This study investigates a hypothesized positive relationship between the number and strength of network ties and the performance of wineries in emerging production regions, which may face different challenges than wineries found in well-established regions. Results corroborate expectations that greater ties to competitors and firms in related tourism food and lodging sectors bolster performance. (JEL Classification: Q130)

The purpose of this study is to examine how restaurants determine the percentage of wine mark-up. Wine sales are a substantial contributor to restaurants’ profitability, therefore a better understanding of the factors affecting mark-up is critical for the industry. Here, the mark-up is expressed as a percentage over the cost and refers to a cost-plus pricing strategy. Sommeliers from around the world, the majority of whom were members of the International Sommelier Association, were approached to complete our Internet-based questionnaire administered between February 2014 and May 2014. Of the 800 who began the survey, 267 fully completed the questionnaire, generating 1,869 observations. We regressed the declared percentage mark-up against restaurant and wine list characteristics, including managerial practices and wine steward characteristics, and showed that if the restaurants apply a simple rule of thumb to set wine prices, focusing on every price segment, it appears that sommeliers do not have much impact on the percentage mark-up. (JEL Classifications: C23, D21)

The inability of many wine judges to achieve perfect consistency by assigning the same rating to the same wine in a blind tasting is well established. Results for four wine tastings that include blind replicates are examined in this article. Although perfection is rare, the probability distributions of those results show that wine judges do tend to assign closer ratings to replicates than is likely due to chance alone. Approximately one-third of judges assign ratings that are within one rank of perfect consistency, and two-thirds assign ratings within two ranks of perfect consistency. This finding is sensitive to judges’ capabilities, the mechanics of the tasting protocol, and the extent to which the replicate is different from other wines in the tasting. Much wine-related research to date takes judges’ individual ratings as deterministic, yet these results show that those ratings are stochastic. These results yield a probability distribution that may guide future research concerning the uses and economic implications of wine ratings. (JEL Classifications: A10, C10, C00, C12, D12)

We evaluate the claim that bottle size formats signal quality changes by performing a controlled laboratory experiment in which we simultaneously auction two different sweet wines: a pomegranate wine and a grape wine. We vary the size of the bottle from 500 mL to 750 mL between participants, but we keep the amount of wine constant across the bottle sizes. We also explore the effect of expectations for the wines, blind tasting, and information about wine attributes on people's willingness to pay (WTP). For both wines, we find evidence consistent with diminishing marginal utility; for the pomegranate wine, we find a premium for the smaller bottle size, which is consistent with changes in the wine's perceived quality. We also find that information is adequate in offsetting the negative effect of the tasting treatment. (JEL Classifications: C23, C24, C91, D12, M31)

Holmes and Anderson (2017a) introduce two extensive data sets on world alcohol consumption and expenditure and with them investigate, among other things, the possible convergence of national alcohol consumption patterns using wine, beer, and spirit shares. Such share data define a composition, on which conventional statistical analysis using covariances and correlations is invalid. This note reanalyses the data using techniques appropriate for a composition and introduces a statistic that can validly track the variation in national shares around the global mean through time. This variability statistic shows that such convergence of national alcohol patterns has clearly taken place over the period 1961 to 2014 and thus confirms Holmes and Anderson's findings using a valid statistical approach. (JEL Classifications: C18, D12, L66)

Recent research in psychology and sociology has established a connection between political beliefs and unhealthy behaviors such as excessive alcohol, tobacco, and illegal drug consumption. In this study, we estimate the relationship between political ideology and the demand for beer, wine, and spirits using a longitudinal panel of fifty U.S. states from 1952 to 2010. Controlling for various socioeconomic factors and unobserved heterogeneity, we find that when a state becomes more liberal politically, its consumption of beer and spirits rises, while its consumption of wine may fall. Our findings suggest that political beliefs are correlated with the demand for alcohol. (JEL Classifications: D3, D12, I1)

This research examines long-run changes in alcohol consumption patterns for the United States, at the state level, and presents forecasts for per capita consumption of beer, wine, and spirits developed using the ARIMA methodology. The evidence is then presented on the extent of convergence in consumption through time. This evidence shows that from the 1970s through the early 2000s, a pattern of convergence in both the level of consumption and the consumption mix was evident, but since the early 2000s, and unlike the pattern observed globally, there has been a reversal of this trend. The changes in consumption through time are illustrated via ternary plots. Bayesian estimation methods are used to formally describe changes in historical consumption patterns and to investigate the impact of policy settings on consumption forecasts. There were no systematic correlations found between alcohol policy settings and forecast future consumption changes, or tax rate levels and forecast consumption changes. (JEL Classifications: D12, I18, L66)

This article discusses key comparative advantages of wine-producing nations and suggest prospective views on their evolution. Our methodology is twofold. First, we study comparative advantages in 16 countries using Porter's diamond. Then, we report results from a survey in which wine economists are asked to assess the future trade performance of these countries. Results are relatively consistent across methods regarding the future “heavy weights” like China, but also New Zealand and Chile, countries show the greatest potential to succeed in the future global wine trade. It is also expected that Georgia, the United Kingdom, and Australia play an important role, although to a lesser extent. Our findings indicate that comparative advantages in wine trade are neither uniform nor static; especially, terroir is no longer sufficient. The diamond approach contradicts experts from two countries in particular, France and Argentina, suggesting that experts put great emphasis on demand and market structures as key trade determinants for the future. (JEL Classifications: F14, Q17)

This paper shows how the hedonic approach to vineyard site selection can be used in the adaptation of vineyard land to climate change, natural disasters or other exogenous events. The basic idea is that, if the relation between weather and grape quality is known for each grape type in existing growing areas, then it is possible to predict the quality of grapes that would be produced in other locations, or in the same location with a changed climate. This permits the optimization of grape type selection for a location and also provides an indication of the value that a particular planting should produce. The relation of grape quality to the weather is provided for several well-known viticultural areas, including Burgundy, Bordeaux, Rioja, and the Piedmont. An application of the method to a new vineyard area in the Czech Republic following the demise of Communism is used to demonstrate the method. (JEL Classifications: O21, Q16, Q18, Q54)

En primeur sales of Bordeaux grands crus occur every spring on the Bordeaux marketplace and represent the main source of supply for wine merchants. We address two specific issues related to the en primeur strategy. First, we study whether en primeur prices are good estimates of wines' qualities, as well as how they may reveal any relevant information to uninformed buyers. Second, we consider which roles en primeur sales may play between traders, given the market informational and competitive structures. (JEL classification: D42, D82, L15.)

In comparison with other organizational forms, cooperatives have been found to offer poor product quality and suffer from low reputation. The main reasons discussed in the literature are information asymmetries, which leads to adverse selection and moral hazard, as well as the absence of profit orientation due to poorly specified and diluted property rights. However, although, in reality, many cooperatives indeed perform poorly, and some are apparently able to completely avoid or at least reduce the problems that are considered prototypical for this hybrid organizational form. Therefore, the purpose of this study is to identify the characteristics required to reduce the problems resulting from poorly specified property rights and information asymmetries and, hence, to successfully compete in the market. The data we use to identify the characteristics that separate “good” and “bad” cooperatives encompass 136 organizations in Austria, Germany, and northern Italy. Our logistic regression estimations show that older and larger cooperatives (in terms of acreage) have a significantly higher probability to be listed in at least one of two highly respected wine guides. Moreover, German cooperatives have a significantly lower probability of being listed than either Austrian or northern Italian cooperatives. The findings suggest that differences in performance can be explained by the management of cooperatives. (JEL Classifications: D23, D82, D86, J54, L22, L25, L66, P13, Q13)

The demand for wine is generally estimated on an aggregate level as a single commodity. However, as recent history shows us, the demand for wine not only varies considerably by varietal, but also by price point within each varietal. As a result, although estimates of the demand for wine may be beneficial to the wine industry as a whole, they provide little benefit to individual wine producers. Using scan data of purchases from US retail chain stores, this paper uses store keeping unit (sku) level data to overcome the limitations of prior research on the demand for wine by providing estimates for the demand for wine by varietal and price point. We also provide estimates of own price effects, income effects by color, varietal and price segment. Problems of endogeneity inherent in demand estimation are corrected by utilizing a novel instrumental variable technique using grape prices as the instrument. (JEL Classification: C23, D12)

A hedonic analysis is applied to a unique data set of Australian wines imported by the British Columbia Liquor Distribution Branch. The data included the important corporate red wine brands produced in Australia. Hedonic price functions are estimated for red Australian wines to show how price premia associated with the attributes of wine brands including the grape variety and alcohol content differ by corporate brands. Results show the positive effects on price of highly reputable brands, positive effect of grape variety Shiraz, and premia for alcohol content. (JEL Classification: D49, L15, L66, QII)

Mid-Atlantic wine consumers participated in an Internet survey to determine which of three attributes (retail base prices, Botrytis cinerea [bunch rot] control measure, or weed-control strategy) and attribute levels (e.g., a retail base price of $12, $16, $22, or $26) were the most important factors in their decisions to purchase 750mL glass bottles of wine. Conjoint analysis was used to calculate average importance for the three attributes. Based on these calculations, the base retail price attribute had the greatest impact on participants’ decision to purchase the wine (57.40%), followed by bunch rot control measure (20.76%) and weed control strategy (21.49%). Participants were also asked to indicate how interested (not at all interested to extremely interested) they were in purchasing wines produced from grapes grown using minimal pesticides or with cover crops to control weeds. Separate conjoint analyses were then performed based on participants’ level of interest in the two sustainable production methods. In both instances, the average importance values for retail base price were still higher than the values for either bunch rot or weed control strategies. Average importance values for price were lower for participants who responded that they were “very” or “extremely interested” in purchasing wine produced with minimal pesticides or with cover crops than for participants who were “not all interested” in purchasing such wines. (JEL Classifications: Q18, Q11, M31)

Intangible assets can play a strategic role in the implementation of differentiated strategies in foreign markets. The literature has addressed the impact of intangible assets on both exports and financial performance and the effects of exports on company financial performance (profit and risk). This article aims to analyze the effect of exports on the relationship between intangibles and company performance in the wine industry. Empirical studies show that intangibles have a positive but diminishing impact on exports. The effect of exports on financial performance differs depending on whether we consider corporations or cooperatives. While intangible expenses reduce company risk in both samples whatever the level of export intensity, the effects are different with profit. In corporations, intangible expenses have a positive impact on profit only when there is a high level of expenses and a high level of export intensity. (JEL Classifications: G32, L25, Q12, Q13)

The European Union (EU) is a major producer, importer, and consumer of wine, as well as other alcoholic beverages. Although it is possible to characterize demand for the EU as a whole, there is variation across the 27 countries that make up the EU. This research uses a simple standard model of demand and some descriptive statistics to characterize demand for alcoholic beverages and to identify four separate subgroups within the EU with different characteristics of wine and beer demand. Changing tastes over time turn out to be important in determining demand. (JEL Classifications: D12, F1, F15)

For many purchases, consumers often possess only limited information about product quality. Thus, observable product characteristics are used to determine expected quality levels when making purchase decisions. We use more than 1 million weekly scanner-level observations from grocery stores across ten U.S. markets between September 2009 and August 2012 to examine how consumers value a wine bottle's closure type (i.e., cork or screw cap). We focus on lower-priced wines—those with sale prices less than $30 per 750 milliliter bottle—to more accurately evaluate decisions of consumers for whom seeking additional information about wine quality is likely more costly than the benefits derived from that information. Using both pooled ordinary least squares and quantile regressions to estimate price premiums for bottles with corks or screw caps, we find that U.S. consumers are willing to pay, on average, approximately 8% more (about $1.00) for a bottle of wine that has a cork closure. In addition, we show that the size of this premium increases as wine prices decline. (JEL Classifications: D81, M31, Q11)

Classification of wines with a large number of correlated covariates may lead to classification results that are difficult to interpret. In this study, we use a publicly available dataset on wines from three known cultivars, where there are 13 highly correlated variables measuring chemical compounds of wines. The goal is to produce an efficient classifier with straightforward interpretation to shed light on the important features of wines in the classification. To achieve the goal, we incorporate principal component analysis (PCA) in the k-nearest neighbor (kNN) classification to deal with the serious multicollinearity among the explanatory variables. PCA can identify the underlying dominant features and provide a more succinct and straightforward summary over the correlated covariates. The study shows that kNN combined with PCA yields a much simpler and interpretable classifier that has comparable performance with kNN based on all the 13 variables. The appropriate number of principal components is chosen to strike a balance between predictive accuracy and simplicity of interpretation. Our final classifier is based on only two principal components, which can be interpreted as the strength of taste and level of alcohol and fermentation in wines, respectively. (JEL Classifications: C10, Cl4, D83)

In this paper, we compare three ranking methods in wine tasting in terms of their respective accuracy levels. The first two are the original-score average and rank average, which are conventional methods in practice. The third is a relatively new ranking method called Shapley ranking. It is a game-theory-based ranking method, whereby judges are required not to rank order or score all the wines but only to choose a subset that they find meritorious. A simulation study is designed, wherein the data-generating scheme mimics how the real wine-tasting data are produced. We also consider two criteria in the comparison: the squared-error loss, which is a suitable measure when accurate ranking of all wines is of interest; and the percentile loss, which only considers whether the wines are correctly put in a certain subset. The main conclusion from our study is that the ranking based on score average is generally more accurate than that based on rank average. Shapley ranking, with the consideration that it puts less burden on judges in wine tasting, may outperform the other methods in certain conditions. (JEL Classifications: C11, C15, D72, D81)

The influence of the wine rater Robert Parker Jr. on Bordeaux wine extended over a 40-year period, with a particular impact on en primeur wine prices. Consequently, his announcement in 2015 that he would no longer rate en primeur wines creates some uncertainty for many chateaux that have purposely designed their production with his palate and preferences in mind. Although the wine rater Neal Martin was named by Parker to be his successor in terms of en primeur wine ratings, there are several other wine critics who have consistently rated en primeur wines over several years. Consequently, we employ copula function analysis to explore which wine critics’ ratings exhibit the closest linear and nonlinear relationship, for right bank en primeur wines, with those of Parker. The study employs data over the period of 2005 through 2012, during which time several wine critics, including Neal Martin for the period of 2010–2012, rated en primeur wines alongside Parker. Our results indicate that of the wine critics that continue to rate en primeur wines, the ratings of James Suckling exhibit the highest rank correlation and also bivariate upper tail dependence, identified through copula function analysis, with those of Parker. (JEL Classifications: C19, G13, L66)