The Sideways Effect: A Test for Changes in the Demand for Merlot and Pinot Noir Wines

Abstract

This paper examines the effect of the movie Sideways on US wine consumption. Specifically, we examine the affects of the movie on the consumption of Merlot, which is derided in the movie and the affect on Pinot Noir, which is praised. We examine the trends in consumption before and after the movie and perform statistical tests for structural changes in consumption. We also test for changes in consumption of each varietal by price point. (JEL Classification: C22)

A “Sideways” Supply Response in California Winegrapes

“…With this important caveat in mind, it is best to frame our results more conservatively: our production estimates for Pinot and Merlot are consistent with the presence of a Sideways supply response, but demand factors other than the film may have also contributed to these estimated responses. That these supply responses are at least partially attributable to the film is reasonable given the price effects attributed to the film in Cuellar, Karnowsky, and Acosta (2009): vineyard managers and winemakers may or may not have watched the film, but they watch prices and respond accordingly.…”

“…Consumer preference trends have naturally triggered supply responses from producers in the United States, including impacts on production location and relative acreages of winegrape varieties (Alston, Lapsley, and Sambucci, 2020). The short-run supply of winegrapes of a particular variety is inelastic (e.g., Alston, Lapsley, and Sambucci, 2020). Winegrape vines are a perennial crop that spends two years in a nursery before being sold to winegrape growers, where they stand for another three years in the field prior to bearing marketable fruit (Smith et al, 2017).…”

“…Sideways grossed about $109M in total worldwide box office sales (The Numbers, 2004), won the Academy Award for Best Adapted Screenplay, and was nominated in a number of other categories. Cuellar, Karnowsky, and Acosta (2009) find that the Sideways film contributed to a measurable decrease in Merlot sales and stimulated consumer demand for Pinot, and increased its price.…”

“…This “ Sideways effect” serves as the starting point for our analysis: we test for a supply response observed through changes to acreage and tons crushed of Pinot and Merlot winegrapes and induced by the wine demand shock found by Cuellar, Karnowsky, and Acosta (2009). We restrict our analysis to California winegrape production.…”

“…

This paper explores growers' supply response to the 2005 "Sideways effect" demand shock (Cuellar, Karnowsky, and Acosta, 2009) triggered by the 2004 release of the movie Sideways. We use a modified difference-in-difference approach to evaluate the supply response in California and regional supply response differences within California.

…”