Get Ready for the Wine Industry Financial Symposium

Sue and I have just returned from a week in Northern Italy as guests of the Valpolicella Consorzio (look for a series of industry reports on Valpolicella and Prosecco in the coming weeks) and now we are getting ready to head to Napa, California for the Wine Industry Financial Symposium that will be held there on September 22 and 23.

The theme of the symposium is “Let the Good Times Roll,” which will strike some as a bit off-key since the California headlines this year have been dominated by bad news — first drought and then the recent Napa earthquake. The program (see below) doesn’t sidestep the challenges, but seeks to put them into the context of a rising tide in the U.S. market. It should be an interesting couple of days!

Monday’s program features workshops that focus on specific issues of interest to wine industry professionals including the Hispanic wine market in the U.S., the rise of craft beer, the emerging talent gap in the wine industry, tax issues and vineyard finance.  Lots of interesting topics and great speakers — something for everyone.

The Tuesday morning program accentuates the positive, beginning with David Freed’s industry overview and ending just before lunch with Carolyn Wente and the celebration of 130 years of Wente Vineyards. In between Dr. Robert Smiley will present the results of his annual survey of wine industry CEOs and John Ciatti will report on U.S. and global harvest trends.

I will talk about “Lessons from the Global Wine Wars,” with an overview of important global market trends, focusing on two that I think are particularly relevant for the U.S. industry today: the “premiumization” of the wine market and the surge in “disintermediation” in the wine industry.

Tuesday afternoon features sessions on social media marketing, “next generation” consumers and wine distribution. Looking forward to hearing the speakers and seeing everyone in Napa next week. Here’s the complete program. Cheers!

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Wine Industry Financial Symposium

Monday Workshops – September 22, 2014

Session I: 1:30 p.m. – 3:00 p.m. – Choose One

1. NEW DIRECT TO CONSUMER TRENDS
Examine new ways to relate to consumers through the direct to consumer channel. Speaker-moderator Craig Root will present several new tips designed to enhance your operation. Featured speaker Norman Stolzoff, President of Ethnographic Insight, will offer a detailed look at ethnographic research. This important field uses anthropological insights to solve real-world problems. Ethnography helps better serve customers, leading to profitable results.
Craig Root, Visitor Management Resources
Norman Stolzoff, PhD, President, Ethnographic Insight Inc.

2. TRANSACTIONS: WHO ARE THE BUYERS AND WHO ARE THE SELLERS?
John Mackie,
Partner, Carle, Mackie, Power & Ross, LLP, Moderator
Tony Correia, Owner, The Correia Company
Matt Franklin, Principal, Zepponi & Company
Josh Grace, Managing Director, International Wine Associates

3. THE HISPANIC WINE CONSUMER
What does it mean to the wine industry and what do we do to make wine the beverage of choice?
Steve Rannekleiv, Executive Director, Research, Rabobank International
Natalia Velikova, PhD., Texas Tech University

4. THE EMERGING TALENT GAP POSES RISKS FOR THE WINE INDUSTRY
Ray Johnson, Director of Wine Business Institute, Sonoma State University
Carol O’Hara, Partner, Burr, Pilger & Mayer, Moderator
Tom O’Brien, Director of Human Resources, Trinchero Family Estates
Larry Smith, Senior Vice President, Human Resources, Jackson Family Wines
Dawn Wofford, Managing Partner, Benchmark Consulting

Session II: 3:30 p.m. – 5:00 p.m. – Choose One

5. EQUITY AND DEBT MARKETS: CURRENT TRENDS AND FUTURE OUTLOOK
David Freed, Chairman, The Silverado Group
William Beyer, Principal, Prudential Agricultural Investments
Hal Forcey
, American AgAppraisal
Perry F. Deluca, Senior Vice President, Wine Industry Team Leader, Wells Fargo Bank

6. WHO IS THE COMPETITION? WILL CRAFT BEER AND CRAFT SPIRITS HURT WINE SALES, OR SHOULD YOU JUST JOIN THEM?
Bill Leigon, President, Jamieson Ranch Vineyards
Mark Crisler, CS, Founder & Chief Everything Officer, Trellis Wine Group
Jesus Ceja, Ceja Winery / Carneros Brewing Company

7. USE PERMITS: CURRENT ISSUES AND FUTURE TRENDS
Phillip Kalsched, Partner, Carle, Mackie, Power, Ross, LLP, Moderator
Dean Parsons, Project Review Manager, Sonoma County Permit & Resource Management Department
Jeff Redding, Principal, Land Use Environmental Planning Service
Beth Painter, Principal, Balance Planning

8. COMMON TAX ISSUES FOR VINEYARDS AND WINERIES
Federal Income Tax Updates, State Income Tax Updates, Sales Tax Updates and Estate Tax/Valuations
David Pardes, Tax Director, PricewaterhouseCoopers
George Famalett, Tax Partner, PricewaterhouseCoopers
Joan Armenta Roberts, Managing Director, PricewaterhouseCoopers
Eric W. Nath, ASA, Principal, Eric Nath & Associates
Thomas Garigliano, Tax Partner, Burr, Pilger & Mayer


Tuesday General Session – September 23, 2014
7:45 – 8:15 a.m.
COFFEE & REGISTRATION

8:15 – 8:20 a.m.
WELCOME & INTRODUCTIONS
Lisa Adams Walter, Director of Programs, Wine Industry Symposium Group

8:20 – 8:30 a.m.
WINE INDUSTRY OVERVIEW
David Freed, Chairman, The Silverado Group

8:30 – 9:15 a.m.
WHAT WINE INDUSTRY LEADERS THINK IS IMPORTANT FOR THE FUTURE
Robert Smiley, PhD, Dean and Professor Emeritus, Director of Wine
Graduate School of Management, University of California, Davis

9:15 – 10:00 a.m.
LESSONS FROM THE GLOBAL WINE WARS
Mike Veseth, Editor, The Wine Economist Blog

10:00 – 10:30 a.m.
GET – ACQUAINTED BREAK

10:30 – 11:15 a.m.
THE CALIFORNIA AND GLOBAL HARVEST UPDATE
John Ciatti, Broker, Ciatti Company LLC

11:15 a.m. – 12:00 noon
WENTE VINEYARDS CELEBRATES 130 YEARS
Carolyn Wente, CEO, Wente Vineyards

12:00 – 1:15 p.m.
NETWORKING LUNCHEON

1:15 – 2:15 p.m.
HOW SKILLFUL USAGE OF DIGITAL MARKETING AND SOCIAL MEDIA
NEED TO BE INTEGRATED IN THE BIGGER PICTURE OF BRAND BUILDING AND POSITIONING
John Gillespie, President, Wine Market Council and CEO, Wine Opinions
Karena Breslin, VP Digital Marketing, Constellation Brands
Alisa Joseph, Vice President, Business Development, The Nielsen Company
Mark Gordon, Digital Marketing Manager, Jackson Family Wines
Mike Osborn, Founder and VP Merchandising, Wine.com

2:15 – 3:00 p.m.
NEXT GENERATION WINE
Liz Thach, PhD, MW, Professor of Management and Wine Business, Sonoma State University
Judd Finkelstein, Judd’s Hill Winery
Lisa Broman Augustine, Broman Cellars
Nicole Bacigalupi Dericco, Bacigalupi Vineyards

3:00 – 4:00 p.m.
WINE AND DISTRIBUTION
Jonathan Pey, Principal, TEXTBOOK Napa Valley
Jon Moramarco, Principal, BW 166 LLC
Dan Grunbeck, EVP Corporate Business Development & Strategy, Youngs Market

4:00 – 5:00 p.m.
FINANCIAL SPONSOR FINALE
WINETASTING & RECEPTION – Hosted by WIFS Sponsors

 

American Association of Wine Economists Conference Program

As I noted last week, the American Association of Wine Economists are meeting in Walla Walla in a few days. I thought you might be interested in the full program, including papers, authors, activities and so on. Lots of interesting wine economics topics and ideas. Enjoy

JUNE 23, 2014 Whitman College, Maxey Hall

8:00 – 9:00

REGISTRATION, Maxey Auditorium Foyer

 

 9:00 – 10:30 Room – Maxey Auditorium  Session #1A: Consumers & Markets
Chair: XXX
Richard Belzer (Regulatory Checkbook) Leveraging consumer ignorance and information search costs to maximize profits in US wine ‘Flash sales': a follow up
Linda L. Lowry, Robin Back (both University of Massachusetts, Amherst) Impact of farm winery legislation S 2582: an act relative to economic development reorganization on Massachusetts wineries
Marc Dressler (University Ludwigshafen, Germany) Exploring success factors in export management – Results of a survey on relevance in the context of the wine business and performance of German producers
Olivier Gergaud (KEDGE Business School, Bordeaux, France), Philippe Masset (Ecole Hôtelière de Lausanne, Switzerland) Using information about web searches to forecast auction prices of fine wines

 

 9:00 – 10:30Room – Maxey 207  Session #1B: Tourism and Economic Impact
Chair: Luigi Galletto (University of Padova, Italy)
Christopher Lucha, Gustavo Ferreira, Martha Walker (all Virginia Polytechnic Institute and State University, Blacksburg) Virginia wine tourism: a profitability analysis
Luca Rossetto, Luigi Galletto (both University of Padova, Italy) Wine tourist profiles: a comparison between two wine routes in Veneto region
Theodore Lane (Western Regional Science Association), Bill Mundy (Bill Mundy Associates) Walla Walla’s wine-based agro-industrial cluster
Martin Prokes, Kamil Prokes (both Mendel University Brno, Czech Republic) Job creation by investing in the wine sector

 

10:30 – 11:00 Coffee Break
Maxey Auditorium Foyer

 

 11:00 – 12:30Room – Maxey Auditorium  Session #2A: Coffee & FoodChair: Morten Scholer (International Trade Centre, Geneva, Switzerland)
Morten Scholer (International Trade Centre, Geneva, Switzerland) Coffee: the product, the trade and comparison with wine
Samrawit Ebabe (Jimma University, Ethiopia) Constraints to Ethiopian coffee exports from a supply chain management perspective
Peter Roberts (Emory University) Product differentiation, pricing and fair trading in specialty coffee markets
Albert I. Ugochukwu University of Saskatchewan, Jill E. Hobbs. University of Saskatchewan Food product authenticity in agri-food markets: implications for collective reputation
Bernd Frick (University of Paderborn, Germany), Olivier Gergaud (KEDGE Business School, Bordeaux, France), Laure Salais (Institut Paul Bocuse, France) The demand for restaurants in Europe

 

 11:00 – 12:30Room – Maxey 207  Session #2B: Trade and International I
Chair: XXX
Alejandro Gennari, Jimena Estrella. Xavier Brevet (both National University of Cuyo, Mendoza, Argentina) Argentinean wineries’ strategies on export markets
Miguel A. Fierro, Rodrigo Romo Muñoz (both Universidad del Bío-Bío, Chile) Characterization of the Chilean bottled wine market
Cynthia Howson (University of Washington Tacoma), Pierre Ly (University of Puget Sound), Jeff Begun (University of Washington Tacoma) Grape procurement, land rights and industrial upgrading in the Chinese wine industry
Maryline Filippi (University of Bordeaux, France) Elena Garnevka (Massey University, New Zealand) Exporting wine to China from New Zealand and from France. Strategies and perspectives
 11:00 – 12:30Room – Maxey 307  Session #2C: U.S. Wine Market & Industry
Chair: XXX
Raphael Schirmer (University of Bordeaux, France) Drinking wine in the United States of America (from 1850 to the present) through the New York Public Library’s collection “What’s on the menu?”
Jon H. Hanf (Geisenheim University, Germany) Retail branding and its consequences on wine brands
Bradley Rickard (Cornell University), Olivier Gergaud (KEDGE Business School, Bordeaux, France), Hu Wenjing (Cornell University) Trade liberalization in the presence of domestic regulations: likely impacts of the TTIP on wine markets
Robert Hodgson (Fieldbrook Winery) The unimportance of terroir

 

12:30 – 14:00 Lunch Break

 

 14:00 – 15.15Room – Maxey Auditorium

 

PLENARY SESSION:
Welcome and Introduction
 Orley Ashenfelter (Princeton University)    Welcome and Introduction
     
Kevin Pogue (Whitman College)   The Terroirs of the Walla Walla Valley American Viticultural Area
15:15 – 15:45 Coffee Break
Maxey Auditorium Foyer
 15:45 – 18:00Room – Maxey Auditorium  Session #3A: Varietals, Geography, Environment
Chair: Julian Alston (UC Davis)
Kate Fuller, Julian Alston, Olena S. Sambucci. (all UC Davis) The value of powdery mildew resistance in grapes: evidence from California
Julian Alston (UC Davis), Kym Anderson (University of Adelaide) Evolving varietal distinctiveness of US wine regions: comparative evidence from a new global database
Christopher Bitter (University of Washington, Seattle) The evolving geography of the U.S. wine industry
Luigi Galletto, Federica Bianchin, Luigino Barisan (all University of Padova, Italy), Eugenio Pomarici (University of Naples Federico II, Italy) An evaluation of a new drought-resistant rootstock in Italy
Jean-Philippe Roby (Bordeaux Science Agro, France) Viticulture of varietal wines: the dead end of terroir at the time of global warming? Case study of Burgundy
Karl Storchmann (New York University), Peter Griffin (Vanderbilt University) Climate change and vineyard prices

 

 15:45 – 18:00Room – Maxey 207 Session #3B: Wine Investment
Chair: Lee Sanning (Whitman College)
Marie-Claude Pichery (Université de Bourgogne, France), Catherine Pivot (Université Jean Moulin – Lyon 3, France) Wine investment: a profitable alternative investment or simply a long-term pleasure?
Beysül Aytac, Thi Hong Van, Hoang, Cyrille Mandou (all Sup de Co Montpellier Business School, France) Wine: to drink or to invest? A study of wine as a financial asset in a French portfolio context
Philippe Masset, Jean-Philippe Weisskopf (both Ecole Hôtelière de Lausanne, Switzerland) Wine funds – an alternative turning sour?
Philippe Masset, Jean-Philippe Weisskopf (both  Ecole Hôtelière de Lausanne, Switzerland) Wine indices in practice: nicely labeled but slightly corked
Jean-Marie Cardebat (Université de Bordeaux, France), Benoît Faye, Eric Le Fur (both INSEEC Bordeaux, France), Philippe Masset (Ecole Hôtelière de Lausanne, Switzerland)  Is wine still an investable asset?
Benoît Faye, Eric Le Fur (both INSEEC Bordeaux, France) Dynamics of fine wine and asset prices: evidence from short- and long-run co-movements

 

 15:45 -18:00Room – Maxey 306  Session #3C: Quality and Experts IChair: XXX
Robin Golstein (Fearless Critic Media) Do more expensive things generally taste worse?
Omer Gokcekus, Clare Finnegan (both Seton Hall University) Lumping and splitting in expert ratings’ effect on wine prices
Neal Hulkower (McMinnville, OR) Information lost: the unbearable lightness of vintage charts
Ying Lou, Jing Cao, Lynne Stokes (all Southern Methodist University) Comparing measures of rater agreement for wine quality ratings
Dom Cicchetti (Yale University), Arnie Cicchetti (San Anselmo, CA) Assessing reliability when multiple judges taste a single wine
Eric Stuen, Jon Miller, Robert Stone (all University of Idaho) An analysis of consensus of prominent wine critic ratings in the US market
 19:00 – about 23.00
Conference Dinner
Long Shadows
Buses leave from Whitman College at 18:15  

 

 

JUNE 24, 2014 Maxey Hall

 

 9:00 – 10:30Room –Maxey Auditorium  Session #4A: Water, Whiskey, Wine, Food
Chair: XXX
Kevin W. Capehart (American University, Washington, DC) Fine water: a hedonic pricing approach
Ian B. Page (University of Maryland) The economics of whisky: an analysis of imperfect competition when product quality is endogenous
Kenneth Elzinga. University of Virginia, Carol Tremblay. Oregon State University, Victor Tremblay. Oregon State University Craft beer in the USA: history, scope and geography
Yohannes Yehabe (Molde University College, Norway) Assessment of weather impact on the sales of breweries in Norway: a panel data regression approach
Robert Harrington, Lobat Siahmakoun. (both University of Arkansas) Which wine and food elements drive high and low levels of perceived match?
 9:00 – 10:30Room – Maxey 207

 

Session #4B: Wine Demand
Chair:
XXX
Getnet Yitagesu (Unity University, Addis Ababa, Ethiopia) A principal component analysis of the demand structure of Wine. The Case of Addis Ababa
Paulina Rytkönen (Södertörn University, Sweden) Wine in a vodka country – changing consumption patterns in Sweden’s way from a rural to an industrial nation
Gary M. Thompson (Cornell University) Wine cellar optimization
Amy Holbrook, Dennis Reynolds (both Washington State University, Pullman) What effect does wine closure type have on perceptions of wine’s appearance, bouquet, Taste, and overall quality? An empirical investigation
Judit Szigeti (Ministry of Foreign Affairs, Hungary), Szilárd Podruzsik, Orsolya Fehér, Péter Gál (all Corvinus University of Budapest, Hungary) Wine affordability for the Hungarian consumers

 

10:30 – 11:00 Coffee Break
Maxey Auditorium Foyer
 9:00 – 10:30Room – Maxey Auditorium

 

Session #5A: Quality & Experts II
Chair: XXX
Adeline Alonso Ugaglia (Bordeaux Science Agro, France), Olivier Gergaud (KEDGE Business School, Bordeaux, France) Restaurant awards and financial rewards: Michelin
Guenter Schamel (Free University of Bolzano, Italy) Points for sale? Examining the market entry of a new wine guide
Orley Ashenfelter (Princeton University), Robin Goldstein (Fearless Critic Media), Craig Riddell (University of British Columbia, Vancouver) Do expert ratings measure quality? The case of restaurant wine lists
Robert Hodgson (Fieldbrook Winery) The fallacy of wine competitions; a ten year retrospective

 

 11:00 – 12:30Room – Maxey 207

 

Session #5B: Marketing
Chair: XXX
Steven Cuellar (Sonoma State University) Measuring the return to social media
Lindsey Higgins, Erica Llanos (both California Polytech, San Luis Obispo) A healthy, but confusing, indulgence? Wine consumers and the health benefits of wine
Benjamin C. Lawrence, Alex M. Susskind, Gary M.  Thompson (all Cornell University) Wine mailing lists
Jon H. Hanf, Oliver Gierig (both Geisenheim University, Germany) Discussion of an Innovative pricing strategy in the context of wine tastings

  

 11:00 – 12:30Room – Maxey 306

 

Session #5C: Industry Organization
Chair: XXX
Paulina Rytkönen (Södertörn University, Sweden) The Swedish wine industry – institutions, knowledge, temperance and regional development in an upcoming wine country
Betsy Carter (Max Planck Institute for the Study of Societies, Cologne, Germany) The state versus the market: patterns of producer politics and the construction of status markets
Marc Dressler (University Ludwigshafen, Germany) Organizational levers on reputation and performance – An empirical analysis of German wineries
Florine Livat (KEDGE Business School, Bordeaux, France), Jean-Marie Cardebat. (University of Bordeaux, France) Are there too many appellations in Bordeaux? A renewal of the brand vs. appellation debate
12:30 – 14:00 Lunch Break
 14:00 – 15.30Room – Maxey Auditorium

 

PLENARY SESSION:
Regulation in the U.S. Wine Industry                                 
 Orley Ashenfelter    Princeton University, Princeton
Paul Beveridge   Family Wineries of Washington State, Seattle
John Hinman   Hinman & Carmichael LLP, San Francisco
Allen Shoup   Long Shadows, Walla Walla

 

15:30 – 15:45 Coffee Break
Maxey Auditorium Foyer
 15:45 – 17:15Room – Maxey Auditorium  Session #6A: Supply
Chair: XXX
Nick Vink, Theo Kleynhans, Willem Hoffmann. (Stellenbosch University, South Africa) Financing wine barrels in South Africa: the Vincorp model
Alessandro Muscio, Gianluca Nardone, Antonio Stasi (all Università degli Studi di Foggia, Italy) Perceived technological regimes: an empirical analysis of the wine industry
Lindsey Higgins. Cal Poly, San Luis Obispo Economic stochastic simulation model for small to medium sized wineries
Julien Cadot (ISG Business School, France), Adeline Ugaglia (Bordeaux Sciences Agro, France) The horizon problem in Bordeaux wine cooperatives.

  

 15:45 – 17:15Room – XXX

 

Session #6B: International & Trade II
Chair: XXX
Joachim Ewert (University of Stellenbosch, South Africa), Jon H. Hanf, Erik Schweickert. (Geisenheim University, Germany) South African Cooperatives and the challenge of product quality
Silvia Gatti (University of Bologna, Italy) Designations of origin for wines, labor and cooperatives in Emilia-Romagna between the Censuses of Agriculture 2000 and 2010
Bo Gao, James L. Seale, Zhifeng Gao (all University of Florida) U.S. import demand for wine by country of origin: a differential approach
Leo-Paul Dana (Montpellier Business School, France), Mathieu Labadan (University of Pau, France), Michael Mettrick, Agate Ponder-Sutton. (both University of Canterbury, New Zealand) Interaction among wine makers in New Zealand
17:15 – 17:30 Coffee Break
Maxey Auditorium Foyer

 

 17:30 – 18:00Room – Maxey Auditorium  PLENARY SESSION:
Upshot and Outlook
 Karl Storchmann    New York University, New York

Alejandro Gennari
 
National University of Cuyo, Mendoza, Argentina

 

 19:00 – 23:00 
Dinner
Whitehouse Crawford, Walla Walla
JUNE 25, 2014 09:00 – 18:00
Tour of Walla Walla Vineyards and Wineries
Geological Guide: Kevin Pogue, Whitman College
Lunch at Basel Cellars
Buses leave from the Marcus Whitman Hotel at 9am

 

The Wine World Comes to Walla Walla

OK, so The World — the whole world! — is not really coming to Walla Walla, the lively wine town in Southeast Washington State, but the city and AVA are hosting two events that promise to draw participants from far and wide. Sue and I will be attending both, so we thought we’d fill you in.

The World of Syrah

2014 is the Walla Walla AVA’s 30th birthday and they are marking the occasion with a three-day program called Celebrate Walla Walla Valley Wine: The World of Syrah on June 19-21, 2014. Click on the link for details.

Walla Walla Syrah will be explored through a series of tastings, talks and dinners.  The inclusion of winemakers from outside the region (including Gary Mills from Australia’s Jamsheed winery) gives the event a global flair, but it must be said that the Walla Walla industry is pretty globalized itself, with influences and investment from the world over.

The Long Shadows winery, for example, features famous partner/flying winemakers from around the world, each of whom makes one wine in a distinctive style from Washington grapes. Michel Rolland, John Duval and Armin Diel are among the international winemakers here.

Some of the best known resident names in Walla Walla wine are international, too, such as Giles Nicault, Jean-Françoise Pellet, Marie-Eve Gilla and Christophe Baron. Walla Walla in intensely local and extremely global at the same time — just what I like!

Sue and I are fortunate to be part of a media group that will go behind he scenes to visit the vineyards, meet the wine people and get to know both the region’s Syrahs and its other wines as well. We are looking forward to the experience.

Wine Economists in Walla Walla

The American Association of Wine Economists will be in town June 22-25 for their annual meetings and we are looking forward to a lot of interesting papers and presentations. I expect to greet fellow wine economists from every continent except Antarctica at the meetings!

Click here to download the conference program, which includes dozens of presentations, a lecture on the region’s terroirs by geologist Kevin Pogue, a panel discussion of U.S. wine market regulation and a festive dinner at the Long Shadows winery.

The World of Syrah and the wine economists back-to-back meetings looks like a great opportunity for me to catch up with the wine’s global-local dynamic and for the world to take a closer look at this dynamic region. Look for future columns about what I learn.

Jamie Goode’s New Book: Second Thoughts on Wine Science

Jamie Goode, The Science of Wine: From Vine to Glass 2/e. University of California Press, 2014.

Jamie Goode’s 2005 book on The Science of Wine is one of my favorites — I’ve read it from cover to cover twice and I dip back in all the time to research specific topics. It seems like there is always more to learn and I enjoy Goode’s teaching style.

I was excited to receive a copy of the new edition and to see what’s new in this important field and how much of a revision the new book represents.

Vineyard to Cellar to Your Glass

The basic organization of the earlier edition is preserved. We begin “In the Vineyard,” move on “In the Winery” and finish with “Our Interaction with Wine” (these are the titles of the main sections of the book — I have copied the Tables of Contents of both volumes below for your reference.

g2

Table of Contents — 2014 edition

 

Once you drill down, however, the extent of the revisions become clear. New chapters replace some of the old ones (the chapter on GM vines is gone, with a new one on Phylloxera and ungrafted vines in its place) and there is much new wine in the old chapter bottles as Goode identifies new issues, reports new research, and brings in new perspectives.

Goode was still working his “day job” as a science editor when the original book appeared. Since then he has embraced wine writing as a full-time occupation and this book reflects his more intense focus as well as the many wine industry people he has met in his global travels. His interviews with them contribute to the analysis throughout.

Substitutes or Complements?

One thing that hasn’t changed from the first edition (a legacy of Goode’s editor days) is his clear and interesting writing style, even when things get quite technical, as they sometimes must in a book like this. One of Goode’s go-to methods is to identify an issue and then pick it apart by asking questions and answering them. Simple, but effective. You always know what he is talking about and why. Clear, direct — a good model for writing on any topic.

I read the second edition over the course of a couple of long air flights and like the first edition it held my interest all the way. But I think  it will be especially valuable as a reference book that you pull off the shelf as you try to answer troublesome questions or get up to speed on research quickly.

Both books are valuable, but does the second edition replace the first or complement it? I’m not sure. I was going to give my first edition away, but now I’m thinking about keeping it, since some issues in the old volume are not discussed in as much depth in the new. And I think it will be useful on some issues to compare and contrast the two volumes to analyze how Goode’s thinking (and the research that backs it up) changed over time. Highly recommended!

g1-002

Table of Contents – 2005 Edition

European Wine Economists Meeting Update

The European Association of Wine Economists is meeting this June and they’ve asked me to post details about the sessions, which sound very interesting and worthwhile.

You can find current information about the meetings by clicking on this link. Here is the program for the conference, which I copied from the website. Take a look at what’s on offer this year.

Wednesday June 4, 2014

14:00 Registration
14:30 – 15:00 OPENING
15:00 – 16:30
Keynote 1: Antoine BAILLY - Univ. de Génève, CH
“Wine and Divine: from Bacchanals to Prohibitionism”
Keynote 2: Jon H. HANF – Universität Geisenheim, DE
“Pay what you want – A New Pricing Strategy for Wine Tastings? “ ( joint paper with Oliver GIERING )
16:30 – 17:00 Coffee break with signing of the book “Wine Economics” by the editors
17:00 – 18:30
Keynote 3: Johan SWINNEN – LICOS, KU Leuven, BE
“The Rise and Fall of the World’s Largest Wine Exporter and its Institutional Legacy” 
(joint paper with Giulia MELONI)
Keynote 4: Ricardo SELLERS-RUBIO, Univ. Alicante, SP
“The Economic Efficiency of Wineries of Protected Designations of Origin” (joint paper with Francisco MAS-RUIZ)
18:30 – 19:00 Signing of the book “Wine Economics” by the editors, welcome drink
20:00
Thursday June 5, 2014
8:15 Inscription and coffee
SESSION 1

8:30 – 10:30 WINE as INVESTMENT and INVESTMENT in WINE
chaired by

Foreign Direct Investment in the Wine and Spirits Sector 
J. François OUTREVILLE 
HEC Montréal, CA
A Barrel of Oil or a Bottle of Wine: How do Global Growth Dynamics Affect Commodity Prices? 
Serhan CEVIK , Tahsin SAADI-SEDIK
International Monetary Fund, US
History and Rational Market Values of French Vineyards,
Optimal Financing of the Vineyard in the Major Countries of the Euro Zone. (EN)

Historique des valeurs de marché et raisonnée du vignoble français. Financement optimal du vignoble dans les principaux pays viticoles de la zone euro. (FR)
Alain DALLOT 
Consulting actuary graduate in viticulture-oenology, FR
Long-run Relationships between Prices of Fine Wines and Stock Market Indices 
Jan BENTZEN , Valdemar SMITH
Aarhus Univ., DK
Wine and Gold as Alternative Investments: Which one is the Best? 
Beysül AYTAC , Thi Hong Van HOANG, Cyrille MANDOU
Groupe Sup de Co Montpellier Business School, FR
Wine Funds – An Alternative Turning Sour? 
Philippe MASSET , Jean-Philippe WEISSKOPF
Ecole hôtelière de Lausanne, CH
Wine – Investment: A Profitable Alternative Investment or a Simple Long Term Pleasure? 
Marie-Claude PICHERY , Catherine PIVOT
LEDI Univ. de Bourgogne & Centre Magellan, Univ. Jean Moulin – Lyon 3, FR

10:30 – 11:00Break “Mâchon” (typical morning snack in Lyon)

SESSION 2a

11:00 – 13:00

PROSPECTIVES & STRATEGIES
chaired by

Prospect (Perspective) of a Strategic Option of Developing and Boosting the Algerian Vineyard 
Nasser SARAOUI 
Institut technique de l’arboriculture fruitière et de la vigne, DZ
Trade Liberalization in the Presence of Domestic Regulations:
Likely Impacts of the TTIP on Wine Markets
 

Bradley RICKARD , Olivier GERGAUD, Wenjing HU
Cornell Univ., US & KEDGE- Bordeaux Business School, FR
Towards Sustainability in the Wine Industry through Engineering and Management Tools 
Stella Maris UDAQUIOLA , Rosa RODRIGUEZ, Susana ACOSTA, María CASTRO, María Verónica BENAVENTE, Marcelo ECHEGARAY, Ricardo SIERRA
Instituto de Ingeniería Química – Universidad nacional de San Juan, AR
Wine as a Cultural Good: Stakes of a Recognition 
Véronique CHOSSAT , Cyril NOBLOT
Univ. de Reims, FR
How to Improve Wine Quality? The Challenge facing South African Cooperatives 
Joachim EWERT , Jon H. HANF , Erik SCHWEICKERT
Univ. Stellenbosch, ZA & Univ. Geisenheim, DE
Price or Quality Competition? Old World, New World and Rising Stars in Wine Export 
Diego LUBIAN, Angelo ZAGO 
Università degli Studi di Verona, IT
Winners and Losers in the Global Wine Industry 
Geoffrey LEWIS , Tatiana ZALAN, Matthew SCHEBELLA
Melbourne Business School, Torrens Univ. & Univ. South Australia, AU
SESSION 2b

11:00 – 13:00

 

GASTRONOMY, TESTING and HEALTH 
chaired by

Restaurants and BYOB: What Do Consumers Expect and Who Are They? 
Nelson A. BARBER , D. Christopher TAYLOR
Univ. New Hampshire & Univ. Houston, US
The Profiles of Worldwide Gastronomy 
Quentin BONNARD , Christian BARRÈRE, Véronique CHOSSAT
Univ. de Reims, FR
Analysis of Consumers’ Sensory Preferences of Nanche (byrsonima crassifolia) Liquor in the South of the State of Mexico. 
Erandi TENA, Javier J. RAMÍREZ, Jessica AVITIA , Tirzo CASTAÑEDA
Universidad Autónoma del Estado de México, MX
Evaluation of the Influence of the Interaction tannin-anthocyanin over the tannin-protein Binding and its Effect on the Perception of Astringency in Red Wines 
Marcela MEDEL , Alvaro PEÑA, Elias OBREQUE, Lopez REMIGIO-LOPEZ
Facultad de Ciencias Agronomicas & Faculta de Medicina, Univ. Chile, CL
Gastronomic Supply and Touristic Clientele 
Christian BARRÈRE , Quentin BONNARD, Elsa GATELIER
Univ. de Reims, FR
Is a Sequential, Profiling Approach useful for Predicting Match Perceptions in Food and Wine? 
Robert HARRINGTON, Lobat SIAHMAKOUN, Nelson A. BARBER 
Univ. Arkansas & Univ. New Hampshire, US

13:00 – 14:00Frugal Lunch

SESSION 3a

14:00 – 16:00

WINE PRODUCTION and MARKETS in the WINE VALUE CHAIN
chaired by

Comparison of Selected Determinants of Chosen European Wine Markets 
Helena CHLÁDKOVÁ, Sylvie FORMÁNKOVÁ , Pavel TOMŠÍK
Mendel Univ. in Brno, CZ
Tournament Mechanism in the Wine-Grape Contracts:
Evidence from a French Wine Cooperative 

M’hand FARES, Luis OROZCO 
INRA Toulouse, UMR AGIR: Univ. de Toulouse, LEREPS, FR
Unperceived Costs: A Dilemma for French Wine-Growers 
Joëlle BROUARD, Benoît LECAT 
School of Wine and Spirits Business & ESC Dijon/Burgundy School of Business, FR
Adaptation to Climate Change in the French Vineyards:
An Innovation System Approach (EN)
Etudier l’adaptation aux changements climatiques des vignobles français:
une analyse par les Systèmes d’Innovation 
(FR)
James BOYER, Jean-Marc TOUZARD 
INRA, UMR Innovation Montpellier, FR
Characterization of Chilean Bottled Wine Market 
Miguel A. FIERRO , Rodrigo ROMO
Universidad del Bío-Bío, CL
Producer Single Commodity Transfer: A Comparison of Policy Intervention Between Wine and Other European Agriculture Products 
Davide GAETA , Paola CORSINOVI
Department of Business Administration, Univ. Verona, IT

 

SESSION 3b

14:15 – 16:00

WINE EDUCATION and WINE PREFERENCES
Chaired by

Are Today’s Consumers Ready to Buy the Wines of Tomorrow? (EN)
Les consommateurs d’aujourd’hui sont-ils prêts à accepter les vins de demain ? (FR) 

Alejandro FUENTES, Eric GIRAUD-HERAUD , Stéphanie PERES,
Alexand re PONS, Sophie TEMPERE, Philippe DARRIET
INRA et GREThA, Bordeaux Sciences Agro & ISVV, Univ. de Bordeaux, FR
The Impact of General Public Wine Education Courses on Consumer Perception 
Richard SAGALA , Paolo LOPES
École In Vino Veritas, Montreal, CA & Kedge Business School, Bordeaux, FR
Contributions of Experimentation in the Study of Reception in Communication Science: The Case of Wine Labels (EN)
Apports de l’expérimentation dans l’étude de la réception en SIC :
le cas des étiquettes de vin (FR)

Mihaela BONESCU , Diana BRATU, Emilie GINON, Angela SUTAN
ESC Dijon Bourgogne, FR
Controlling for Price Endogeneity: A Case Study on Chinese Wine Preferences 
David PALMA , Juan de Dios ORTÚZAR, Gerard CASAUBON, Huiqin MA
Pontificia Univ. Católica de Chile, CL & China Agricultural Univ., CN
Young Urban Adults’ Preference for Wine Information Sources:
An Exploratory Study for Republic of Macedonia
 

Hristo HRISTOV , Aleš KUHAR
Biotechnical Faculty Ljubljana, SI
“In Vino Veritas”—But what, In Truth, Is in the Bottle?
Experience Goods, Fine Wine Ratings, and Wine Knowledge 

Denton MARKS 
Univ. Wisconsin-Whitewater, US
The Need for Information of the Wine Consumer after the Purchase of the Wine (EN) 
Le besoin d’information post achat du consommateur de vin (FR)

Frédéric COURET 
Bordeaux Sciences Agro Univ. de Bordeaux, FR

16:00 – 16:30Coffee break16:30 – 17:30General Assembly VDQS20:00

Friday 6 June, 2014
SESSION 4a

8:30 – 10:30 WINE TOURISM, WINE CONSUMPTION and the HISTORY of WINE
Chaired by

The Douro Region: Wine and Tourism 
João REBELO , Alexandre GUEDES, José CALDAS
Univ. Trás-os-Montes and Alto Douro & Turismo do Porto e Norte de Portugal, PT
Traditional Wine Taverns and their Hard Landing in the 21st Century:
The Case of the Viennese Heurigen 

Cornelia CASEAU , Albert STÖCKL and Joëlle BROUARD
Groupe ESC Dijon Bourgogne, FR & Fachhochschule Burgenland, AT
Consumers’ Intentions to Purchase Greek Bottled Wine
Athina DILMPERI , Martin HINGLEY
Lincoln Business School, UK
‘Dry Enough to Wash your Hands in': The English Taste for Champagne, 1860-1914 
Graham HARDING 
Univ. Cambridge, UK
Liastos Oinos Siatistis: Where the Enthusiastic Present Meets the Glorious Past
Georgios MERKOUROPOULOS , E BATIANIS
Center for Research & Technology – HELLAS, Regional Admin. of Western Macedonia, GR
Seatbelt Use Following Stricter Drunk Driving Regulations 
Scott ADAMS, Chad COTTI , Nathan TEFFT
Univ. Wisconsin-Milwaukee, Connecitcut, & Washington, US
Interest of Italian Consumers for a Sustainable Wine 
Chiara CORBO, Martina MACCONI , Giovanni SOGARI
Univ. Cattolica del Sacro Cuore, IT

 

SESSION 4b

8:30 – 10:30

WINE MARKETING, Selected Aspects
Chaired by

Retail Channel Selection on Wine by Households in Argentina 
Gustavo ROSSINI , Rodrigo GARCÍA ARANCIBIA, Edith DEPETRIS
Universidad Nacional del Litoral, AR
Vinsseaux Traditionel: The Branding of Canadian Sparkling Wine 
Doris MICULAN BRADLEY , Donna LEE ROSEN
George Brown College, CA
The Consumer Trail: Applying best-worst Scaling to Classical Wine Attributes 
Fernando NUNES , Teresa MADUREIRA, José Vidal OLIVEIRA
Instituto Politécnico de Viana do Castelo & Instituto Politécnico de Lisboa, PT
Presentations of Packaging Quality Wines:
Semiotic Analysis of Bottles of the Top 100 Wines from “Wine Spectator”,2008 – 2012 (EN).

Les présentations packaging des vins de qualité: Analyse sémiotique des bouteilles du top 100 du “Wine Spectator” de 2008 à 2012 (FR)

François BOBRIE 
Maison des Sciences de l’Homme et de la Société-Poitiers; Laboratoire CEREGE, FR
Difference of Representation and Choice of Burgundy Red Wines from the Upstream vs Downstream Actors of the Wine Sector 
Monia SAIDI , Georges GIRAUD
UMR CESAER INRA – AgroSup Dijon, FR
Wine Distribution Channel Systems in Mature and Newly Growing Markets:
Germany versus China
 

Tatiana BOUZDINE-CHAMEEVA, Wenxiao ZHANG , Jon H. HANF
KEDGE Business School, FR & Geisenheim Univ., DE
Attitudes Towards M-Wine Purchasing. A Cross-Country Study 
Jean-Eric PELET, Benoît LECAT , Jashim KHAN, Linda W. LEE, Debbie VIGAR-ELLIS, Marianne MC GARRY WOLF, Sharyn RUNDLE-THIELE, Niki KAVOURA, Vicky KATSONI
Univ. Nantes, ESC Dijon, FR; Auckland, NZ; KTH Royal Institute of Technology, SE; Univ. KwaZulu-Natal, ZA; California Polytechnic State Univ., US; Griffith Univ., AU; Technological Educational Institute of Athens, GR

10:30 – 11:00Break “Mâchon” (typical morning snack in Lyon)

SESSION 5a

11:00 – 13:00

BUILDING PERFORMANCE and EFFICIENCY
Chaired by

The Market Structure-Performance Relationship Applied to the Canadian Wine Industry 
J. François OUTREVILLE 
HEC Montréal, CA
Wineries’ Performance, Response to a Crisis Period 
Juan Sebastian CASTILLO-VALERO , Katrin SIMON-ELORZ, Ma Carmen GARCIA-CORTIJO
Universidad de Castilla la Mancha & Universidad Pública de Navarra, ES
Quality Improvements and International Positioning of Chilean and Argentine Wines 
Fulvia FARINELLI 
UNCTAD, CH
Winegrower or Winemaker? Influence on Business Efficiency in Burgundy 
Georges GIRAUD 
AgroSup Dijon, FR
Institutional Drives of the Success of the New Wine World. Factors Influencing Technical Efficiency of Wine Production and its Relation with Wine Exports Growth 
József TÓTH , Péter GÁL
Univ. Budapest, HU
Creating Jobs from New Investment in the Wine Sector 
Martin PROKEŠ , Pavel TOMŠÍK
Mendel Univ. Brno, CZ
Terroir and Sustainability: The Role of Terroir in Sustainable Wine Standards 
Shana SABBADO FLORES 
Instituto Federal do Rio Grande do Sul, BR

 

SESSION 5b

11:00 – 13:00

WINE CONSUMPTION, Selected Aspects
Chaired by

The Importance of Wine Region and Consumer’s Involvement Level in the Decision Making Process 
Teresa MADUREIRA , Fernando NUNES
Instituto Politécnico de Viana do Castelo, ES
We Should Drink no Wine before its Time 
Leo SIMON , Jeffrey LAFRANCE, Rachael GOODHUE
Univ. California at Berkeley, US; Monash Univ., Victoria, AU & Univ.C. Davis, US
An Analysis of Alcohol Demands in Japan 
Makiko OMURA 
Meiji Gakuin Univ. Tokyo, JP
The Effect of Wine Culture on the Relationship between Price, Consumption and Alcohol-Related Problems 
Damiana RIGAMONTI , Frédéric LAURIN
Aarhus Univ., DK & Univ. Quebec, CA
Segmenting Greek Wine Consumers Using the Best-Worst Scaling Approach: New Results and Comparison across 11 Countries 
Dimitrios ASTERIOU , Costas SIRIOPOULOS
Hellenic Open Univ. & ; Univ. Patras, GR
Wine and Women: A Focus on Feminine Consumption of Wine 
Stefania CHIRONI , Marzia INGRASSIA
Univ. Palermo, Department of Agricultural and Forestry Science, IT
A Comparative Study of Demand for Local and Foreign Wines in Bulgaria 
Petyo BOSHNAKOV , Georgi MARINOV
Univ. Economics Varna, BG

13:00Awards of VDQS13:30 – 14:30Cocktail with snacks14:30

 Saturday June 7, 2014 – Tourism around Lyons

Disintermediation: How Many People Did It Take to Make Your Wine?

How many people does it take to produce a case of wine?  Well, it depends on how you look at it — and the number may surprise you.

When you think about all of the steps in the process from vineyard to cellar to bottling line and so forth, it seems like a lot of different people must be involved although the degree of labor-intensity necessarily depends on many factors. Where wages are high as in Europe and the United States, more of the steps are likely to be mechanized compared with Chile or South Africa, for example.

And there are economies of scale at certain production levels. But it still seems like lots of hands are needed to produce a bottle of wine.

(In The Wine Economist’s very first post, I counted about  twelve workers needed to simply bottle a vintage of Fielding Hills wine.)

So how man of these  people will a winery end up employing? All of them, you  might think, if you have that romantic image of an estate winery stuck in your head, where all of the production from vines to wines to finished product takes place on the same property.

Specialization and the Division of Labor

But this picture ignores the fact of disintermediation, which I wrote about a few weeks ago. Disintermediation is basically Adam Smith’s theory of specialization of labor applied to the entire product chain. Instead of specialization within a business (specialized vineyard labor and cellar crews, for example) you have different businesses specializing in each function within the process. That traditional estate winery is deconstructed into perhaps a dozen different specialized business units.

Thus, for example, many wineries rely upon outside contract labor firms to maintain the vineyards and harvest the grapes and thus do not have such workers listed directly on their payrolls. Many also contract with mobile bottling lines to handle that important function. And of course buying grapes is a way to disintermediate compared to growing them yourself and buying wine from others takes desconstruction one additional step.

With product chain disintermediation, the number of people actually employed by a winery can be surprisingly small with that tiny workforce specializing  in coordinating the various firms and contractors that make up the links in the chain.

Small is Beautiful?

How small can the  winery staff be (which is another way of asking how far can you push disintermediation)? Well, the data provided in Wine Business Monthly’s annual  “Review of the Industry” issue (February 2014) gives us a glimpse at how disintermediation is working in the American wine industry. Here are WBM’s data for the 30 largest wine companies in the United States.

Rank

Wine Company

U.S. Production

Number of Employees

1

E&J Gallo Winery

80 million cases (US, estimate)

85 million (global, estimate)

4000

2

The Wine Group

57.5 million

1000

3

Constellation Brands

50 million (US)

64 million (global)

6000 (global)

4

Bronco Wine Company

20 million

n/a

5

Trinchero Family Estates

18.5 million

1000

6

Treasury Wine Estates

15.4 million (US)

32.1 million (global)

1140 (US)

3600 (global)

7

Ste Michelle Wine Estates

7.5 million

800

8

DFV Wines

7 million

600

9

Jackson Family Estates

5.5 million

1000

10

Diageo Chateau & Estates

3.8 million

2700 (US & Canada)

11

Viña Concha Y Toro (Fetzer)

2.7 million (US)

30 million (global)

308 (US)

12

Korbel Wine Estates

2.3 million

450

13

Bogle Vineyards

1.7 million

95

14

CK Mondavi Family Vineyards

1.6 million

120

15

J. Lohr Vineyards & Wines

1.55 million

250

16

Don Sebastiani & Sons

1.5 million

90

17

Francis Ford Coppola Winery

1.25 million (est)

n/a

18

Precept Wine

1.1 million

350

19

Foley Family Wines

950,000 cases (US)

1.45 million (global)

400

20

Rodney Strong Vineyards

820,000

164

21

Caymus Vineyards

800,000 (est)

n/a

22

Vintage Wine Estates

800,000

280

23

Boisset Family Estates

750,000 (US)

6.5 million (global)

n/a

24

Wente Vineyards

750,000

550

25

The Hess Collection

700,000

140

26

Mesa Vineyards

650,000

n/a

27

Domaine Chandon

625,000

217

28

Castle Rock Winery

550,000

9

29

Michael David Winery

420,000

150

30

Purple Wine Company

400,000

60

You can see that the degree of disintermediation varies quite a bit within the US wine industry with wineries of similar production size often directly employing very different numbers of workers (see Don Sebastiani & Sons versus J. Lohr)  and wineries with about the same direct payrolls pumping out vastly different amounts of wine (compare The Wine Group, Trinchero, and Jackson Family Estates).

Modesto’s Tight Ship

The most interesting winery from this standpoint is obviously Castle Rock, which sells more than a half million cases of wine but directly employs just nine people! Wow, that’s just amazing — about 61,000 cases of wine for each person on the payroll. Of course it takes many more people working for contractors and so forth to actually get the job done. Castle Rock is a disintermediation machine!

As the Wine Business Monthly profile of Castle Rock notes, the company does not own any wineries or vineyards. The original business model was based upon opportunistic bulk wine purchases that were then bottled by others and brought to market. Now the business is built around long-term contracts with vineyards and production wineries that also grow grapes and make wine for others. WBM reports that the portfolio includes about 20 different wines at any time, many of them relatively site-specific offerings.

What if giant Gallo embraced disintermediation to the same degree as Castle Rock? Well, the math is easy to do. Gallo makes about 150 times the amount of wine, so it might in theory be able to reduce its direct employment from 4000 workers to 9 x 150 = 1350 people on staff. I suppose that you could look at that number and conclude that Gallo is way over-staffed at the moment.

But I see it the other way. Given that Gallo does own wineries and other production functions that Castle Rock eschews, I’d say that folks in Modesto run a very tight ship!

American Wine Economists to Meet in Walla Walla — June 2014

The American Association of Wine Economists have announced a Call for Papers to be presented at their annual meeting, which will be held in Walla Walla, Washington this year.  Click on the links below for more details. Hope to see you in Walla Walla. Hope you enjoy this video, which is a good introduction to the Walla Walla wine story. Enjoy!
>>><<<
The 8th Annual Conference of the  American Association of Wine Economists AAWE  will be held from
 
          June 22-25, 2014 
   in Walla Walla, Washington.
Check the website for more information.
Please send a 500-word abstract to   aawe@wine-economics.org.
The submission deadline is March 1, 2014.
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