This paper analyzes stock market reaction to court decisions related to the differential treatment of in-state and out-of-state internet wine sales. Several states had differential laws governing internet sales of wine directly to consumers for in-state and out-of-state wineries. These laws were possibly more harmful to small wine producers as their products are less likely to be carried by retailers. In May of 2005, The Supreme Court of the United States declared these practices unconstitutional. Prior to the Supreme Court granting the writ of certiorari there was a circuit split on the issue. Our study seeks to measure the impact of the Courts' decisions on the stock returns of wineries using standard event study methodology. The results show a negative stock market reaction to publically traded large wineries to the Supreme Court ruling. It appears that differential treatment laws were, indeed, beneficial to the large wineries. (JEL Classification: G18, Q28)

We use data from Wine Spectator on 266,301 bottles from 12 countries sold in the United States to investigate the link between the score awarded by the guide and the price charged. The link between quality and price is positive, in line with the literature. In a deeper inspection, however, hedonic regressions show that the price premium attached to higher quality is significant only for “superstar” wines with more than 90 points (on a 50–100 scale), while prices of wines between 50 and 90 points are not statistically different from each other. Furthermore, an analysis performed through normal heteroskedastic and quantile regression models shows that the dispersion of quality-adjusted prices is described by an asymmetric U-shaped function of the score; that is, products with the lowest and highest quality have the highest residual standard deviation. Pursuing excellence is a risky strategy; the average price is significantly higher only for wines that achieve top scores, and the price premium becomes more volatile.

Using a sample of New York City restaurants, we examine the relationship between a wine's bottle margin and whether the restaurant offers that same wine by the glass. We find that restaurants offer less expensive wines by the glass but set higher margins on these bottles than for similar wines offered only in bottles. Overall, offering wine by the glass is associated with a 5.0% increase in the bottle price and a 12.2% increase in the bottle margin. We find similar results for retail and wholesale markups of wine bottles. Our results offer evidence that settles a theoretical ambiguity in the menu-pricing literature (Anderson and Dana, 2009) about whether to raise or lower the price of a high-quantity package when introducing a low-quantity package of a good, as it applies to restaurant wine pricing. (JEL Classifications: L11, L83)

This study develops thirteen criteria to detail diverging direct shipping laws of the U.S. states. It also investigates why some states have prohibitive laws by utilizing a logit regression model. Regression results provide strong support for public finance and special interest arguments: It appears that states concerned about incurring losses in tax revenues, that is, that are heavily dependent on federal aid and have low state revenues, and protecting the wholesalers and retailers that benefit from the three-tier system (at the expense of wineries and wine drinkers) are most likely to have a prohibitive law. (JEL Classification: D72, H71, Q18)

This paper investigates the relative importance of various attributes, including varietal, brands, and geographic origin, in explaining retail wine prices for the United States market. We use a metric based on the Shapely value, from cooperative game theory, in the context of an empirical hedonic price equation estimated using a large sample of retail wine sales for home consumption over the period 2007–2019. We find that brands alone explain more than 70% of the variation in wine prices, but geographic origin and varietals retain additional explanatory power. Furthermore, information about the geographic origin appears to be a considerably more important attribute than varietals.

The changing legislative landscape of the U.S. wine market provides a scenario to examine the effect of regulation on the size distribution of firms. Using the variation across states and time in the sum of in-state and out-of-state adult populations between 2002–2017, and a difference in difference-style empirical model, I examine how restrictions on Direct to Consumer (DTC) sales impact the number of establishments and the employment at wineries. I find that the expansion of the potential wine market by 10 M adults caused about a 3.5% increase in the number of wineries. While reduced DTC restrictions explain growth in the number of wineries, I find no effect of lessened restrictions on the number of winery employees, though there is evidence of a lagged effect. Additionally, I find that the growth of smaller wineries substantially outpaces that of larger wineries when regulations are lessened. These results suggest that regulatory barriers in particular industries may allow states to maintain an artificial size distribution.

This article examines the diffusion of technological innovation within the California wine industry by studying the adoption of ozone-cleaning technology. The paper compares ozone with other sanitizing systems and reviews current perspectives on innovation diffusion and adoption before describing and analyzing the results of a 2007 industry survey completed by 128 California wineries. We find that the decision to adopt ozone-cleaning technology was correlated with its economic advantages but not with either demographics of decision makers or variables indicative of a winery's ability to absorb new information. (JEL Classification: Q1, Q16, O33)

In this article, we report the results of an experiment designed to address the effect of risk attitudes on valuations of aged wines. We find that higher risk taking in the economic domain is associated with a significantly higher willingness to pay for an old wine. Given the increasing interest of consumers and investors in old wines, our results are applicable to the pricing of old wines and to the use of auctions as an efficient willingness to pay elicitation mechanism. (JEL Classifications: C91, D44, L66)

In recent years, several European antitrust authorities intervened in the wine sector to authorize mergers and acquisitions, provide opinions to governments, and ascertain anticompetitive agreements. This article analyzes these interventions in the context of an evolving regulatory framework. I draw conclusions about the direction of competition policy, in particular in relation to possible co-operations among various players in the wine industry. (JEL Classifications: K21, L40, L51)

This paper examines the branding and marketing techniques used to develop the British champagne market in the nineteenth century. It draws upon the archives of the major French champagne houses and the extensive collection of price lists and marketing material in the scattered archives of W. & A. Gilbey, the dominant wine distributor in nineteenth-century Britain, to focus on the period from 1850 to the early 1900s. This period saw the creation of a powerful marketing template centered on a group of premium brands that endured for well over a century and influenced champagne marketing worldwide. Contemporary commentators saw a “cult” of famous brands, which disadvantaged consumers and merchants. Looking back at this period through the lens of a century of marketing history, we can clearly see a different picture: one of astute marketing (although that term was not then in use) that exploited selective distribution and created the concept of vintage-dated wine (what we would today call “limited-edition” product lines), making the champagne houses and their agents early exponents of Jean-Noël Kapferer's twenty-first-century “anti-laws” of luxury marketing. (JEL Classification: M3)

Logistic regressions identified determinants of red and white wine purchases in formal and casual restaurants, using a detailed dataset of over 26,000 consumer-level food away-from-home purchases in two Canadian provinces during 2000–2005. Meal context regressors, and prior behavior associated mainly with unobserved heterogeneity, contributed most of the explanatory power, with observable demographic regressors playing a modest role. The main strategic recommendation is thus to focus wine marketing resources on the restaurant environment, with less emphasis on targeting specific audiences. (JEL Classification: C25, D12)

Consumers use expert ratings to help choose wine, and economists find correlations between ratings and transaction prices. Rating scales resemble hedonic scales in the behavioral sciences, which suffer from an “intersubjectivity” problem. Taste is a private sensation; people taste differently (an external validity problem), so ratings are often unreliable hedonic markers of enjoyment. But why? Hedonic measurements from food science (“general Labeled Magnitude Scales”) attempt to adjust for differences in perceived sensory sensitivity and offer clues. Resulting insights illustrate wine ratings’ shortcomings as reliable guides to enjoyment. (JEL Classifications: C14, D12, D91, L15, L66)

This article aims to estimate the effect of expert assessments on the prices for single malt Scotch whiskies on the investment market. Our results obtained using an original dataset combining data from Jim Murray's Whisky Bible and a web trading platform specializing in whisky investment show that the quality rating is not a powerful predictor of investor ask prices, especially when controlling for distillery and bottler reputation. This finding suggests that although the Murray score may embed information of use to unsophisticated investors, its effect on price can be outperformed by a detailed knowledge of the whisky industry. (JEL Classifications: L11, L15, Q13)

Empirical evidence gives support to a close association between liver cirrhosis mortality and the intake of alcohol. The present analysis draws on a panel data set for sixteen European countries from 1970–2006 where both alcohol consumption and liver cirrhosis seem best described as trend-stationary variables. Consequently, a flexible non-linear functional form with country fixed effects including linear trends is applied in the analysis. It is argued that fewer restrictions on the relationship between liver cirrhosis mortality and alcohol consumption are appropriate for empirical modeling. The conclusion is that the total level of alcohol consumption as well as the specific beverages – beer, wine and spirits – contribute to liver cirrhosis mortality, but the present study also reveals that addressing the question of panel unit roots directly and in this case subsequently applying a trend-stationary modeling methodology reduces the estimates of the impacts from alcohol consumption to liver cirrhosis. Finally, more restrictive alcohol policies seem to have influenced the country-specific development in cirrhosis mortality positively. (JEL Classification: 110)

This paper analyzes buying decisions when consumers consider the risk that a bottle of wine may be cork-tainted. Drawing on a sample of 804 subjects, we examine the role of gender, price level, and subjects’ country of origin and their personal cork-taint risk assessments. We find that women assess the cork-taint risk higher than men but are still more likely to buy bottles with cork closures. Young consumers from Asia are more risk-averse than people from Western countries. Gender and regional differences vanish for wines in higher price brackets. (JEL Classifications: C90, D12, L66)

This study examines the impact of repealing Sunday blue laws on alcohol sales and retail competition, focusing on Connecticut’s 2012 policy change allowing Sunday beer sales in grocery stores. Using nationwide data from 2004 to 2021, we find a short-term increase in beer sales post-policy change, but no significant long-term economic effects on grocery and liquor stores. Our analysis also shows similar treatment effects for chain and standalone liquor retailers, suggesting limited lasting implications for the liquor retail industry’s performance and conduct after Sunday sale restrictions were lifted.

This paper examines the evolution of champagne prices in New York City from 1948 to 2013 by determining how many hours one must work, using after-tax income, to purchase a bottle of champagne. Each of the three brands analyzed—Bollinger, Louis Roederer, and Moët & Chandon—was divided into three tiers of nonvintage, vintage, and flagship champagne. The results indicated that all income groups worked fewer hours for entry-level nonvintage bottles of champagne, whereas the number of hours required to purchase flagship bottles generally increased. (JEL Classifications: E31, H24)

We developed a partial equilibrium model to examine the welfare impacts of bird damage and its control in California wine grape production. The model incorporates the impacts of pest damage and its control and allows the impacts to vary regionally. Importantly, the model requires minimal information to apply; only elasticities, current market price and production data, and information on the cost and effectiveness of the pest control methods are needed. We rely on data from a recent survey of California growers and use the model to estimate changes in wine grape prices, production levels, and consumer and producer surplus that result from both bird damage and its control in three grape-growing regions of California. Results suggest that eliminating the threat of bird damage and control costs results in an increase in producer and consumer surplus of 1.3% and 3%, respectively. Furthermore, eliminating current bird control and allowing any resulting damage would decrease producer and consumer surplus by 6.6% and 11.5%, respectively. (JEL Classifications: Q11, Q18, Q57)