Working Paper Category: Economics

This paper attempts to understand the mechanism of an upward trend in wine consumption in Japan by analysing its trend and possible correlations with food-related consumptions. Through the panel and time-series analyses of wine consumption and food-item expenditures, and of wine consumption and food-service industry sales, we investigate whether wine consumption is correlated with food westernisation in Japan and whether wine is gaining its steady place in daily life of Japanese. Although not robust, we find supportive evidences for both, particularly for the second one. While on-premise consumption, in particular at reasonably priced diners, is estimated to be an important factor for growing wine consumption in Japan, there are possible evidences that home consumption of wine is increasing. It is also suggested that reasonably price wine, especially that of imported wine, are likely to be the key for future wine consumption in Japan.

This paper examines the impact of the recent high taxation policy on Anatolian wine production as well as the value added loss from the use of grapes for non-wine consumption. The results clearly indicate that the high taxation policy is significantly reducing the wine production in Turkey. The suggested policy option of increasing the wine production may create six times more revenue than the existing policy outcome. A possible feasible policy is to remove the lump sum tax from exports and encourage export-oriented ‘Anatolian Old World’ wine.

We examine the impact of aging on wine prices and the Performance of wine as a long-term investment, using a unique historical database for five long-established Bordeaux wines that we construct from auction and dealer prices. We estimate the life-cycle price patterns with a regression model that avoids multicollinearity between age, vintage year, and time by replacing the vintage effects with annual data on production yields and weather quality. In line with the predictions of an illustrative model, we observe the highest rates of appreciation for young high-quality wines that are still maturing. The findings suggest that the non-financial "psychic return" to holding wines that are substantially beyond maturity is at least 1%. Using an arithmetic repeat-sales regression, we estimate an annualized return to wine Investments (net of insurance and storage costs) of 4.1%, in real GBP terms, between 1900 and 2012. Wine underperforms equities over this period, but outperforms government bonds, art, and stamps. Wine and equity returns are positively correlated.

In 1985, the Commission chaired by Judge Klopper reported on the illegal import into South Africa of chardonnay clones, which turned out not to be chardonnay but auxerrois, an inferior cultivar (variety). This paper examines the Evidence before and the Report of the Commission, and the political and institutional context in which it took place.

Anthropologists have long documented substantial and persistent differences across so- cial groups in the preferences and taboos for particular foods. One natural question to ask is whether such food cultures matter in an economic sense. In particular, can culture constrain caloric intake and contribute to malnutrition? To answer this question, I first document that inter-state migrants within India consume fewer calories per Rupee of food expenditure com- pared to their non-migrant neighbors, even for households with very low caloric intake. I then form a chain of evidence in support of an explanation based on culture: that migrants make nutritionally-suboptimal food choices due to cultural preferences for the traditional foods of their origin states. First, I focus on the preferences themselves and document that migrants bring their origin-state food preferences with them when they migrate. Second, I link together the findings on caloric intake and preferences by showing that the gap in caloric intake between locals and migrants is related to the suitability and intensity of the migrants’ origin-state food preferences: the most adversely affected migrants (households in which both husband and wife migrated to a village where their origin-state preferences are unsuited to the local price vector) would consume 7 percent more calories if they possessed the same preferences as their neighbors.

There has been an increase in interest in local foods among final consumers in the United States, and there has also been a rise in offerings of local products in restaurants. Here we use Zagat Survey data and restaurant-specific menu information to estimate factors that influence the availability of New York State (NYS) wine in 1,401 NYS restaurants. We focus on wine because the production region is clearly labeled on the menu and because there is a burgeoning wine industry in NYS. Our econometric results indicate that décor ratings, cuisine styles, certain wine list characteristics, and distance to wine regions have a statistically significant impact on the likelihood of NYS restaurants serving local wine.

In this paper, we examine the effect of food prices on clinical measures of obesity, including body mass index (BMI) and percentage body fat (PBF) measures derived from bioelectrical impedance analysis (BIA) and dual energy x-ray absorptiometry (DXA), among youths ages 12 through 18. The empirical analyses employ data from various waves of the National Health and Nutrition Examination Survey (NHANES) merged with several food prices measured by county and year. This is the first study to consider clinically measured levels of body composition rather than BMI to investigate the effects of food prices on obesity among youths. We also examine whether the effects of food prices on body composition differ by gender and race/ethnicity. Our findings suggest that increases in the real price of one calorie in food for home consumption and the real price of fast-food restaurant food lead to improvements in obesity outcomes among youths. We also find that an increase in the real price of fruits and vegetables has negative consequences for these outcomes. Finally, our results indicate that measures of PBF derived from BIA and DXA are no less sensitive and in some cases more sensitive to the prices just mentioned than BMI.

Wine is a complex product. Preferences for it are not only highly heterogeneous throughout the population, but also amply susceptible to context. The objective of this study is to discover and measure these preferences, focusing on a set of non-sensory attributes of wine.
To identify the most relevant non-sensory attributes of wine, from the consumers’ standpoint we considered four sources: existing literature, a Delphi survey (applied to wine marketing experts), in- depth interviews and a web-page survey answered by fairly large sample of wine consumers. Not all sources were consistent on which attributes were the most important. Notably, consumers did not select price as a relevant attribute on the web survey, even though it had been considered relevant in the in-depth interviews. Finally, six wine attributes were selected for inclusion in a stated choice (SC) experiment: grape variety, alcohol level, label design, product recommendations, price and discounts.
An efficient experimental design was then developed and a web based SC survey was applied to 274 regular wine consumers (who had already answered the previous web survey). These consumers have high income (among the richest 20% of the Chilean population), only 28% of them are female and 33% are 35 years old or younger. The SC experiment simulated a purchase, at a retail store, for a casual meal with friends. A fixed fictional brand was used for all the wines presented on the experiment. With this data we estimated various discrete choice models, including mixed logit and hybrid choice models.
Grape variety was found to be the main driver of preferences. Evidence of preference for higher alcohol levels was also discovered. Price proved to be highly endogenous, as it is strongly related to wine’s expected quality. Recommendation by a friend and critics were equally valued, except in the case of (self-declared) expert consumers. Preferences over label designs showed high variability. The results also suggest that price is a key attribute in the construction of expected quality by the consumer before tasting the product.

This paper investigates the relationship between alcohol consumption, deterrence, and crime for New York City. We examine high-frequency time-series data from 1983 to 2001 for one specific location to examine the impacts of variations in both alcohol consumption and deterrence on seven “index” crimes. We tackle the endogeneity of arrests and the police force by exploiting the temporal independence of crime and deterrence in these high-frequency data, and we address the endogeneity of alcohol by using instrumental variables where alcohol sales are instrumented with city and state alcohol taxes and minimum drinking age. We find that alcohol consumption is positively related to assault, rape, and larceny crimes but not murder, robbery, burglary, or motor vehicle theft. We find strong deterrence for all crimes except assault and rape. Generally, deterrence effects are stronger than alcohol effects.

It is hard to imagine in the 21st global wine economy, but until 50 years ago Algeria was the largest exporter of wine in the world – and by a wide margin. Between 1880 and 1930 Algerian wine production grew dramatically. Equally spectacular is the decline of Algerian wine production: today, Algeria produces and exports little wine. This paper analyzes the causes of the rise and the fall of the Algerian wine industry. There was an important bi-directional impact between developments of the Algerian wine sector and French regulations. French regulations had a major impact on the Algerian wine industry. Vice versa, the growth of the Algerian wine industry triggered the introduction of important wine regulations in France at the beginning of the 20th century and during the 1930s. Important elements of these regulations are still present in the European Wine Policy today.

We present a model of vine-growing specialization in the municipalities of the province of Barcelona in the mid-19th century that explains how a comparative advantage arose through a process deemed to be one of the starting points for Catalan industrialization. The results confirm the roles played by the ‘Boserupian’ population-push on land-use intensification and the ‘Smithian’ market-pull in a growing demand from the Atlantic economy. They also stress the conditioning function of agro-ecological endowments and socio-institutional settings related to income inequality. Vineyard planting gave rise to less unequal rural communities until 1820, but inequality grew again afterwards.

We investigate various characteristics, including firm-level panel data, of the Japanese beer market over time (over 30 years) to determine the level and nature of competition. Next, we conduct two sets of regressions using market share and firm-level accounting data in a variation of Boone’s (2008) measure of competition. While traditional indicators (very high market concentration, little or no overt price competition) suggest that Japanese beer firms do not compete, Boone-style regressions yield strong evidence of competitive behavior.

Almost half of the world’s vineyards are in the EU and the EU produces around 60% of the world’s wine. The EU is also the world’s most regulated wine market. In 2007, the European Union decided on a major reform of its wine policy, the so-called Common Market Organization (CMO) for wine. A crucial element was the abolishment of a system of planting rights to regulate planting of vineyards in the EU. However, before its implementation opponents of the liberalization of planting rights are lobbying EU governments to reverse the decision. Our paper provides the first theoretical analysis of the economic effects and the welfare implications of planting rights. Our model integrates the markets for land, planting rights and wine to analyze the efficiency and distributional effects. We analyze the impact of enforcement problems, trade restrictions, and the use of government reserves in the planting rights system.

Since wine is an experience good, experts may help to fill a lack of information to non-expert consumers. In the literature, the true impact of experts on the pricing of wine is unclear. Do they really influence the price? Is there a Parker effect? Or are meteorological conditions predominant? We use a dataset concerning the scores attributed to wines from France, Spain and United States by 19 experts over the period 2000-2010 and the corresponding meteorological conditions. The data aims to avoid endogeneity and bias rooted in errors of judgment. We show that Bordeaux wine prices are very sensitive to expert ratings, but this impact is not higher than it is for Californian wines or Spanish wines. Furthermore, we did not find any direct evidence of a Parker effect for Bordeaux wine, but a presumption of measurement errors of any individual expert.

This study examines vertical coordination in an emerging Illinois wine industry. Results generally corroborate earlier findings that quality matters, as temporal issues related to grape perishability increase the probability written contracts are used to procure grapes and decrease reliance on informal agreements. Hold-up concerns related to sourcing adequate quality grapes and at risk investments winemaking equipment displace informal contracts with in-house production. Older wineries also rely more on their own vineyards, and larger ones require additional outside supplies. There is also some evidence that a few wineries outsource wine production activities to more experienced and larger wineries.

It has been a persistent phenomenon in many societies that a large proportion of alcohol consumption takes place in company of other people. While the phenomenon of social or public drinking is well discussed in disciplines as social psychology and anthropology, econo- mists have paid little attention to the social environment of alcohol consumption. This paper tries to close this gap and explains social drinking as a trust facilitating device. Since alcohol consumption tends to make some people (unwillingly) tell the truth, social drinking can eventually serve as a signaling device in social contact games.

Do well-known restaurants stand the test of time? The objective of this short paper is to review the list of the top ranked restaurants from 1974 to 2010 and examine the sustainability of the grades of these restaurants over time. A new methodology to calculate migration and default rates is presented for selected years over the period under study. It is shown that these rates are relatively stable and low compared to bankruptcy rates. After 24 years, the default rate of top ranked restaurant is only about 32%.

The growth of the modern regulatory state is often explained in terms of an unambigu- ous increase in regulation driven by the actions of central governments. Contrary to this traditional narrative, we argue that governments often strove to weaken the autar- kic tendencies of regional laws, thereby promoting greater trade and a more integrated market. For this purpose, we focus on the wine industry in France at the turn of the twentieth century and take advantage of a quasi-natural experiment generated by a law implemented on 1 January 1901 which lowered and harmonized various local tax rates. We show that high internal taxes on wine, set by regional governments, discouraged trade and protected small producers. We then trace how the political response to this tax decrease led to increases in wine regulation.

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The act of purchasing wines is clouded with insecurity and many wine purchases therefore involve risk-aversion. Risks include functional, such as the taste of the wine or the physical aspects of the product, social, such as being embarrassed is the quality is not adequate, financial because of the cost of the product. Different people will respond to similar risky situations in very different ways. Numerous experiments have been undertaken by psychologists and economists in attempts to understand the behavior of risk-averse persons.
The experiments reported in this paper try to shed some light on this issue by analyzing choices within the framework of a purchase decision of a wine bottle when the context assumes a possible functional risk. The experiments are conducted with graduate and undergraduate students in different countries using a questionnaire and assuming either no information or full information on the probability that the wine may have a functional risk. The demand function is negatively related to the price of a bottle as expected. When potential buyers are facing a known functional risk, the demand curve is shifting downward.

While business sustainability has been defined as the protection of the ability of future generations to meet their own needs, we still have little understanding of how to facilitate investments in practices geared at long-term sustainability. In this paper we seek to understand the conditions that facilitate a long-term business perspective. We investigate how family ties to future generations can facilitate the adoption of sustainable practices. Using data from 248 wineries in the U.S. collected through a survey questionnaire, we show that ties to future generations, measured as the intention of the owner of the winery to pass down the winery to their children, positively impacts the adoption of sustainable certification. We also found that winery owners were motivated by both positive potential market outlook for sustainable wine and increase in quality of their product associated with certification, and that the market outlook motivation was stronger for higher levels of certification.

The ultimate goal of strategic decision‐making is to realize sustainable profits. To achieve this objective, managers must devise ways to create and capture value. Apart from actions to reduce production costs, to lower consumer transaction costs or to devise new products or services, the most promising strategy is to in‐ crease product demand by horizontal differentiation, i.e. by making the product sufficiently different from similar products offered by the competition. Using a large sample of restaurants from Croatia, a popular holiday destination in South‐ ern Europe, we show that adoption of either a “celebrity strategy” or a “wine strat‐ egy” is associated with significantly higher revenues. Since they require substantial investment in social capital or access to financial capital both strategies are diffi‐ cult, if not impossible to imitate.

Models of collective reputation are extended here to consider the effects from regional marketing efforts that attempt to establish links to famous production regions—a phenomenon we define as “reputation tapping”. We collect data from a laboratory experiment and estimate consumer response to information that ties U.S. wine regions to French wine regions. Results show that reputation tapping is significant for wines from emerging regions and important among subjects that are relatively knowledgeable about wine. Our findings also suggest that full protection of geographical indications would require the regulation of activities beyond those by individual firms.

In this paper we analyze the effect of expert opinion on the price-quality dispersion of experience goods by referring to a large sample of wines produced in the U.S. When controlling for the number of past critical reviews and for past quality scores attained on the producer level, the following results emerge from our analysis: (1) Price-quality dispersion grows with the level of past critical exposure. (2) Price- quality dispersion grows with the level of past maximum scores obtained. This is particularly pronounced if the difference between maximum and average points is high. (3) Both effects mentioned above exert their largest spillover in the low- quality bracket resulting in significant overpricing of mediocre wines.

Using stated choice methods, a sample of 223 wine consumers participated in a conjoint experiment where 36 hypothetical wine labels were ranked based on organic and “no sulfites added” labeling, as well as varying price and quality levels. The results indicate that quality and price are the primary factors influencing wine choice, while “no sulfites added” labeling does not directly determine the purchasing decision. However, we find strong evidence that, at parity with price and quality, the average consumer is willing to pay $0.64 for no sulfites added in wine. Additionally, a substantial segment (34.08%) of the consumer population is willing to pay a greater premium of $1.23 for no sulfites added, indicating a potential niche market to which marketing promotions could be targeted.

This study aims at predicting the effects of planting rights liberalization on the wine industry of south-western region of Germany. Introduced by the CAP reform of 2008, abolishment of planting rights shall go into effect from 2018 the latest and is expected to cause changes in production volumes and market prices for wine throughout the EU. Rheinland-Pfalz is the most important wine producing region in Germany and thus investigated as a relevant case study here.
In order to assess the effects of planting rights liberalization a long run static partial equilibrium model is developed. The model projects equilibrium supply, demand and wholesale market price for two types of wine: barrel quality wine and wine for further processing. Since the modelling is conducted for the long term perspective, climate change effects on the land suitability for wine grapes growing are taken into consideration. With abolishment of planting rights, the model projects an increase of production of quality wine and wine for further processing and the fall of their domestic market prices.

How do judgment devices influence price formation? We investigate this question through a study of the German wine market. The German wine market is characterized by the simultaneous existence of two classification systems: the official classification system referring to the “quality in the glass,” and the concept of “terroir,” introduced by a private association of quality winemakers, the Verband deutscher Prädikatsweingü- ter. We used a data set comprising 1,890 wines from 248 different wineries in the German wine-growing regions of Rheingau and Rheinhessen. Our results show that the two classification systems function as mutually exclusive strategic options for wine- makers. We also show that the non-official classification of terroir is much more power- ful in explaining price formation within the market.

This paper measures the impact of annual changes in temperature and rain on wine prices and revenue per hectare, in order to determine the effect climate change will probably have on viticulture.
Using the Ricardian Methodology and the prices and volumes data from Mendoza Board of Trade, Wine National Institute and Argentina’s Ministry of Agriculture I find a non-linear relationship between temperature and revenue per hectare. In Mendoza, income per hectare would reach its maximum for an average temperature of 17.5°C during the grapevine’s growing season.

Exploiting a natural experiment for New York City restaurants we analyze whether consumers’ quality perception is influenced by newly appearing expert opinion. As the leading restaurant guide Zagat has rated New York City’s restaurants since 1979 by drawing on consumer surveys. In 2005, with the first release of the red Michelin Guide New York City, Zagat faced a serious competition. In contrast to Zagat, Michelin relies on experts. Employing a difference-in-differences approach we analyze whether consumer assessments (Zagat ratings) have responded to Michelin quality assessments. While we do not find any significant Michelin-induced increase in perceived food quality, we find strong Michelin effects on service and décor quality. In addition, the inclusion in the Michelin guide induced substantial price increases. While restaurants that were not Michelin-reviewed can raise their prices in response to food quality improvements, service and décor improvement do not payoff. In contrast, Michelin-reviewed restaurant enjoy substantial returns only to service and décor improvement. Our results suggest that expert opinion on the New York City restaurant market exerts a negative externality on gourmets by giving restaurants incentives to invest mainly in service and décor leading to higher prices.

An attempt is made to synthesise the lessons from at least four different ways of looking at the South Africa wine industry: economics, climatology, viticulture, and the sociology of work. To this end, the economic performance of South Africa’s wine industry since democratisation in the early 1990s is reviewed, as is the effect of climate change on the industry. This is followed by an assessment of possible strategies for building international competitiveness whilst simultaneously coping with the effects of climate change. Here we argue that, while industry systems should allow the marketing of speciality wines (e.g. from a single vineyard, from a single estate), this is not a viable strategy for most wine producers. Furthermore, climate change will lead to volatility in the characteristics that identify different terroirs. For this reason, industry strategies should rather focus on the benefits of diversity, but with a range of adaptations that will also result in better quality wines. These encompass quality; geographic location; viticultural practices; the style of wines and the renewal of skills. In synthesising this argument, we then consider whether such a strategy could enhance or hinder greater international competitiveness for the industry.

The present-day border between Belgium and the Netherlands traces back to the separation of the Low Countries after the Dutch Revolt (1566-1648) against Spanish rule. The capacity to finance war expenditures played a central role in the outcome of this conflict. Excise taxes on beer consumption were the single largest income source in Holland, the leading province of the Dutch Republic. Beer taxes thus played a crucial role in financing the Dutch Revolt which led to the separation of the Low Countries and, eventually, the creation of Belgium.

It is widely acknowledged that landscape features can play a major role in determining tourism demand. The analysis presented in this work aims at assessing the impact of agricultural landscape and high-quality wine production on regional tourism flows. This paper focuses on Tuscany, a major touristy region in Italy renowned for its pleasant climate and enchanting countryside. Thus, agricultural landscape and high-quality wine production have been included as explanatory variables in a regression model encompassing also the socio-demographic and geographical characteristics of each municipality, accommodation availability, the presence and availability of protected areas and the main types of tourism attraction factors, such as art and proximity to the seaside. This model has been run tourist demand, which has then been disentangled into the international and domestic markets. Results allow concluding that agricultural landscape and the production of quality wines represent a positive externality for tourism flows. A monetary evaluation of the impacts of agricultural landscape and wine production has been performed. The results show that the yearly contribution of these externalities to the revenue of tourism services differs across the provinces. This can have important policy implications for tourism promotion choices and allows drawing a profile of the average tourist visiting different parts of Tuscany.

We develop a model to examine (1) the relationship between initial wine prices, regional reputation and bottle quality, as well as (2) the potential impact of a word-of-mouth effect, particularly via online social wine networks on price discounts. Regression estimation results based on this model provide empirical evidence to support the existence of a premium attached to bottle quality and regional reputation in setting initial prices. Moreover, we find a significant positive effect of regional reputation on discount rates, which indicates the existence of a word-of-mouth effect and its eroding effect on the regional reputation premium.

The object of this paper is to provide evidence concerning the extent to which consumers of liquor exhibit a demand for precommitment devices. One of the most frequently mentioned strategies for exercising self-control is to limit the availability of a problematic good by not maintaining an easily accessed supply. In a policy regime with shorter sales hours (either for on- premise or off-premise consumption), this strategy should be more effective; hence, if the strate- gy is widely used, alcohol consumption should be lower. In contrast, without time inconsistency, one would expect liquor consumption to decline with shorter on-premise sales hours (because of complementarities between liquor and other on-premise activities such as dining and socializ- ing), but not necessarily with shorter off-premise sales hours (because liquor is storable at low cost and the experience is repeated with high frequency). We examine a collection of natural ex- periments in which states expanded allowable Sunday sales hours for liquor. Our results indicate that consumers increase their liquor consumption in response to extended Sunday on-premise sales hours, but not in response to extended off-premise sales hours. Thus we find no indication that precommitment strategies affecting availability play meaningful roles in aggregate liquor consumption. Instead, the observed pattern coincides with predictions for time-consistent con- sumers who have rational expectations and low costs of carrying inventories.

This study investigates factors influencing coordination of the California grape and wine supply chain. Results corroborate prior findings that quality considerations and needs to protect investments in specialized or durable assets significantly increase usage of more formal coordination mechanisms like formal contracts and vertical integration or ownership. Consistent with findings for other industries, such investments are associated with greater contract complexity and inclusion of enforcement provisions, while trade partners’ prior experience working together decreases contract complexity. Furthermore, our results suggest that quality considerations extend to greater use of formal contracts further downstream.

Over the last years the field of wine economics has seen a surge in the amount of research carried on. Apart from the charm exerted by the item itself, the wine market is ideal to conduct economic research since it is characterized by the presence of thousands of small and medium enterprises, enormous variety of products, abundance of information and consequent huge information asymmetries among producers and buyers.
Wine is an experience good because consumers learn only after purchase about the actual quality of the product. As pointed out by Akerlof (1970), this feature can lead to market failures due to the information asymmetry between the producer, who followed each step of the production process (Dubois and Nauges, 2010), and the consumer. In extreme cases this can prevent agents from buying the good.
In order to reduce information asymmetries and avoid market failures wine guides have assumed the function of rating agencies (Hay, 2010)4. An extensive literature relying on hedonic price models has shown that the judgment of experts strongly affects the final price of wines (see, among others, Arias-Bolzmann et al., 2003; Lecocq and Visser, 2006; Dubois and Nauges, 2010) since market prices are most often determined before consumers obtain any direct and personal information about the quality of the wine of the current year (Castriota and Delmastro 2011, Landon and Smith, 1997; 1998)5. As shown by Ali et al. (2008), famous gurus like Robert Parker can affect even en-primeur wine prices. Therefore, wine guides represent a key factor that affects the market price mechanism (Oczkowski, 2001).
In spite of its prominence in shaping market equilibria, a number of studies have started pointing out that wine experts may differ in their opinion (Cliff and King, 1997; Ashenfelter, 2006; Hodgson, 2008). This paper aims at providing new evidence on wine experts’ behaviour when forming quality ratings. Using a unique database on Italian wines we show that tasters’ quality evaluations are affected by personal bias, which leads judges to be systematically more or less generous than their colleagues, and by personal preferences towards certain wine characteristics. Our results are even more interesting if we think that the tasters under scrutiny here work for the same wine guide and share a set of common and agreed tasting and rating rules.

Scores of wine competitions are held annually to bestow gold, silver or bronze medals upon a select number of bottles. Only within the past few years has the reliability of the awards come under rigorous scrutiny and been found wanting. The focus of these studies has been on the decision makers. For major competitions, these are typically expert judges who may or may not have been trained and who may or may not have been screened for consistency. Since ultimately the credibility of the decisions stems from the credibility of the judges, how they are selected is critical. But once reliable judges have been empanelled, how their opinions are recorded and aggregated becomes of paramount importance. It is well-known that an outcome of any vote depends as much on the choice of method used to combine the votes as on any other factor (Saari 2001b). After examining a number of procedures for comparing wines, Amerine and Roessler (1983) concluded that “[r]anking procedures are then usually preferred” (p. 168). Ashenfelter and Quandt (1999) used rank values, which they called “Points Against,” introduced in Amerine and Roessler (1983) to reassess the famous Judgment of Paris red wine competition. This method is equivalent to the Borda Count which Hulkower (2009, 2011) emphasized is the most mathematically defensible for combining individual rankings of wines to arrive at an aggregate ranking. In addition to the unique properties summarized in the third section of this paper, the Borda Count avoids distortions introduced by summing or averaging points assigned by individual judges which can diminish the influence of tougher graders thereby violating “one judge, one vote.” The purpose of this paper is to offer a ranking procedure based on the Borda Count that can be used to award medals in a manner that most reliably and completely reflects each judge’s opinion while preserving “one judge, one vote.”
A summary of recent studies exposing problems with wine competitions is presented in the next section. The case for the Borda Count is made in the third section and a method for awarding medals based on it comprises the fourth section. The fifth section is a discussion that compares the method proposed in this paper to an alternative in the literature. Conclusions are contained in the sixth section.

The availability of beer, wine, and spirits in grocery stores varies across the United States due to state-level regulations. Recently there have been a number of controversial legislative proposals to expand the distribution of certain alcoholic beverages, notably wine. Here we estimate how grocery store alcohol availability affects the prices and consumption of different types of alcohol. Then, changes in total alcohol consumption and the relative shares of beer, wine, and spirits are linked to traffic fatalities. While states with higher levels of total alcohol consumption have higher traffic fatality rates, econometric results show that the type of alcoholic beverage consumed is also relevant. Holding constant the total quantity of alcohol consumed, a higher share of wine correlates with lower traffic fatality rates, while the opposite is true for beer. Spirits are more strongly associated to traffic fatalities than wine, but less than beer. These findings suggest that the ethanol alcohol content in beverages is not a good indicator of its relative impact on traffic fatalities, and arguments against the wider distribution of wine as a way to reduce social problems may not be fully justified.

The influence of grape assortment in terms of assortment size and product function/product consistency on the technical efficiency of grape-growing family farms in Macedonia was analyzed. A two-stage Data Envelopment Analysis (DEA) method extended with bootstrapping was applied to the three-year average (2006-2008) of a panel dataset for 300 farms. In the first stage, output-orientated ordinary DEA and bias- corrected technical efficiency scores accompanied with confidence intervals were obtained. In the second stage, the impact of grape assortment characteristics on the efficiency scores obtained was assessed. The analysis revealed very high potential for revenue increases. Farmers with lower variety diversification, specializing in growing local and regional varieties and table grape varieties, achieved higher efficiency. Thus the ongoing revitalization and investments in Macedonian grape assortment should primarily be directed towards regionally recognized and table grape varieties. Grape variety diversification is generally not recommended.

Geographical indications (GI) have become a common mean of product differentiation in food markets, and a vast number of studies have estimated the price premium captured by specific GI products. We collected 30 valuation studies conducted across the globe, compiling a total of 183 estimates of GI premia for wine, cheese, coffee, meat, produce, olive oil and grain products.
The average premium is 13.3%, with a rather large standard deviation (24.59%). We show that models accounting for product characteristics and institutional framework (PDO, PGI, trademarks) can explain a large portion of this variance. GIs capture the highest percentage premium in markets for products with short supply chains and relatively low added value (e.g. fresh produce), while premia are lower for wine and olive oil, where alternative means of product differentiation (e.g. branding) exist. Controlling for product characteristics, GIs adopting stricter regulations (PDO) yield larger premia than less regulated ones (PGI).

A wine buyer is faced with a multitude of often diverging expert reviews and ratings of one and the same wine. In this article we attempt to shed light on the question to whose rating a regular buyer should pay attention. We do so by comparing the taste of regular consumers, captured by community tasting notes to the expert ratings of Robert Parker, the Wine Spectator and Stephen Tanzer. We find that for a randomly selected sample of 120 2005 Bordeaux wines Stephen Tanzer’s scores are most closely associated with the community ratings; and more interestingly, compared to expert ratings, average price paid for a bottle of wine is more highly correlated with median community score. The latter finding possibly confirms the “acquired taste” of experts, but may also be explained by cognitive dissonance.

Several states impede direct-to-consumer wine shipment from out-of-state sellers by excluding out-of-state retailers from direct shipment or by enacting production caps that prevent direct shipment of wines from wineries with annual production above a designated number of gallons. We explore the economic effects of these two barriers to competition by combining new data on winery prices and production with price data employed in previously-published research. Principal findings include: (1) Direct shipment by out-of-state wineries is sufficient to maximize the variety of wines available to consumers. (2) Excluding online retailers from direct shipment deprives consumers of access to significant online price savings and reduces competitive pressure on local wine merchants by reducing the number of wines for which online savings are available. (3) Low production caps in the 20,000-30,000 gallon range are tantamount to a ban on direct shipment of the wines in our sample. Higher production caps of 150,000-250,000 gallons allow direct shipment of wines with significant online price savings but, paradoxically, prevent direct shipment of the wines most likely to induce price-cutting by offline stores. (4) Combining exclusion of retailers with a production cap can either be redundant or more restrictive than either policy alone, depending on the level of the cap.

As Constitution framer James Madison warned, special-interest politics never cease. “The latent causes of factions,” he said, are “sown in the nature of man.” Without measures to control them, overbearing majorities or politically connected minorities would trample the rights of everyone else—taking property and destroying prosperity. The key was to set up a system of checks and balances to keep factions—today known as special interests—under control. Recent efforts by beer, wine, and spirit wholesalers show that Madison’s concerns remain relevant today.
Wholesalers have a long history of leveraging their position within the industry, employing state laws to secure a guaranteed slice of the market. However, recent court cases have challenged some of these anticompetitive state laws. Accordingly, the wholesalers’ Washington, D.C., lobbyists are turning to Congress to pass federal legislation that undermines the free market and constitutional principles in order to serve their narrow special interest. Their effort is embodied in a bill offered by Rep. Jason Chaffetz (R-UT), the Community Alcohol Regulatory Effectiveness (CARE) Act (H.R. 1161).
At the heart of this debate is wholesalers’ desire to maintain a government-enforced three-tier system for distributing alcoholic beverages. This system, present in nearly all states, requires alcohol producers—wineries, distillers, brewers—and importers to sell only to wholesalers, who in turn are the only source from which retailers may purchase their inventory. Most states—with notable exceptions such as California and Washington, D.C. — also ban “vertical integration,” preventing any single company from owning and operating businesses in more than one tier.
In many states, franchise laws—which depend on a three-tier system—also play a big role in alcohol distribution. Once a producer selects a wholesaler, it must abide by terms and conditions set in state franchise laws that grant legal and competitive advantages to wholesalers. Most franchise laws are written to make it extremely difficult and expensive for a producer to terminate the agreement. Many also require “brand exclusivity,” which prevents producers from hiring more than one firm within a designated area—either a state or local region—to compete in finding retail buyers for a product. Legally enforced brand monopolies and the inability to terminate contracts for non-performance make it extremely difficult for small-scale wineries, breweries, and distilleries to get their products to retailers, because wholesalers have little desire to market specialty products. These producers must focus on selling their products via their tasting rooms, direct-to-consumer shipping, or both, where it is allowed.
The three-tier system, along with franchise laws, promotes a highly localized, territory- based wine marketing system—which ultimately amounts to a system of fiefdoms. Accordingly, when policy change becomes a threat to the system, wholesalers turn to the government for help. The CARE Act is the wholesalers’ latest attempt to solidify their position.
To that end, H.R. 1161 would allow states to pass laws that impede commerce as long as they do not “intentionally or facially discriminate against out-of-state or out-of-territory producers of alcoholic beverages in favor of in-state or in-territory producers unless the State or territory can demonstrate that the challenged law advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.”
Should H.R. 1161 be approved, the courts might allow states to impose discriminatory laws against out-of-state wineries, but only if the state can argue that the impact is not intentionally protectionist. In any case, since the limited protections in H.R. 1161 apply only to producers, the bill would unleash an unbridled number of state-level protectionist policies affecting anyone else in the industry. Such laws will undermine sales of any domestic winery or importer whose brands are marketed via online retailers. It also might prevent direct shipping from producers who rent winemaking facilities because many states classify them as either retailers or distributors rather than producers. This blatantly unfair treatment may destroy many small entrepreneurial businesses, leaving fewer outlets through which wineries can reach consumers.
The wholesalers’ ultimate goal with such legislation is to limit the amount of wine and spirit sales that skip the wholesaler tier and deprive them of profits. For example, states like California allow retailers to buy directly from wineries in-state and even outside the U.S. If California retailers are free to ship these wines to consumers around the nation, wholesalers do not earn profits from those sales. By tying the hands of retailers and importers to ship interstate, wholesalers can block such competition. But the desire to avoid competition does not make a compelling political argument, which is why wholesalers claim to be guardians of the Constitution and states’ rights.
The wholesalers’ use of constitutional arguments is particularly ironic because James Madison specifically designed the Constitution to ward off such special-interest politics. In Federalist Number 10, Madison explained that the “principal task” of government is to control “factions” such as special-interest groups from trampling the rights of others.
Accordingly, Madison and the other framers advocated a form of government that would balance powers and employ checks and balances to limit opportunities for overbearing special interests to undermine liberty. The federal commerce power—which wholesalers want to overcome—is one of the many checks in the system. The debate over the CARE Act epitomizes the concerns that Madison had about the unwieldy and dangerous threat that special interests would always pose toward liberty. It is nothing more than a special-interest attempt to game the system to advantage one segment of the alcohol industry at the expense of everyone else.

By using an econometric approach this paper looks at the evolution of the world wine industry in the period 1961-2005. A particular stylized fact is the appearance of non- traditional producing and exporting countries of wine from the beginning of the nineties. We show that the success of these new producing and exporting countries can be explained by the importance of the demand from non-producing countries with little or no tradition of wine consumption, relative to the world demand. This stylized fact is consistent with a testable implication of the switching cost literature and to the best of our knowledge this is the first time that this implication is tested.

What determines wine prices? The question is obviously not new but the most recent papers dealing with this subject tend to go beyond a simple competitive market where the prices are the result of supply and demand. There is more than the price of wine in a bottle. The decision to market wine in a different bottle size is considered to have more to do with the judgment of taste and the feeling of pleasure than other factors. Does size matter? In this short paper we investigate the relationship between price and the size of the bottle for the same wine. We find that in the case of Champagne, the posted price of wine increases more than proportionally with the size of the bottle. However, this result does not fully hold for Bordeaux wines when we consider auction prices for large bottles.

Humans have cultivated vines for the production of wine for thousands of years. According to Unwin (1991), the origins of viticulture lie in the region between the Black Sea and the Caspian Sea and date back to the year 4000 BC, possibly even 6000 BC. There are few products that can look back to such a long history while the production process has remained more or less unchanged.
Accordingly, over the last millennia, a large body of viticultural and enological literature has accumulated. Early examples date more than 2,000 years back (Robinson, 2006). The Roman statesman, Marcus Cato, also known as Cato the Elder (234-149 BC), in his book “De agri cultura,” provides detailed practical advice how to profitably run a wine farm. Among other topics, he stresses that grapes should be fully ripe when harvested and all vats need to be perfectly clean to prevent wine from turning into vinegar. Another Roman, Lucius Columella, discusses many technical aspects of Roman viticulture in his treatise on farming “De re rustica” (60 AD). In two books, he elaborates on topics such as what grape variety grows best on what soil type. He lays out many elements of modern vine training and trellising. For instance, he recommends a vine spacing of a double-pace (about 1.50m), vines to be trained on chestnut stakes as high as a man and willow shoots to fasten the vines (a natural fastener that is still being used in the Mosel valley).
Economists have taken notice of wine and the vine as well. Adam Smith, David Ricardo, John Stuart Mill, Karl Marx or Leon Walras, all wrote, to some extent, about wine (see, e.g., Chaikind, 2010). Although these early writings are on topics such as the value of vineyard land or trade, they mostly touch wine only in passing or refer to it as an example. In addition, these references are too scattered over more than a century that they can constitute wine economics as an independent economic discipline.
Wine economics as a discipline that analyzes wine-related issues as its main focus entered the scene much later. Over the last two decades, wine economics has emerged as growing field not only within agricultural economics but in adjacent fields such as finance, trade, growth, and environmental economics as well. There are several academic associations that are devoted to furthering the economics of wine. At the annual conferences of the largest one of them, the American Association of Wine Economics (AAWE), more than 200 wine economists from all over the world regularly meet and present the results of their research.2 Since 2006, and in addition to the agricultural economics journals, there has been an academic journal entirely devoted to wine and economics, the Journal of Wine Economics.3 Furthermore, wine economics research has been increasingly recognized by general economics journals as well.
In what respect is wine different from milk, coffee, tea or beer? This paper wants to sketch the emergence of wine economics and recent developments in the economics literature. Furthermore, I want to shed some light on the three main research issues of wine economics: wine as an investment, environmental issues and the role of experts. The remainder of this paper is organized as follows. In Section 2, I provide some data on the development of wine in the scholarly literature over the last decades. Section 3 describes the emergence of wine economics. The central topics of wine economics are introduced in Section 4, 5 and 6. Section 7 concludes and provides an outlook.

Many economists and others are interested in the phenomenon of rising alcohol content of wine and its potential causes. Has the alcohol content of wine risen—and if so, by how much, where, and when? What roles have been played by climate change and other environmental factors compared with evolving consumer preferences and expert ratings? In this paper we explore these questions using international evidence, combining time-series data on the alcohol content of wine from a large number of countries that experienced different patterns of climate change and influences of policy and demand shifts. We also examine the relationship between the actual alcohol content of wine and the alcohol content stated on the label. The systematic patterns here suggest that rising alcohol content of wine may be a nuisance by-product of producer responses to perceived market preferences for wines having riper, more-intense flavours, possibly in conjunction with evolving climate.

In this paper, we analyze the careers from a sample of more than 1,000 top French chefs over more than twenty years and link it to the success or reputation of the restaurants where they have worked. This allows us to test what are the determinants of success but also to investigate the dynamics of performance and reputation, stress- ing the importance of the quality of apprenticeship, mentoring and entrepreneurship spirit. We find that the prestige of the restaurant where individuals work is on average declining along the career, and that the quality of apprenticeship is strongly related to the future success as chef.

The purpose of this paper is to empirically estimate the propensity for alcohol-related policies to influence rates of entry into foster care and the length of time spent in foster care. Alcohol consumption is believed to be major contributing factor to child maltreatment, associated with an increased likelihood of abuse and longer durations once in foster care. We analyze a panel of state-level foster care entry rates over time, followed by a duration analysis of individual-level cases. The alcohol regulations of interest include beer, wine, and liquor taxes and prices, and a measure of alcohol availability. Overall, these alcohol control policies appear to have limited power to alter foster care entry rates and duration once in care. We find that higher alcohol taxes and prices are not effective in reducing foster care entry rates, however, once in foster care, the duration of stay may be influenced with higher taxes, particularly when the entry was a result of an alcohol abusing parent.

In this paper we analyze the evolution of beer consumption between countries and over time. Historically, there have been major changes in beer consumption in the world. In recent times, per capita consumption has decreased in traditional “beer drinking nations” while it increased strongly in emerging economies. Recently, China has overtaken the US as the largest beer economy. A quantitative empirical analysis shows that the relationship between income and beer consumption has an inverse U-shape. Beer consumption initially increases with rising incomes, but at higher levels of income beer consumption falls. Increased openness to trade and globalization has contributed to a convergence in alcohol consumption patterns across countries. In countries that were originally “beer drinking nations”, the share of beer in total alcohol consumption reduced while this is not the case in countries which traditionally drank mostly wine or spirits. Climatic conditions, religion, and relative prices also influence beer consumption.