American Wine Economics: An Exploration of the U.S. Wine Industry
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The wine industry possesses unique characteristics that make it interesting to study from an economic perspective. This volume delivers up-to-date information about complex attributes of wine; grape growing, wine production, and wine distribution activities; wine firms and consumers; grape and wine markets; and wine globalization. Thornton employs economic principles to explain how grape growers, wine producers, distributors, retailers, and consumers interact and influence the wine market. The volume includes a summary of findings and presents insights from the growing body of studies related to wine economics.
Economic concepts, supplemented by numerous examples and anecdotes, are used to gain insight into wine firm behavior and the importance of contractual arrangements in the industry. Thornton also provides a detailed analysis of wine consumer behavior and what studies reveal about the factors that dictate wine-buying decisions.
goods. They are not inferior because their absolute level of quality is low, but only because consumers prefer to consume less when they have more money to spend and more when they have less to spend. Empirical Studies and Implications To measure the size of the effect of income on wine consumption, most economic studies use the concept of income elasticity of demand.9 The income elasticity of total wine demand has important implications for the wine industry. Long-term income growth of the
17. Bird 2005, 132–34. 18. Lewin 2010, 104. 19. If a wine is labeled as a blend of different grape varieties, the order in which the grapes are listed typically indicates their relative proportions from largest to smallest. For example, a wine labeled Grenache Syrah Mourvedre contains more Grenache than Syrah, and more Syrah than Mourvedre. 20. Lukacs 2000, 197–99. 21. White wines are typically bottled in spring and red wines in summer. 22. Lavin 2008. 23. Pregler 2005. 24. Lewin 2010,
with renewable biogas energy. It is acid-free and EcoLogo certified. To Julie, Robert, Sarah, and the memory of my parents Contents List of Illustrations List of Tables Preface Acknowledgments Introduction 1The Economic Approach to the Study of Wine 2The Wine Product 3Wine Sensory Characteristics 4Grape Growing 5Grape Markets and Supply Cycles 6Wine Production 7Bulk Wine, Private-Label Wine, and Wine Alcohol 8Wine Distribution and Government Regulation 9The Wine Firm 10Wine-Firm
For example, some wine critics have started to publish information on the actual alcohol content of wines they evaluate. However, these sources will become available only to the extent that consumers demand and are willing to pay for the information provided. 8 Wine Distribution and Government Regulation After a wine has been produced and packaged it must be distributed to consumers. The wine distribution system in the United States is very complex. Each state has its own regulations governing
the United States place relatively few restrictions on grape growing and wine production, but significantly more restrictions on wine distribution. In European nations such as France, Germany, and Italy, wine laws and regulations often impose substantial restrictions on grape growers’ choices in the form of permissible grape varieties, maximum grape yield, and viticultural practices, such as allowable pruning techniques and trellis systems. Wine producers typically face legal restrictions on