The wine industry in the United States has grown tremendously over the past few decades, from fewer than 1,000 wineries in 1980 to upward of 8,500 today. The growth has occurred over a period that has seen substantial changes in the structure of the wine industry, the modes of distribution available to wineries, and the regulations governing them. Most economic research, however, has focused on supply relations between wineries and wine grape growers rather than between wineries and their downstream markets. In this article, we examine wineries' contracting behavior with downstream distributors and the effects of industry structure, winery organizational structure, and state laws regarding direct shipment and distribution franchise laws. (JEL Classifications: D23, L14, L22, L66)

Ecolabels are part of a new wave of environmental policy that emphasizes information disclosure as a tool to induce environmentally friendly behavior by both firms and consumers. Little consensus exists as to whether ecocertified products are actually better than their conventional counterparts. This study seeks to understand the link between ecocertification and product quality. We use data from three leading wine-rating publications (the Wine Advocate, Wine Enthusiast, and Wine Spectator) to assess quality for 74,148 wines produced in California between 1998 and 2009. Our results indicate that ecocertification is associated with a statistically significant increase in wine quality rating. Being ecocertified increases the scaled score of the wine by 4.1 points on average. (JEL Classifications: L15, L66, Q13, Q21, Q56)

The prior literature disregards the time-varying conditional correlation and its importance for portfolio diversification when it assesses the risk-return profile of fine wine with that of stocks. To address this limitation, this paper applies a dynamic conditional correlation model and examines the co-movements between fine wine and stock prices in the United Kingdom (UK). Based on monthly data from January 2001 to February 2014, we find that fine wine is a hedge against movements in UK stocks. Nevertheless, it cannot act as an effective safe haven during market turmoil. Those findings have noteworthy implications for financial advisors and portfolio managers who are interested in alternative investments. (JEL Classifications: G1, G11, Q1, Q14)

This article examines the time-varying risk premium with reference to investments in fine wines. Unlike previous studies, our article focuses on this issue within the context of the financial crisis. To do this, we propose the use of a conditional capital asset pricing model and a multivariate generalized autoregressive conditional heteroskedasticity model on several appellation wines worldwide. We find that Bordeaux fine wines were more volatile during the financial crisis and are less volatile in non-crisis periods. In addition, while the volatility of Burgundy wines is second only to Bordeaux wines, non-French fine wines (Australia, Italy, and USA) exhibit inverse volatility trends to French fine wines. (JEL Classifications: C50, G01, G11, Q13)

In the context of the important implications of climate change, this paper analyzes the impact of weather on wine quality and prices for Australian premium wines. Motivated by a recognition of consumers’ accessed information sets, the impact of temperature and rainfall on retail wine prices is assessed through their relation with quality ratings from a high-profile wine guide and then on prices. For a broad spectrum of different quality wines from a cross section of wines available in 2014 and a separate analysis of eight wine varieties, the indirect approach to modeling weather effects through wine quality is found to be superior than assuming weather impacts directly on retail prices. The results also demonstrate the importance of regional variations in weather conditions in influencing prices and identify the optimal season growing temperatures for different grape varieties. (JEL Classifications: Q13, Q54)

This special symposium focuses on the analysis of climate change impacts on the spatial dimension of vineyard land use. This includes the analysis of projections of current vineyard areas that are lost due to climate change, those that are retained despite climate change, and new vineyard areas that are created due to climate change. The analysis explores the use of GIS over regional and global scales. Furthermore, this symposium sheds light on the socioeconomic dimension of climate change impacts on the wine industry and viticulture by exploring the use of an ecosystem service approach. Such an economic sector is responsible for the provision of a wide range of cobenefits in addition to wine products. These include biodiversity protection and cultural services, including landscape values and ecotourism benefits (see Nunes and Loureiro, forthcoming). In this context, this symposium endorses the ecosystem service approach to the management of vineyards as a regional strategic plan to promote sustainable development. This embraces a broad range of issues including (1) the improvement of people's quality of life; (2) the increase of prospects for more jobs in rural areas; and (3) the protection of regional commons, including both biodiversity and cultural heritage–oriented commons.

This study examines a framework developed by Cardebat, Figuet, and Paroissien in a 2014 Journal of Wine Economics article for identifying the impacts of both objective and subjective quality on wine prices. We recognize how various specifications are observationally equivalent and that the interpretation of model estimates depends crucially on the posited assumption for the relation between price and objective and subjective quality. The proposed framework is applied to Australian premium wines. Results indicate that the price impact of expert personal opinions is similar to the impact of objective quality as estimated via weather, vintage, and producer fixed effects. The relative importance of objective quality compared with subjective quality depends crucially on the ability of expert scores to accurately reflect objective quality. (JEL Classifications: C21, Q11, Q54)

In 2008, the European Union (EU) voted to liberalize its system of planting rights, which has strictly regulated vine plantings in the EU. However, after an intense lobbying campaign, the liberalization of the planting rights system was overturned in 2013, and new regulations could create an even more restrictive system. European wine associations have complained about the detrimental effects of the new regulations. There is a precedent in history. In 1726, the French political philosopher and landowner Montesquieu complained to the French king about the prohibition on planting new vines. Montesquieu was not successful in his demands to remove the system of planting rights. Old and recent history suggests that political forces against liberalization of planting rights are very strong. Only the French Revolution in 1789 led to a fundamental liberalization of planting rights. The “liberal period” of the nineteenth century was sustained by the combination of the French Revolution's liberal ideology, the thirst of Napoleon's armies for wine, and diseases that wiped out most of the French vineyards.

That said, in the past and the present, enforcement of planting rights is a major problem. In fact, despite the official restrictions, Montesquieu managed to plant his vines, allowing him to become a successful wine producer and merchant, to travel, and to spend time thinking, discussing, and ultimately writing up his ideas that influenced much of the Western world's constitutions. (JEL Classifications: K23, L51, N43, N54, Q18)

Climate change may drive shifts in global agriculture that will affect remaining natural lands, with important consequences for the conservation of species and ecosystems. Wine production is an excellent model for examining this type of impact, because suitable climate is central to product quality and production is centered in Mediterranean climate regions that are all global biodiversity hotspots. Adaptation to climate change in existing vineyards may involve water use to ameliorate heat stress or drought, resulting in additional conservation issues. Global studies of wine, climate, and conservation have highlighted the need for more detailed regional analyses to better understand these complex multiple issues. Here we examine impacts of climate change on winegrape suitability in California and its possible implications for nature conservation and water use. Under two global climate models and two emissions scenarios, winegrape suitability in California is projected to decline overall and to move into undeveloped areas that provide important habitats for native species. Coastal and upslope areas retain and improve in suitability, respectively, while inland areas see the largest losses in suitability. Areas of declining suitability are regions in which heightened water use for vineyard adaptation may lead to declines in stream flow or conflicts with other water uses. Continued growth in global demand for wine and reduced production in areas of declining suitability will drive expansion into newly suitable areas, potentially impacting important species native to California. Existing vineyards in areas of declining suitability will likely need to adapt to remain viable. Advance planning for a changing climate and adaptation options that are not water intensive (e.g. vine orientation, trellising, or varietal switch) will help reduce potential water conservation issues in those areas. (JEL Classifications: Q15, Q54, Q57)

The value of expert opinion for establishing prices in the Bordeaux futures market is analyzed. The expert opinions examined are the wine quality ratings provided by two of the world's foremost wine experts, Robert Parker and Jancis Robinson, for more than 1,700 red Bordeaux wines over the period 2004–2012. The results show that the experts' ratings have both a statistically and practically significant impact on prices after controlling for the effects of other known determinants of price. Thus, expert opinion has significant value in this setting. The results further show that although Parker's impact on prices is significantly greater than Robinson's, combining the quality ratings of both experts has a significantly greater impact than Parker's ratings alone. As hypothesized, the strength of the results differs for wines produced in different regions of Bordeaux because of differences in the availability of other quality-related information. All results are robust to several alternative sample specifications and other research design choices. (JEL Classifications: C52, G13, L11, L15, M21)

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)

The present paper aims to assess the impacts of climate change on grapevine cultivation in the Mediterranean basin by using three regional climatic models (RCMs), which were designed specifically for high-resolution simulation of climate in that region. RCM outputs were used to feed a grapevine growth simulation model, which was developed, tested, and calibrated for the Sangiovese variety. The study area was identified by implementing a bioclimatic classification of the regions based on the Winkler Index (ranging from 1,700 to 1,900 thermal units). The results indicated that the projected increasing temperatures will result in a general acceleration and shortening of the phenological stages compared to the present period. Accordingly, the reduction in time for biomass accumulation negatively affected the final yield. Few exceptions were found in the northern and central regions of the study area (southern France and western Balkans) for which changes in climatic conditions were not limiting and the crop benefited from the enhanced atmospheric concentration of carbon dioxide. (JEL Classifications: Q100, Q540)

We use rich IRI household- and individual-level data sets to examine the relationships between heart disease and type 2 diabetes with alcohol consumption. We control for a wide variety of potential confounders, including diet quality and lifestyle choices. Beer has long been studied in related literature to ambiguous outcomes. We explore the role of beer consumption in detail by separating craft beer from macrobeer and imported beer. The results indicate that most alcohol types could have protective effects against heart disease and diabetes, with the strongest effects occurring for craft beer and wine. Treating beer as a single, homogenous category in health studies likely leads to measurement error. (JEL Classifications: D12, I12, R20, L66, P36)

The European Union's (EU) long-standing financial support for its wine industry has been nontrivial but very difficult to estimate. The Organization for Economic Cooperation and Development's (OECD) generic producer support estimate methodology has been able to capture some of the supports, but it excludes such measures as subsidized distillation of low-quality wine, grants to promote wine generically, protection via import tariffs, and grubbing-up premiums. Nor does the OECD disaggregate EU supports to individual member countries. This article provides a new set of more complete estimates of support to EU wine producers. It also reveals how unevenly those supports are spread across EU member countries. The new estimates suggest that during 2007–2012, annual assistance amounted to approximately 700 euros per hectare of vines or 0.15 euros per liter of wine produced in the EU as measured at the winery gate. That is equivalent to a nominal rate of direct plus indirect producer assistance of approximately 20%. (JEL Classifications: F14, H25, L66, Q18)

In this article, we provide an overview of the extensive literature on the impact of weather and climate on grapes and wine with the goal of describing how climate change is likely to affect their production. We start by discussing the physical impact of weather on vine phenology, berry composition, and yields and then survey the economic literature measuring the effects of temperature on wine quality, prices, costs, and profits and how climate change will affect these. We also describe what has been learned so far about possible adaptation strategies for grape growers that would allow them to mitigate the economic effects of climate change. We conclude that climate change is likely to produce winners and losers, with the winners being those closer to the North and South Poles. There are also likely to be some substantial short-run costs as growers adapt to climate change. Nevertheless, wine making has survived through thousands of years of recorded history, a history that includes large climate changes. (JEL Classifications: Q54, Q13)