Wittwer, Glyn; Berger, Nick; Anderson, Kym,A Model of the World's Wine MarketsEconomic Modelling, vol. 20, no. 3, May 2003, pp. 487-506
Abstract
This paper describes the theoretical and empirical structure of the World Multisectoral Wine Model, which uses some of the features of general equilibrium models. The model is disaggregated into the expanding premium and shrinking non-premium segments of the wine market. To illustrate its usefulness, we model the impact on the global market of the projected rapid premium supply expansion in New Worldwine production to 2005. The results show supply-induced falls in producer prices of New World producers are dampened or even reversed in the projection period by a growing consumer preference globally for premium wine.
Xia, Yin; Buccola, StevenFactor Use and Productivity Change in the Alcoholic Beverage IndustriesSouthern Economic Journal, vol. 70, no. 1, July 2003, pp. 93-109
Abstract
Technology structure and change in the beer, wine, and spirits industries are examined here in a dual cost framework. Productivity growth in these industries has been strong and uninterrupted for the past four decades, outstripping that in the general food sector. Scale economies continue to be significant in brewing and distilling but are weak to nonexistent in winemaking. Substitution between raw materials and value-adding (labor and capital) inputs is high, implying that any reversal in factor price trends likely will bring substantial changes to production processes. Despite recent rapid increases in relative capital prices, technical change has shifted capital-material expansion paths toward capital, suggesting that new equipment is designed for its ability to save on raw material and packaging cost.
Seale, James L, Jr; Marchant, Mary A; Basso, AlbertoImports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine MarketReview of Agricultural Economics, vol. 25, no. 1, Spring-Summer 2003, pp. 187-202
The U.S.wine market experienced rapid growth in all facets--production, consumption, exports, and imports--over the past decade. Red wine imports more than tripled while consumption of domestically produced red wines doubled. This research estimates demand elasticities of U.S. red wine imports from five countries accounting for over 90% of imports--Italy, France, Spain, Australia, and Chile--using the first-difference version of the almost ideal demand system (AIDS). These elasticities are compared with those for domestically produced red wine. Results for conditional expenditure elasticities indicate that the U.S. red wine industry gains over imports when U.S. consumers' total expenditures on red wine increase. However, comparing own- and cross-price elasticities reveals an increase in the price of U.S. red wine results in a decline in quantity demanded six times greater than for French and Italian red wines and over 20 times greater than other import countries, thus harming the U.S. red wine industry. Empirical results suggest that U.S. red-wine producers could increase their total revenue by decreasing prices, while Italian and French producers can increase total revenues by increasing them.
Scott Morton, Fiona M; Podolny, Joel M Love or Money? The Effects of Owner Motivation in the CaliforniaWine IndustryJournal of Industrial Economics, vol. 50, no. 4, December 2002, pp. 431-56
Models that assume only consumer tastes determine the characteristics of supply are restrictive; producers can gain utility from aspects of production and pay for deviating from demand by accepting lower financial returns. We model and measure motivations of California winery owners, and analyze their effects on quality and price. We find utility-maximizers are more likely to produce high quality and set higher quality-adjusted prices. Profit-oriented owners are less likely to produce high quality wines. These results suggest that the presence of hobbyists who enjoy producing high quality may lower financial returns in the segment and discourage profit-maximizers from locating there.
Lockshin, LarryGlobalisation and Wine BrandingEconomies et Societes, vol. 36, no. 9-10, Sept.-Oct. 2002, pp. 1573-90
Wine is now a globally traded product, but it is still produced by thousands of small and large producers. They are faced with a rapidly consolidating of the retail channel. This paper develops the concept of branding as applied to the wine sector through a detailed literature review and provides a segmentation scheme for wine consumers. It concludes with directions for applying branding concepts for managers of small, medium, and large wineries.
Wittwer, Glyn; Anderson, KymImpact of the GST and Wine Tax Reform on Australia's Wine Industry: A CGE AnalysisAustralian Economic Papers, vol. 41, no. 1, March 2002, pp. 69-81
This study analyses the impacts of the Goods and Services Tax (GST) introduced on 1 July 2000, and the associated wine tax reform, on both the premium and non-premium segments of the grape and wine industry using a computable general equilibrium (CGE) model of the Australian economy. Through input cost reductions, the grape and wine industry is projected to gain from the GST tax package. Thus the industry can still gain even though wine consumption is taxed a little more heavily after than before the introduction of the GST. This is particularly so for the export-oriented premium wine segment. A switch from the current ad valorem to a revenue-neutral volumetric tax on wine under the GST is shown also to favour the premium segment of the industry, but at the expense of the non-premium segment.
Burton, Benjamin J; Jacobsen, Joyce PThe Rate of Return on Investment in WineEconomic Inquiry, vol. 39, no. 3, July 2001, pp. 337-50
Is wine an investment alternative to stocks and bonds? First, we review prior studies regarding the pecuniary rate of return to wine and other alternatives to financial assets. Next, we calculate the rate of return to holding red Bordeauxwine from 1986 to 1996 using a repeat-sale regression. Finally, we contrast the financial performance of wine, both on an aggregate basis and for various portfolios, to that of other asset classes. We conclude that wine does not yield greater returns than financial assets, especially when the volatility of returns and transaction costs are taken into account.
Andrikopoulos, Andreas A; Loizides, JohnThe Demand for Home-Produced and Imported Alcoholic Beverages in Cyprus: The AIDS ApproachApplied Economics, vol. 32, no. 9, July 2000, pp. 1111-19
The purpose of this paper is to investigate the demand and its composition between home-produced and imported for alcoholic beverages in Cyprus. The methodological approach used is the Almost Ideal Demand System (AIDS), both in static and dynamic terms. Empirically, the AIDS, both in its static and dynamic version, was estimated using time-series (1970-92) for three sets of data which include: (1) alcoholic beverages (wine-beer-other brandies) broken down between home-produced and imported (model A); (2) alcoholic beverages only without disaggregation between home-produced and imported (model B), and (3) aggregate alcoholic beverages (wine-beer-other brandies) and food (model C). Zellner's iterative estimation F procedure was used for estimating the model. The empirical findings: (1) strongly support the dynamic version of the AIDS over its static alternative; and (2) provide certain guidelines concerning economic policies relating to an increase in government revenues and changing the composition between home-produced and imported consumption of alcoholic beverages. These basic findings could be considered relevant to the policy makers in the light of Cyprus' accession to the EU
Combris, Pierre; Lecocq, Sebastien; Visser, MichaelEstimation of a Hedonic Price Equation for Burgundy WineApplied Economics, vol. 32, no. 8, June 2000, pp. 961-67
A hedonic price equation and two jury grade equations are estimated for Burgundywine: The approach is the same as in an earlier Bordeauxwine paper (Combris et al., 1997). The data come from an experimental study that is very similar to the study on Bordeaux wines. The results for the two wine-growing regions are compared and discussed
Heien, Dale; Sims, Eric NThe Impact of the Canada-United States Free Trade Agreement on U.S. Wine ExportsAmerican Journal of Agricultural Economics, vol. 82, no. 1, February 2000, pp. 173-82
On 1 January 1989 the Canada-United States Free Trade Agreement went into effect. The agreement reduced the restrictions on the importation and marketing of wine produced in the United States. This article analyzes the impact of this lessening on United Stateswine exports to Canada. A demand relation for United States exports to Canada is estimated and then used to decompose the effects into their proximate causes. These causes are (a) own-price and exchange rate effects, (b) substitute price and exchange rate effects, (c) changes in real income in Canada, (d) tariff removal effects, and (e) removal of nontariff trade barriers by Canada
Lecocq, Sebastien; et alThe Impact of Information on Wine Auction Prices: Results of an ExperimenDocument de Travail du CREST: 9936, May 1999, 12 pp
This paper reports the results of an experimental wine auction. Participants of the experiment were randomly assigned to three rooms. In each room four wines had to be evaluated, but the level of information to which participants had access differed across rooms. After the evaluations, the wines were sold sequentially, by four separate Vickrey auctions with secret reservation prices. We find that certain socio-economic characteristics such as gender, income and consumption habits, have a significant impact on the willingness to pay for wine, while others such as age and nationality, do not. We also find that once individuals have read the label characteristics and extracts from wine guides, the taste of the wines does not have an additional impact on willingness to pay. Conversely, if individuals who have only tasted the wines blindly are informed about the wine characteristics and opinions from experts, their willingness to pay increases substantially.
Hamman, Johann; Ewert, Joachim A Historical Irony in the Making? State, Private Sector and Land Reform in the South African Wine Industry Development Southern Africa, vol. 16, no. 3, Spring 1999, pp. 447-54
This article traces the development of the land distribution policy of the Department of Land Affairs (DLA) of South Africa. Despite the DLA's political commitment to land reform by way of restitution, redistribution and tenure reform, to date no small-scale wine farmers have been settled in South Africa by virtue of this policy. Three case studies describe how agricultural labourers have successfully gained access to this lucrative sector through private sector intervention. It is also argued that the small farm versus large farm debate masks the real opportunities for land reform in the wine industry