All Working Papers

The aim of this study was to identify which attributes impacted the dynamic liking of
cheese and wine individually as well as when consumed together. Three wines (a white one, Pouilly Loché; and two red ones Maranges and Beaujolais) and three cheeses (Comté, Époisses, Chaource) were individually evaluated by a group of 60 consumers using mono- intake Temporal Dominance of Sensations (TDS) with simultaneous hedonic ratings. The same data acquisition screen was used for all products showing a unique list of 14 descriptors (covering cheese and wine perception) and a hedonic scale for dynamical rating of liking. The dynamic hedonic data was associated to the TDS profiles obtaining Temporal Drivers of Liking (TDL). The nine wine-cheese associations were evaluated by multi-bite and multi-sip TDS, consumed in a free manner. Individually, Chaource had practically no TDL, in Comté mushroom flavor was a positive TDL, and in Epoisses salty was a negative TDL. All wines presented TDL, but negative were only present in the red ones: bitter, sour and astringent. In wines, the positive TDL were: fruity, spicy and woody. Dynamic perception changes had a bigger impact on liking in wine compared to cheese. For the associations, the negative TDL were only three and mostly wine related: sour (for 7/9 combinations), bitter (6/9) and astringent (5/9). Positive TDL were more varied (a total of 10 descriptors) and were related either to wine or cheese. As opposed to what was found in cheese alone, salty was a positive TDL in two of the combinations. It was observed that the dynamic sensory perception had a more important impact on liking in wine-cheese combinations than when consumed separately. This shows that TDS and TDL have a big potential in the study of food pairing which should be further exploited.

It is obvious that exchange rates in uence exports since they add a uctuat- ing component to the costs or rather to the price in the destination country and therefore in uence the international competitive ability. Whether this in- uence on exports is of a special non-linear path dependence, called hysteresis, is investigated in this paper. To identify hysteresis, three methods are pre- sented and compared. First, the spurt method developed by Belke and Göcke [2001], second, the Preisach addition method which was used by Hallett and Piscitelli [2002] and third, the Preisach replacement technique which can be found in de Prince and Kannebley Junior [2013]. Both Preisach approaches use an algorithm provided by Piscitelli et al. [2000] to derive the so called Preisach variable from the exchange rate time series. After nding hysteresis in export values the question arises if the hysteresis descends from hysteresis in prices or quantities, see Göcke and Werner [2015]. Therefore, the study analyses values, quantities and prices, i. e. unit values, of European wine exports to the USA. As the entry into the US market requires sunk costs, for example for dealing with the extensive regulations, see e. g. Beliveau and Rouse [2010], FTA [2015], the requirements for the appearance of hysteresis are conformed. Indeed, the esti- mations revealed hysteresis for values in case of Italy and Spain and for prices in case of Italy and France.

Although grapevines have been cultivated in present day Germany since Roman times (e.g., Bassermann-Jordan, 1907), compared to European wine growing nations such as France, Italy, and Spain, Germany has never been a major wine producing country. Its geographical location between the 48th and 54th parallel and the resulting marginal climate restricts grape growing to the valleys of the Rhine river and its tributaries Ahr, Mosel, Nahe, and Main in the south-west. In addition, some professional viticulture, though at a much smaller scale, can also be found in the valleys of the Saale-Unstrut and the Elbe river in the eastern part of present day Germany.

The California Grape Crush Report includes summaries of quantities produced and estimates of the average prices and value of wine grapes crushed in California, and serves as an authoritative source of information on production and returns per ton by variety of wine grapes. The data provided in the Crush Report are used to calculate the total value of wine grape production as reported in the annual Agricultural Statistics reports published by the United States Department of Agriculture and in major industry publications. We use the differences among crush districts in the shares of production crushed to growers’ accounts to show that the current mechanism of calculating average statewide returns per ton understates the true total value of the crush by 14– 20 percent. We show that a more accurate estimate of the total value and average price can be obtained if the prices of the wine grapes that are sold are used to infer the prices of wine grapes that are not sold before computing the weighted averages.

French Oak barrels are considered a vital input for the finest wines, and comprise a very large portion of wine production costs. Wineries in the United States purchase French oak barrels priced in Euros, and have the opportunity to pay for their barrels early, in April, with a discount or in September with no discount. Given the inherent complexities in fluctuating exchange rates and limited resources of the average winery, little consideration has been placed on this purchasing decision despite potentially large cost implications.

We conduct a choice experiment where the number of labels vertically differentiating Chianti wines (Chianti, Chianti Classico, Chianti Classico Riserva, Chianti Classico Gran Selezione) is augmented incrementally in a between-subject design, eliciting both quality perceptions and wine choices. We find that quality expectations are endogenous to the labeling regime, and adding a high-quality label (e.g., Chianti Gran Selezione) decreases the perceived quality of all other Chianti wines (comparative stigma). A model conditioning on subjective quality perceptions with heterogeneous WTP for quality is then proposed, and estimated via random parameter multinomial logit. The endogeneity problem arising from using subjective beliefs as regressors is addressed by means of a control-function approach. Results are compared to reduced form approaches where the marginal utility of quality and subjective perceptions are confounded in a single label-specific estimate, and the model is used to determine how much of the cannibalization observed after introducing higher-tier quality standards is attributable to restructuring of perceptions and comparative stigma.

Wine production in Québec over the last twenty years has grown rapidly with an increased interest for diversified products in terms of quality and price. The growth of supply is related not only to the number of producers but also to the increased varieties of wines proposed. This paper proposes an economic analysis of wine production in Québec by analyzing the concentration level of producers. The level of competition has increased significantly between 2008 and 2105 due to an increasing number of small wine producers. An index of relative firm position in the market based on relative prices is calculated and we demonstrate that a high price strategy is significantly related to the size of the vineyard rather than the age of the domain or the number of wines produced.

Everything you know about wine is right -- for now. But by mid-century, global changes will have upended conventional wisdom in the wine industry: climate change, shifting global demand, new vinification techniques, and marketing innovations will transform the industry. Climate change will expand the areas now suitable for grape growing into northern latitudes and higher altitudes, while also changing the climates, and thus suitability, of current growing regions. More advanced and intensive manipulations during the vinification process will facilitate winemaking in new areas and allow adaptation in old ones. The desire for European-style wine by China’s middle class will skyrocket, fueling global demand that will fund the adaptation needed in both viti- and vinicultural sides of winemaking.
This transformation has profound implications for the environmental footprint of the industry and conservation, both in traditional wine regions and in emerging wine- producing areas. The large expansions of vine impinge upon areas of high habitat importance for iconic wildlife, and adaptation to warming and heat stress may mean more water use in current growing regions. Solutions – like those proposed in the Yellowstone to Yukon program and China’s Eco-Compensation program—must balance the needs of the wine industry with those of wildlife, and will therefore require extensive and collaborative land use planning.

The objective of the paper is to investigate how the market structure of grape varieties affects the performance in the wine industry. We examine the export performance of countries in 2000 and 2010 and analyze the market structure hypothesis applied to grape varieties and the technical efficiency of the market structure of grapes on exports performance using a Data Envelopment Analysis (DEA) methodology. Our results are based on a sample of 20 major wine exporting countries. First, only a few countries are efficient. Second, a small number of prime varieties is not a condition to obtain efficiency. Finally, concentration of top varieties is not sufficient to be efficient.

This paper identifies the macroeconomic determinants of fine wine prices and estimates their impacts on a monthly database from 1996 to 2015. The fine wine demand from emerging markets plays a key role in fine wine pricing, and more precisely, on the fluctuation of Bordeaux fine wine prices. Furthermore, the continuous weakening of the U.S. Dollar in real term favors the fine wine prices to increase. Since 2011, the slowdown of economic growth in emerging markets, followed by the depreciation of national currencies has engendered negative effects on the fine wine market. Along with the process of financialization in the fine wine market, fine wine prices have become more volatile. Factors such as money supply, real interest rate and the growth of investment funds start to show their influence on fine wine pricing.

Québec and Ontario wine drinkers displayed low interest in purchasing environmental friendly even if they were willing to price premium of CAN$1.11 for wines with “100% Eco-friendly” claim when buying a bottle with an average value of CAN$15.53. Organic and biodynamic affected negatively the price and purchase intent. On the contrary, consumers were most likely to buy (~6%) and would pay CAN$1.69 and CAN$1.29 more for wines sealed with natural corks compared to those sealed with synthetic or screw cap closures, respectively. However, closures and eco-label claims did not have a combined utility to respondents’ by signaling higher “environmental friendliness”.

This paper examines the survival rates of cooperatives. Traditional theories suggest that cooperatives are inefficient and consequently are prone to failure, but recent literature suggest they could be more resilient. Can cooperatives cope better? We found that French wine cooperatives survive longer than corporations. This result is robust to semi-parametric and parametric models, even when we control for mergers and acquisitions exits. The higher survival rate of wine cooperatives seems to be associated with an ability to shift the fluctuations of their environment to their members.

Crowdfunding has recently emerged as a novel way of financing new ventures. This coincides with a growing interest in wine as an investment good and with a search for new funding opportunities by wine makers. In this study, we first suggest a brief review of the literature on wine and finance as well as on how crowdfunding is entering the wine sector. In particular, we question who are the potential investors willing to engage in wine crowdfunded projects, and what kind of revenue could attract them. To go further, we also exploit an original survey where interviewees are asked about their wine consumption and purchase, their knowledge about crowdfunding, their relation to the Internet, their investment and project related to wine crowdfunding and their expectations concerning the returns from this type of contribution. We suggest that, among all forms of crowdfunding, the donation/voluntary contribution side, driven by intrinsic motivation, is likely to remain marginal compared to crowdfunding as an investment or a form of early purchase - a retail form of the “en primeur” sales. More generally, we ask how the public can help finance this sector and diversify the way wine is sold.

Most sommeliers, if not all, have a good understanding and knowledge of the wines they sell. But designing and managing the wine list is a different job, requiring a different set of expertise. As such, the sommelier’s managerial behavior seems critical in the success of a wine list and can be a substantial contributor of the restaurants’ profitability. Part of the profitability of the wine list relates to the mark-up that is applied to the wines available on the list. A mark-up is the amount the restauranteur will charge in addition to the cost of purchase of the wine. The purpose of this study is to analyse empirically the determinants of wine price mark-up size in the case of restaurants and respond to the following question: what are the determinants of wine price markup size?
Thanks to an original survey conducted in 2014 with sommeliers, we regress the declared mark- up against restaurants characteristics, wine list characteristics and wine stewart characteristics. Following a few words about mark-up determinants and the research protocol, we present the findings of the survey and its main managerial implications.

Gravity and pricing to market (PTM) models have been used to elaborate determinants of bilateral trade and export pricing for different countries and branches. Typically, only one of the two methods was chosen. We show in a stepwise approach that a combination of both methods yields novel results on the determinants of exports and export pricing behaviour. For the case of German beer exports, we show that structural differences exist between markets on which exporters apply either PTM or non-PTM strategies. German beer exporters apply PTM strategies, in particular local-currency stabilization, on those markets where imports are very sensitive to exchange-rate changes. Non-PTM strategies, i.e. full exchange-rate transmission, occur on export markets with insensitive reactions. Apart from PTM strategies, German beer exports are strongly dependent on policy variables such as the introduction of the Euro and the partner country’s membership in the EU.

Wine is mostly sold in closed bottles that prevent buyers from inspecting their contents. This practice turns wine into an experience good which buyers are unable to asses at the time of purchase. In order to reduce buyers’ information gaps, wine sellers provide information about the wine on one or several labels attached to the bottle. Wine buyers' problem then is to interpret this information and to assess its veracity. Institutional arrangements have emerged in Germany, as in other wine producing countries, that standardize communication between wine sellers and buyers, and that reduce the risk of wine buyers being misled by the information provided by the sellers. Core elements of the institutions are (i) verifiable wine quality categories or grades, (ii) wine examination by independent experts and certification of the information items provided by the wine bottler, and (iii) rules for the content and form of labeling information. Wines that satisfy all legal requirements for a quality wine are deemed to be "Tested Quality in the Glass". They are recognizable by a number that is issued for each wine that has passed examination; the number must be printed on the label. The objectives of this study are three: (i) to provide an English-language description of the German wine quality certification system, together with a summary of its legal basis; (ii) to describe an alternative private wine certification system that has been grafted onto the pubic system, and (iii) to encourage readers to think about how datafication of wine and digitization of wine certification may transform the "Tested Quality in the Glass" system. The study is of interest to all wine experts and scholars with an interest in wine certification, especially of German wines.

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Canada has a small, but vibrant winemaking industry. Since the US-Canada Free Trade Agreement (FTA), which went into effect in 1987, growers have shifted to vinifera grapes and modern winemaking techniques and there has been an explosion in the number of wineries, which number about 150 in the Niagara peninsula alone. However, their share of the Ontario wine market, which fell with free trade, has continued to decline. This paper delves into the reasons for the downward trend.
Ontario provides a unique source of data on the wine market, since a single price for each wine is enforced by the Liquor Control Board of Ontario (LCBO). The paper analyses data downloaded from the LCBO’s website at the end of 2012 for all Ontario white table wines available for sale, and for wines from both “old world” (France and Italy) and “new world” (Argentina and Chile) wine producers. It is shown that after controlling for wine characteristics Ontario wines are higher priced than their competitors. This helps to explain why, despite improvements in the quality of Ontario wines, the share of imports in LCBO sales has risen. Certain wine varieties, in particular Chardonnay and Riesling, command higher prices, while in Vintages stores (but not in ordinary LCBO outlets), both the age of the wine and alcohol content have a significant positive effect on price. In terms of exports, Canada is miniscule on the world wine market, and it does not have a revealed comparative advantage in wine (except for ice wine).
In addition to the disadvantage on input costs, Ontario wine production also suffers from an industry structure that limits the extent that most wineries can exploit economies of scale. A limit in the number of off-winery stores--included in the FTA and subsequently NAFTA to prevent further protection of Canadian wines--has led to an uneven playing field in which two firms, one now American owned, operate the vast majority of those stores. Other wineries are limited to selling through the LCBO or at the winery. Further development of Ontario’s wine industry is likely to require opening up wine retailing to allow all wineries to benefit equally. In order to avoid the strictures of NAFTA, this would have to mean opening up competition to a wider range of wine retailers able to sell both domestic and imported wines.

Eco-labels are part of a new wave of environmental policy that emphasizes information disclosure as a tool to induce environmentally friendly behavior by both firms and consumers. Little consensus exists as to whether eco-certified products are actually better than their conventional counterparts. This paper seeks to understand the link between eco-certification and product quality. We use data from three leading wine rating publications (Wine Advocate, Wine Enthusiast, and Wine Spectator) to assess quality for 74,148 wines produced in California between 1998 and 2009. Our results indicate that eco-certification is associated with a statistically significant increase in wine quality rating.

In this paper we develop an original approach to evaluate the costs and benefits associ- ated to a generic promotion program using an application to Bordeaux wines. The benefit is computed from the marginal impact of the collective reputation of the program on the individual reputation of its members. These different marginal impacts are estimated us- ing detailed survey data about the image of Bordeaux wines in seven European countries. We find positive and significant spillover effects from the umbrella reputation (Bordeaux) that moreover increase with the individual reputation level of the wine. Controlling for the natural endogeneity of the collective reputation in this setup, we capture the impor- tant fact that this relationship is faced with marginal diminishing returns. These spillover effects, when significantly positive, vary from a minimum of 5% to a maximum of 15% of additional favorable quality opinions. We then show that some subregions are more likely to benefit from generic promotion programs, suggesting that fees should be established on a benefit-cost basis.

Although evidence for anchoring effects has been produced in experimental settings, there have been relatively few studies testing for anchoring in actual markets. We analyze a large data set of vineyard sales in the Champagne region of France to de- termine whether Echelle Des Crus (EDC) ratings are an anchor in the land market. The EDC is a set of numerical scores for villages in the region that was used as part of a price-setting system for wine grapes that began in 1919 and persisted until 1990. Although grape prices are now determined in a market and the EDC no longer plays a direct role in determining them, we test whether the EDC continues to be an an- chor for participants in the land market. The econometric challenge is to separately identify anchoring effects from the effects of relevant information the EDC may convey about vineyard quality. We instrument for the EDC using the average attributes of vineyards in neighboring villages, which are unlikely to be correlated with errors in prices because only the characteristics of the vineyard itself affect the rents from grape production. We find strong evidence for anchoring effects in the land market, which is further supported by analyses of grape prices. We also examine whether the anchoring effect is diminishing over time as market participants come to rely more on objective information to determine prices. We find, instead, that effect of the EDC persists many years after it became obsolete.