Determinants of Argentinean Wine Prices in the U.S.

Martín, Guillermo J. San; Troncoso, Javier L.; Brümmer, Bernhard

doi:10.1017/s1931436100000560

Cited by 31 publications

(22 citation statements)

References 16 publications

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“…The negative coe¢cient on quality therefore indicates that when a …rm exports several wines with di¤erent levels of quality to a given destination, the high quality wines are on average exported in smaller quantities than the low quality wines. This is consistent with San Martín, Troncoso, and Brümmer (2008) who observe that more sophisticated, high quality wines are generally produced in smaller quantities.…”

Section: Baseline Resultssupporting

confidence: 91%

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Quality, trade, and exchange rate pass-through

Chen

Juvenal

2016

Journal of International Economics

144

156

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This paper investigates the heterogeneous response of exporters to real exchange rate ‡uctua-tions due to product quality. We model theoretically the e¤ects of real exchange rate changes on the optimal price and quantity responses of …rms that export multiple products with heterogeneous levels of quality. The model shows that the elasticity of demand perceived by exporters decreases with a real depreciation and with quality, leading to more pricing-to-market and to a smaller response of export volumes to a real depreciation for higher quality goods. We test empirically the predictions of the model by combining a unique data set of highly disaggregated Argentinean …rm-level wine export values and volumes between 2002 and 2009 with experts wine ratings as a measure of quality. In response to a real depreciation, we …nd that …rms signi…cantly increase more their markups and less their export volumes for higher quality products, but only when exporting to high income destination countries. These …ndings remain robust to di¤erent measures of quality, samples, speci…cations, and to the potential endogeneity of quality.JEL Classi…cation: F12, F14, F31

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Section: Baseline Resultssupporting

confidence: 91%

“…59 San Martín et al (2008) also expect the Wine Spectator rankings to be endogenous to the price of Argentinean wines sold in the US. They use the average score of all the wines of the same or older vintages or that belong to the same region of the wine under consideration as instruments for the quality rankings.…”

Section: The Endogeneity Of Qualitymentioning

confidence: 99%

Quality, trade, and exchange rate pass-through

Chen

Juvenal

2016

Journal of International Economics

144

156

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“…Economists often use hedonic models to empirically study price-quality and reputation effects [8,12,14,[16][17][18]. In his seminal paper, Rosen [15] posits that goods are valued for their utility-generating attributes.…”

Section: Literature Reviewmentioning

confidence: 99%

Wine quality, reputation, denominations: How cooperatives and private wineries compete?

Schamel

2014

BIO Web of Conferences

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Abstract. We analyze how cooperatives in Northern Italy (Alto Adige and Trentino) compete with private wineries regarding product quality and reputation, i.e. if firm organization affects wine quality and winery reputation. Moreover, we examine if cooperatives with deep roots in their local economy specialize in specific regional denomination rules (i.e. DOC, IGT). Compared to private wineries, cooperatives face additional challenges in order to raise wine quality, among them appropriate incentives that induce individual growers to supply high quality grapes (e.g. vineyard management and grape pricing schemes to lower yields). The quality reputation of a winery with consumers depends crucially on its winemaking skills. Wine regions differ with respect to climatic conditions and quality denomination rules. Assuming similar climatic conditions within wine regions as well as winemaking skills between firms, incentive schemes to induce individual growers to supply high quality grapes and quality denomination rules remain crucial determinants of wine quality and winery reputation when comparing different regions and firm organizational forms. The data set analyzed allows differentiating local cooperatives vs. private wineries and denotes retail prices, wine quality evaluations, indicators for winery reputation, and distinct denomination rules. We employ a hedonic pricing model in order to test the following hypothesis: First, wines produced by cooperatives suffer a significant reputation and/or wine quality discount relative to wines from private producers. Second, cooperatives and/or private wineries specialize in specific wine denominations for which they receive a price premium relative the competing organizational form. Our results are mixed. However, we reject the hypothesis that cooperatives suffer a reputation/wine quality discount relative to private producers for the Alto Adige wine region. Moreover, we find that regional cooperatives and private wineries specialize in specific wine denomination for which they receive a relative price premium (e.g. Alto Adige cooperatives specialize in DOC relative to private wineries in the region; private wineries in Trentino specialize in IGT denominated wines emphasizing their own brands). Our results indicate regional differences in terms of how cooperatives compete with private wineries with respect to wine quality and reputation. If cooperatives are able to implement incentive schemes to induce individual growers to raise grape quality, they may also gain a wine quality and reputation premium in the market. Specialization in local denomination rules allows private wineries and cooperatives to capture premium prices in different market segments.

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“…The data were obtained from the magazine Wine Spectator (2012), which offers a database that has been widely used in other studies (Troncoso & Aguirre, 2006;Miller et al, 2007;San Martín et al, 2008;Cuellar & Claps, 2013;Lee & Sumner, 2013). The digital edition of Wine Spectator includes more than 290,000 wine ratings covering all the main wineproducing countries, and including 12,500 Spanish wines.…”

Section: Methodsmentioning

confidence: 99%

“…Aging is included in many studies with significant results (Morilla & Martínez, 2002;Melo et al, 2005;Lecocq & Visser, 2006;Troncoso & Aguirre, 2006;San Martín et al, 2008;Rodríguez & Castillo, 2009;Perza, 2010;Kwong et al, 2011Kwong et al, , 2017. Spanish regulations establish only four wine classifications based on aging: joven, crianza, reserva and gran reserva 5 .…”

mentioning

confidence: 99%

Spanish wines in the US market: What attributes do US consumers look for in Spanish wines?

Areta¹,

Azcaráte

Apezteguía

2018

Span. j. agric. res.

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This paper analysed the impact of different attributes in Spanish quality wines on United States (US) demand behaviour. A hedonic price model was estimated in order to assess the values that US consumers give Spanish wines. The main results showed that the most influential factor on sale price was aging, which had a positive impact. US consumers valued the quality ratings provided by experts, especially in the upper price categories. The year of vintage and size of the winery were considered medium importance factors in decision-making, with the latest vintages and the smallest wineries receiving the highest ratings. Geographical origin (appellation) helped to explain consumer preferences. Although colour was the least important attribute in consumers' purchase decisions, red wines were the most highly rated in this attribute.

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Determinants of Argentinean Wine Prices in the U.S.

Cited by 31 publications

References 16 publications

Quality, trade, and exchange rate pass-through

Quality, trade, and exchange rate pass-through

Wine quality, reputation, denominations: How cooperatives and private wineries compete?

Spanish wines in the US market: What attributes do US consumers look for in Spanish wines?

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