as Ritvo observes, the body politic is what the body politic eats, and it doesn’t easily tolerate a change in diet.
Fifteen years later and a world away in Japan, another government facing crisis seems willing to trade health for other interests. Yet promoting the sale of Fukushima-radiated fish and rice may not simply be a way of showing decisiveness or diverting cash into a disaster-ravaged region. As the British example invites one to conclude, Japan’s fish-and-rice policy is designed to feed a fish-and-rice polity. Home cooking local food, that is, may be a good means of nurturing not just the physical but also the psychosocial recovery of tsunami-decimated communities. Sarah Phillips points out in her piece on the post-Chernobyl food crisis, however, that compromising food safety and neglecting citizen health contributed to the collapse of Soviet Russian control in Ukraine. Poisoning your constituents is a good way to lose their support.
Much of the ethnographic data gathered in this work is now reaching its expiration date. Its theoretical concerns, however, and the broad relations it illuminates between globalization, governance, business, science, food and drink, health, and the recipes for self-construction are still interesting. Eating and drinking, it’s pleasant to think, may belong to a different category than automobiles, TV sets, and other impersonal classics of modern manufacturing. Like music and language, their roots still touch the living, private prehistory, the temps perdu of food fetishist Marcel Proust. This is why we treasure certain foods, and become confused when they are lost. This is why we can use food to reconfigure and console ourselves. Cultural identity has always been a malleable thing. We don’t feel a strong need to worry about this fact, however, until the pace of communal self-transformation speeds up to less than a generation. Then, as the bullet train of psychic foreclosure, renovation, and reopening keeps accelerating, people start reaching for the emergency brake . . . or a slice of pizza. Food and eating can offer a means of slowing the change. Eating, especially when we practice it in the self-conscious fashion so popular and apparently necessary nowadays, allows us to locate, isolate, and nourish a familiar, reliable me. It’s still an idealized, constructed me. But when I sit down to eat, a madeleine, an Oreo, or a heritage turkey at a Thanksgiving feast, at least I seem to recognize the face looking back at me from the plate.
Anyone analyzing the economics of wine will quickly notice the diversity of forces pressuring the industry. Wine’s (alleged) progression towards homogeneity to meet mass market demand, corporate ownership consolidation, often cut-throat international competition, rivers of excess supply, technological manipulation in production, wildly vacillating price differentials and the impacts of global warming, among a host of other factors, may be simultaneously viewed as evil, good or both depending on one’s perspective. These issues also make for a robust research agenda in wine economics. A new book by Mike Veseth, Wine Wars: The Curse of the Blue Nun, the Miracle of Two Buck Chuck, and the Revenge of the Terroirists, nicely captures the essence of these factors affecting the evolution of wine and the agenda for wine economics.
The running theme throughout this book is a search for the future of wine. Written in a brisk and non-technical style, Veseth uses this theme to focus on the competing forces vying for wine’s future, expanding on and unifying essays previewed on his wineeconomist.com website. The overarching influence affecting the current market for wine, and one that will increasingly affect the future of wine, is globalization – albeit wine’s global reach has existed since vineyards were first planted. Entwined with shrinking international borders and reduced barriers to the wine trade are increased efficiencies in wine production, shipping and marketing. These and other changes, in turn, have fostered a gnawing fear and vocal backlash against what these disruptions will bring to the wine world as we know it today.
Veseth takes us on a journey through wine economics via the use of what amounts to case studies exemplifying how wine economic issues are playing out in the marketplace. One learns, for example, about the lingering effects that certain very sweet and often badly made wines of the past have had on current consumer perceptions and taste. We gain insights, too, on the way large international and national retail chains are altering consumer wine buying routines, how new consumer interest in wine is being cultivated, and the ways, means and implications of the world wine glut. Further, we get a sense in Wine Wars of how historical, social and cultural factors in France, China and other countries will likely affect the future of wine. In France, for example, we hear both sides of the “terroirist” debate on what wine should be. And we glean several unique perspectives on how China’s relationship with wine might really shape wine consumption and production there – an analysis that extends beyond the current hyperbole for anything having to do with the Rothschild name among China’s nouveau riche. Veseth explains, for example, the unique workings of China’s production supply-chain, the use of fruits other than grapes in winemaking, and why it might be reasonable for Chinese wine consumers to mix their wine with Coca Cola.
The personal approach Veseth takes in Wine Wars can lead the reader to think of this as an interactive book. In fact, Veseth encourages this by inviting us to “(g)rab your wineglass and follow me . . . ,” calling each of the book’s sections flights, and adding a wine tasting at the end of each section with suggested pairings exemplifying the ideas in that part of the book. If I had not seen Mondovino yet, I would have been encouraged do so when reading Wine Wars. I did, however, take a look at the Japanese soap opera Kami no Shizuku, review Jancis Robinsons’ wine course, and went scurrying to the encyclopedia to find out what a New Zealand Dalmatian gum digger was. While I started reading the book with a glass in-hand of a 2005 Haut-Medoc picked up during one of the recent rounds of Bordeaux “vintage of the century” hysterias a few years ago, Veseth’s book also motivated me to try my first box wine. No such luck obtaining a bottle of Lafite Rothschild, though.
The sometimes invisible hand of globalization is made more visible throughout Wine Wars. The interrelationships that bring wine to the world are truly international in nature today, and will only become more so in the future. Veseth infuses Wine Wars with stories about these connections and conflicts, and in the process we learn much about the business aspects of wine – in addition to enjoying the narratives that inform the economics. The global role of flying consultants and wine formulation in the laboratory to satisfy the tastes of influential wine critics are well-known, for example, but the way huge amounts of wine are shipped around the world in freighter-sized plastic bags inside crates, or the marketing philosophies and German ownership behind the Trader Joe’s Charles Shaw (aka Two-Buck Chuck) wine are less known.
Wine retailing too is a global exercise. It is not only Trader Joe’s and its twin Aldi that are introducing new buyers to wine through their inexpensive but (often) drinkable offerings. Wine Wars introduces many of us who do not live in Britain to Tesco and how this supermarket chain is using its marketing muscle to change the rules on wine shipping, bottling (lighter, with screw caps) and pricing. We also are given the lowdown on methods used by Costco that have helped it become the biggest retailer of wine in the United States, such as how it displays its wine and the rationale behind the selection of wines offered in its “warehouses.”
The consolidation of winery ownership continues as well, with discussions in Wine Wars about the marketing strategies of the large wine conglomerates, such as Gallo and Constellation Brands. Using an inventive allegory of a “wine wall,” with bottom, middle and top shelf wines representing the spectrum of quality and price on their respective levels, Veseth takes us through examples of the range of product differentiation from the large players, indicating both benefits and pitfalls from such corporate consolidation. If you’ve ever wondered, but never took the time to follow, who owns which wines and which wineries remain independent, you will get a good idea from Wine Wars (however, things change so rapidly in this area that reading Wine Business Daily online is necessary to keep current).
All of these changes in the wine industry can and do create conflicts, of course. Veseth covers the evolving tensions, especially in the third “flight” of Wine Wars, and the tone of the book becomes more serious towards this latter part of the volume. Just as terroir is a multidimensional concept, so too are the arguments for and against a “globalized” style of wine – if one agrees that such a style exists at all. In addition to documenting a growing globalization in wine, Wine Wars also discusses events demonstrating the antithesis to globalization; for example, opposition to American and other influences on French wine is being fought by CRAV (Comite ́ Re ́ gional d’Action Viticole), many family wineries continue despite economic pressures, and Michel Rolland’s approach is not implemented in every winery in existence.
Anyone with an interest in wine and wine economics will enjoy reading Wine Wars. While the economics in this book is not presented in the form of econometric models and t-values, there is no mistaking the well of economic theory and knowledge that underlie the chapters in this book, and that hint at part of the future for wine economics research.
Gallaudet University and Johns Hopkins University
Wine was discovered in the Zagros mountains of northwestern Iran some 7,000 to 8,000 years ago. Greeks and Romans then spread grapes and wine around the lands bordering the Mediterranean. At around the year 200 the Romans promoted a wine industry along the Rhine and Mosel rivers. After that expansion of grapes and wine nothing much happened for the next 1,600 years until the California gold rush of 1848 stimulated the cultivation of wine in the New World. Shortly after, in the 1850s, the gold rush in Australia led to the establishment of a wine industry in Victoria. At present, we may be witnessing the peak of yet another period of significant wine grape area expansion and wine production growth in the “New World” wine countries of Argentina, Chile, South Africa, and New Zealand.
Significant changes in the spatial expansion of crops are attention grabbers, which call for explanation and understanding of their causes and impacts. The causes of the New World wine expansion are, according to the book, “. . . innovation in product and process, spurred by consistent investments and research efforts” (p. 2). Moreover, the editors of the book regard the wine industry as “extremely interesting from a development point of view because the late-comers in the international market have radically changed how wine is produced, sold and consumed” (p. 11). Finally, the editors believe that, “An investigation into the wine industry of countries such as Argentina, Chile and South Africa represents an extraordinary opportunity to show how a traditional agro-food industry can become highly competitive and catch up in the global market . . . ” (p. 2).
The book collects selected papers from a workshop organized by the Project “Innovation and globalization in the wine sector” which was held in 2009 at the Universita` del Piemonte Orientale, Novara, Italy. The contributions to the book are organized into an introduction and two parts. The introduction, authored by the editors of the book, explains the aim of the book, motivates the research questions, and it highlights the main concern of the book: to contribute to our knowledge about how economically and technologically lagging countries catch up.
Part I of the book comprises three chapters. The chapters are said to “adopt a macro-level perspective to analyze the process of catch-up in a variety of contexts (that is, both emerging and developed economies), with a focus on the role played by scientific research and innovation” (p. 2). More simply put, Chapter 2, describes how the New World wine countries, in particular the United States, Australia, Argentina, Chile and South Africa, but not New Zealand, have caught up with the Old World wine countries of Europe. Chapter 3 presents results from a bibliometric study that traces the growth of the contributions of New World wine countries to the international scientific literature on topics related to wine. And in Chapter 4 Kym Anderson explains how Australia organized its wine industry in order for collective action, which includes R&D, to be effective.
In Chapter 2, entitled “Catching-up trajectories in the wine sector,” Cusamo, Morrison and Rabellotti adopt a “Sectoral Systems of Innovation” perspective for their story of how the New World wine countries caught up with the Old World wine countries of Europe. Sectoral systems of innovation are conceived as an extension of “the traditional concept of sector adopted in industrial economics” and include more actors, non-market interactions in addition to market interactions, and “knowledge and learning processes” (p. 24). This perspective, the authors suggest, is useful to cope with the dynamic and complex interplay of firms, industries, markets, and countries. The authors conclude the chapter with the insight that innovative, scientific approaches to production, knowledge imports, universities, and R&D-organizations have all contributed towards the modernization of the wine industries in the New World wine countries.
Under the title “The changing geography of science in wine: evidence from emerging countries” Cassi, Morrison and Rabellotti report in Chapter 3 the results of their bibliometric investigation of (i) the contribution of New World wine countries to internationally published wine research and of (ii) the interconnections among productive wine researchers who publish. The data used for this purpose are derived from the World of Science edition of the Science Citation Index Extended (SCIE) of the Institute of Scientific Information (ISI), which has become the standard source for such studies. In total, more than 12,000 records of publications from the period 1992–2006 were analyzed. The chapter impressively documents the growth in the contribution of the New World wine countries to the international scientific literature related to wine and grapes. Moreover, analysis of co-publications, i.e., publications co-authored by researchers affiliated with different research organizations, reveals a trend toward more complex national and international networks of cooperation in the world of wine sciences.
In the third chapter of Part I of the book Kym Anderson provides a brief account of the boom-and-bust phases in the evolution of Australia’s wine industry. In addition, Anderson describes the main organizations and institutions of the innovation system that has provided the basis for the spectacular success of Australia’s wines in world export markets during the last 25 years. Advertising, brand building, and research are all concerned with the production of information, which is a non-rival good that invites free-riding. Apparently, the arrangements of the Australian wine industry succeeded in internalizing much of the information externalities, and in overcoming the free-rider problem associated with generic advertising and R&D.
Part II of the book collects case studies of the various ways in which New World wine countries have employed their sectoral systems of innovation – universities, public R&D organizations, and researchers – in their efforts to become competitive players in global markets for wine. In Chapter 5 Kunc and Tiffin compare the activities of two universities, one located close to the Mendoza wine region of Argentina and the other located in the heart of Chile’s Maule Valley wine region. The comparison includes wine-related research activities, training of wine industry personnel, consulting, and networking activities by the universities.
The relationship between product upgrading and the intensity of networking activities by oenologists in the Mendoza and San Juan wine regions of Argentina is the focus of Chapter 6, “The remaking of the Argentine wine sector” by McDermott and Corredoira. A sample of 115 firms was surveyed of which an extremely high proportion (97 percent) responded. Results of eight regression models are reported which explain levels of product upgrading in terms of some control variables and a battery of thirteen variables measuring the network linkages of oenologists to other firms and to government support institutions. No crisp and clear qualitative results emerge from this analysis.
In Chapter 7, “Bridging researchers and the openness of wine innovation systems in Chile and South Africa”, Giuliani and Rabellotti apply techniques from formal network analysis to identify “bridging” researchers and to investigate their characteristics. A “bridge” in a network is usually understood as the only link between two nodes. In this chapter “bridging researchers”, in contrast, are defined as “those researchers who are simultaneously well connected with both the domestic industry and the international academic community” (p. 156). Information on their networking activities were collected from 42 researchers in Chile and from 40 researchers in South Africa. Results suggest that researchers in Chile tend to entertain more links to researchers in the USA whereas their South African peers look more towards Australia and Europe. Moreover, the authors were able to show what many research managers and policy makers appear to know intuitively: “First, . . . there is a small number of researchers who at the same time have a prominent scientific openness as well as a significant degree of connection with the domestic industry”, and “Second, these researchers are significantly more ‘talented’ than the other researchers . . . ” (p. 165).
The fourth and last chapter of Part II of the book contains a description by Lorentzen of institutions and organizations which provide innovation support services to the grape and wine producers of South Africa’s Western Cape Province. In addition, the chapter contains a verbal summary of the results of extensive interviews of 23 members of Winetech, an organization which is at the center of many wine innovation activities in South Africa.
The book closes with Chapter 9, “What have we learned from the wine industry? Some concluding remarks.” Here the editors of the book return to the issue of catching-up and they summarize the results and insights from the individual chapter in four lessons and three policy recommendations.
The key lessons are (pp. 203–205):
. 1) “Traditional sectors are not necessarily low-tech and characterized by low knowledge intensity; they can be knowledge intensive and highly innovative.”
. 2) “Innovation is not just the result of formal R&D.”
. 3) “Access to foreign knowledge and local capability building are complementary activities.”
. 4) “Networks of private and public actors are key to learning and innovation.”
Lessons 1–3 are likely to be familiar to most scholars of innovation in agrifood industries. Lesson 4, in contrast, adds a novel and potentially seminal perspective to what earlier research might have called “spillovers”.
The policy recommendations submitted by the editors are (pp. 206–207):
. 1) “. . . to invest in public universities, tertiary formal education and PROs [Public Research Organizations], paying special attention to the specialization and specificity of wine regions.”
. 2) “to attract and support talent and to take advantage of international linkages to build domestic research and innovation competences.”
. 3) “. . . to experiment with new forms of governance of public-private partnerships, so as to implement participatory mechanisms in setting research agendas.”
There are two weakness of the book that I would like to point out. First, the book neglects most of the vast and rich literature on catching up in agriculture. The big catch-up in agriculture was the Green Revolution in Mexico and South Asia some 40 years ago. This catch-up revolution also was science-driven and knowledge intensive. Moreover, in its wake came the founding of the CGIAR, which has evolved into a truly global non-profit research organization. The significance of the Green Revolution as a catch-up event would seem to exceed that of the New World wine revolution by far, but somehow the authors and editors have missed this story.
Whilst reading the book a nagging question emerged in my mind: Given that a R&D infrastructure or knowledge system is important, perhaps even indispensable for successful innovation in competitive global wine markets, why have the Old World countries not made better use of their own well-established research organizations? In Germany, the Geisenheim wine research station will celebrate its 140th birthday next year and the Oppenheim wine education and training facility on the other bank of the Rhine was founded some 115 years ago. But the German wine industry is not known for bubbling innovation. There are some hints in the book why this may be so: a double layer of domestic and EU regulation may be sufficient to suffocate many attempts at entrepreneurial innovation. But this only begs another question: Why did the wine industry in the Old World not acquire regulations that allowed it to make better use of its innovation potential?
Books that collect contributions from different authors can never be cut from one cloth, their style varies, and if the individual contributions are concerned with similar or related issued some repetition is unavoidable. This is also true for this book. But fortunately for its readers, repetition and overlap are small and tolerable.
Overall, the editors have produced a book that contributes to our knowledge of the significance of innovation for the success of the New Wine World countries. It helps us to better understand the drivers of the most recent episode of wine grape area expansion and wine production growth. The hardcover price is likely to dishearten some buyers. Fortunately, there also is a much cheaper ebook version available. Whatever the version, the book deserves a place on the shelves or data files of sociologists, geographers, economists, and policy makers concerned with the evolution of the global wine industry.
Rolf A.E. Mueller
Christian Albrechts University Kiel, Germany
The most-visited winery in the U.S. is not in California. The Biltmore Winery in North Carolina entertains about a million guests per year. By comparison, the Korbel Champagne Cellars hosts about 120,000 visitors and Robert Mondavi is in the neighborhood of 100,000 (Horiuchi, 2011 and Schlabach, 2011).
This is one of the anecdotes that Prof. Ian Taplin includes in a lively and entertaining history of the North Carolina wine industry. The book is filled with anecdotes about people, places and wineries. It also includes speculation about what forces might explain the recent revival of viticulture and wine making since 1990. But the work suffers from two defects. First, Taplin does not identify the position of the North Carolina wine industry in the national and global wine market. Second, he has tried to use an analytical framework (knowledge-based clusters) to add structure to his history. Taplin is not an economist and has allowed the lure of the cluster idea to blind him to other considerations.
Wine has been made in the southeast from the native muscadinia rotundifolia grape, commonly called muscadine, since the 1600s. But the real history of North Carolina winemaking begins after the end of prohibition.
Prohibition began in North Carolina on May 26, 1906, eleven years before the 18th amendment was adopted, persisting for five years after repeal. There was a surge in wine production in the 1970’s when the state imposed a differential sales tax on wine from outside the state, causing muscadine wine production to jump from virtually nothing to a high of 200,000 gallons per year. Production collapsed when the tax was ruled unconstitutional.
According to Taplin, vinifera plantings in North Carolina started in earnest in the Yadkin Valley and northern Piedmont in the early 1990’s. There were about 21 vinifera wine-makers and 200 growers by 2001 (Taplin, 2011, p. 78).
Taplin lists several causative factors – people like Charlie and Ed Shelton with the vision to see the Yadkin Valley as the “Napa Valley of the East,” (Taplin, 2011, p. 86), knowledge network effects of local wine production clusters, retirement of growers of traditional crops (especially tobacco), growing cultural acceptance of alcohol, and anticipation of the removal of the U.S. tobacco quota and price supports (finally ended in 2004).
Taplin believes the dynamism of clusters and of key North Carolina personalities caused this growth, but offers no stronger evidence than proof by anecdote:
“ . . . the number of wineries would double again every two years up to the present. . . . one can discern a pattern of trial-and-error learning, a gradual accumulation of viticultural knowledge and the establishment of informal procedures for exchange of tacit operational details.” (p. 69)
“One can see [. . .] how a series of intersecting events has produced circumstances that enabled an incipient market to develop. It did so through the growth of informal structured interactions based upon cooperation and knowledge exchange that provided allocative efficiency to firms.” (p. 100)
We have two comments about these excerpts. First, clusters create allocative efficiency? A citation for this claim would have been nice. Second, this dynamic is nothing new. In other regions, winemakers routinely help each other. At the 1981 opening of the Amador Foothill Winery, owner Ben Zeitman thanked Bardon Stevenot who had been making wine nearby for several decades. Although Taplin did find that a few North Carolina winemakers obtained advice or hired staff from out of state, he paints a picture of a very insular wine industry. North Carolina winemakers mainly talk to each other.
This is the first flaw in the analysis. Taplin has failed to recognize the transmission of misinformation. He complains that North Carolina vinifera wines have a vegetal smell caused by methoxypyrazine, a problem which can be eliminated using well-known vineyard management techniques (Scheiner, et al., 2009). According to Taplin many North Carolina winery owners believe the vegetal smell and flavor are virtues rather than flaws to be fixed. Taplin fails to recognize that when a cluster is closed, misinformation transmits and becomes group truth just as easily as good information.
The second major flaw is Taplin’s failure to acknowledge the terror dimension of geographic cluster formation in the wine industry. Wineries tend to be built in areas that have appropriate terroir – absolute advantage – for growing vinifera. Terroir is at least as important as knowledge in fostering growth of a winery cluster.
Taplin stresses the role of tobacco at various places in the book. For over 50 years, North Carolina tobacco growers received about 38 percent of all tobacco support payments, the most of any state (Tiller et al., 2004, Table 2, page 8). Families kept their land and grew tobacco. California, a state without significant tobacco price support, started reviving wine production promptly after prohibition was lifted in 1933. In North Carolina wine production only began to pick up around 1990. However, after spending many pages discussing the transition from tobacco farming to growing vinifera, it turns out that only 1–2 percent of tobacco growers actually made this transition.
There are numerous pages scattered throughout the book that extoll the virtues of the Biltmore Winery. As mentioned earlier, Biltmore is the most-visited winery in the U.S. One reviewer (Lima) has tasted Biltmore wines. They are very similar to California wines. A search of the Biltmore Winery web site reveals their secret (Biltmore, 2011). Of Biltmore’s 17 wines, 16 are made from at least 50 percent California grapes. Only one (a chardonnay) uses 100 percent North Carolina grapes. Taplin’s use of Biltmore as an example of a successful North Carolina winery is misleading in the extreme. He does note that Biltmore sources juice from California and New York, but he attributes this to the inability of North Carolina growers to meet the demands of a winery producing 150,000 cases per year (p. 70).
But perhaps there is another reason. Recall the earlier discussion of the prevalence of methoxypyrazine in North Carolina grapes. Perhaps Biltmore is simply purchasing superior vinifera grapes from California.
The economic analysis in this book is often confused. For example, “. . . financial resources necessary to sustain them for years of red ink on the balance sheet” (p. 6). Few companies will survive long with red ink on the balance sheet. However, they might last several years if they only have red ink on their income statement.
Taplin’s frequent references to examining “these issues empirically” (p. 29 is one instance) leave the reader gasping for actual data. There are exactly four charts or tables, one with an obvious error. The metrics in Table 4.1 do not agree with those in the text. The table claims yields of 1,875 to 4,714 tons per acre. In the text yields of 2 to 8 tons per acre are cited. This glaring mistake makes the reader doubt the validity of the entire enterprise.
Readers of this book should focus on the lively narrative punctuated by quotations from Taplin’s numerous interviews with winery owners and winemakers. However, we recommend skipping the attempts at economic analysis. Reading those sections will only lead to confusion and headaches.
For the reviewers, the best part of the book review process was being spurred to begin reading Thomas Pinney’s masterly two volume history of wine in America (Pinney, 1989 and 2005). Naturally, Pinney includes a discussion of wine in North Carolina. See that book reviewed in this journal (Summer, 2006).
California State University, East Bay
and Norma Schroder
Blue Weasel Productions
Biltmore Winery (2011). http://www.biltmore.com/our_wine/trade.asp. Accessed June 25, 2011.
Horiuchi, G. (2011). Communications Manager, The Wine Institute. Personal e-mail communication, July 11.
Pinney, T. (1989). A History of Wine in America From the Beginnings to Prohibition. Berkeley and Los Angeles, California: University of California Press.
Pinney, T. (2005). A History of Wine in America: From Prohibition to the Present. Berkeley and Los Angeles, California: University of California Press.
Scheiner, J.J., Sacks, G.L. and VandenHeuvel, J.E. (2009). How viticultural factors affect methoxypyrazines. Wines & Vines, November, 2009. Available at http:// www.winesandvines.com/template.cfm?section=features&content=68769&ftitle= How%20Viticultural%20Factors%20Affect%20Methoxypyrazines. Accessed September 24, 2011.
Schlabach, S. (2011). Director of Retail Visitor Services, Korbel Champagne Cellars. Personal e-mail communication July 13.
Summer, D.A. (2006) Review of T. Pinney’s A History of Wine in America: From Prohibition to the Present. Journal of Wine Economics, 1(2), 191–194.
Taplin, I. (2011). The Modern American Wine Industry: Market Formation and Growth in North Carolina. London: Pickering & Chatto.
Tiller, K.J., English, B.C. and Menard, R.J. (2004). Tobacco quota buyout legislation: economic impacts in the southeast. Paper presented at the Southern Agricultural Economics Association, February 17, 2004. Available through the University of Tennessee Institute of Agriculture at http://agpolicy.utk.edu/pubs/tillersaea04buyou timpact.pdf. Accessed September 7, 2011.
Zeitman, B. (2011). Co-owner, Amador Foothill Winery. Personal communication, September 12.