The yeast, Brettanomyces bruxellensis (Brett) is a significant cause of quality defects associated with red wine spoilage. At least some wine producers spend significant resources to prevent, detect, and mitigate damage from Brett, and many express concern about it, but some producers and consumers say they like it in small doses. Brett damage is especially of concern in premium red wine and has become more of a concern to producers in recent years as consumers have become better informed about it. We combine information from diverse sources to develop an initial understanding of the economics of Brettanomyces and management practices to mitigate its consequences. An analysis of detailed confidential data from three wineries in California reveals that at least some wineries are incurring significant costs to reduce the risk of infection with Brettanomyces. Some other wineries that opt not to spend so much on prevention are incurring higher costs in treating infected wines and in lost value from wines being downgraded to lower-valued blends. Results from an online survey of industry participants reinforce the analysis of the detailed data from the three wineries and suggest that the findings may be indicative of conditions more generally across the industry. (JEL Classifications: D22, D24, L66)

Leuven's Den Hoorn brewery, now AB Inbev SA, has become the world's largest brewing group by far, but critics say the company overpaid for its acquisitions. In this article, we study typical stock market reactions to the many takeover announcements by AB Inbev and the industry's runner-up, Heineken. Unlike Heineken's, the market leader's takeover announcements were met by, on average, a –2% price reaction in the stock market in the announcement month, but most of that is already undone in the next month. For Heineken, the same pattern shows up, only faster: the V-shaped reaction takes a few weeks rather than a few months. Such V-reactions may actually reflect a temporary rise in uncertainty rather than overpaying. The finding that reactions are reversed and heterogeneous across firms, raises issues of interpretation and optimal test design of event studies. (JEL Classifications: G12, G14, G17)

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)

As for all traded products, aggregated wine imports build on numerous trades at the firm level. To ensure consumers access to a variety of wines with different qualities, importers need to connect to different wine exporters. Some of these relationships will last for a long time, while the duration of others may be short. In this article, we employ transaction-level data to analyze the duration of trade relationships in wine imports to Norway from 2004 to 2014. We find that most relationships are short-lived, as more than 75% of trade relationships end after less than two years. Furthermore, we find that higher-quality wines, as indicated by the import price, increase trade duration. Deeper firm-to-firm trade relationships for more exclusive wines are likely due to higher search costs for high-quality products. The results also show that the size of the initial trade between the partners, or degree of commitment, is a positive determinant for persistent relationships. (JEL Classifications: C41, F14, Q27)

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)