In this paper, we use copula-GARCH models applied to daily data from March 2010 to March 2018 to test the time-varying dependence of the Liv-ex 50, a secondary market fine wine index comprised of the ten most recent vintages of the five Bordeaux First Growths, with a portfolio composed of the six main stock markets (S&P 500, CAC 40, DAX 30, FTSE 100, and Hang Seng). Our results suggest that the Liv-ex 50 underperforms the six stock indexes, but provides diversification benefits in terms of volatility, asymmetry, and extreme events. (JEL Classifications: G110, G120, Q14)

Much research shows that women and men have different taste acuities and preferences. If female and male judges tend to assign different ratings to the same wines, then the gender balances of the judge panels will bias awards. Existing research supports the null hypothesis, however, that finding is based on small sample sizes. This article presents the results for a large sample; 260 wines and 1,736 wine-score observations. Subject to the strong qualification that non-gender-related variation is material, the results affirm that female and male judges do assign about the same ratings to the same wines. The expected value of the difference in their mean ratings is zero. (JEL Classifications: A10, C00, C10, C12, D12)

We propose to establish wine rankings using scores that depend on the differences between favorable and unfavorable opinions about each wine, according to the Borda rule. Unlike alternative approaches and specifications, this method is well-defined even if the panelists’ quality relations are not required to exhibit demanding properties such as transitivity or acyclicity. As an illustration, we apply the method to rank wines assessed by different experts and compare the resulting ranking with that obtained according to Condorcet's method of majority voting.

This paper analyzes the impact of annual weather fluctuations on the total output of wine and on the share of output of different wine-quality categories in Germany, using a set of wine data from all thirteen German wine regions and daily weather data taken from regional weather stations. The empirical analysis suggests that rising average temperatures have a significantly positive impact on the total output of wine as well as on the output shares of wine in higher-quality categories. The number of freezing days appears to be detrimental to overall production; precipitation during the growing season impairs higher-quality wines in particular. (JEL Classifications: Q21, Q13)

To test whether consumers can distinguish among different bottled waters and, if so, whether they prefer some to others, we recruited more than 100 subjects to participate in a blind taste test that consisted of four brands of bottled water featured in a restaurant's water menu and a guidebook to fine waters. The tasting involved three successive experiments. First, our subjects tried to distinguish bottled waters in a sensory discrimination test. They were only slightly better than random chance at doing so. Next, they rated bottled waters and tap water on a 14-point scale used at an international water competition. Some subjects preferred the inexpensive tap water to any of the bottled waters, and there was no association or a weak negative association between a bottled water's price and its rating. Finally, our subjects tried to distinguish tap from bottled water while matching the bottled waters to expert descriptions. They were no better than random chance at doing either of those things. Similar results have been found in previous taste tests of beer and wine. Overall, our results suggest consumers do not have strong preferences over different bottled waters to the extent they can even tell a difference. (JEL Classifications: D12, Q25)

Data on U.S. state-level beer shipments from 1970 to 2007 provided by The Beer Institute are used to estimate pooled time-series models of annual consumption regressed on economic and demographic variables, using the common correlated effects (CCE) estimators to control for unobserved common effects and to allow for heterogeneous responses across units. Beer is found to be a procyclical good, varying negatively with the state unemployment rate. Previous findings for the negative effect of excise taxes on consumption are supported, though the estimated elasticities are smaller than those reported in earlier research. Demographics have a significant and material effect on consumption, with larger shares of young adults in the population implying greater consumption of beer per capita. (JEL Classification: D12, C23)

Wines are usually evaluated by wine experts and enthusiasts who give numeric ratings as well as text reviews. While most wine classification studies have been based on conventional statistical models using numeric variables, there has been very limited work on implementing neural network models using wine reviews. In this paper, we apply neural network models (CNN, BiLSTM, and BERT) to extract useful information from wine reviews and classify wines according to different rating classes. Using a large collection of wine reviews from Wine Spectator, the study shows that BERT, a neural network framework recently developed by Google, has the best performance. In the two-class classification (90–100 and 80–89), BERT achieves an accuracy of 89.12%, followed by BiLSTM (88.69%) and CNN (88.02%). In the four-class classification (95–100, 90–94, 85–89, and 80–84), BERT yields an 81.57% accuracy, while the other two produce an 80% accuracy. The neural network models in the paper are independent of domain knowledge and thus can be easily extended to other kinds of text analysis. Expanding the limited work on wine text review classification studies, these models are up-to-date and provide valuable additions to wine data analysis. (JEL Classifications: C45, C88, D83)

We use data from Wine Spectator on 266,301 bottles from 12 countries sold in the United States to investigate the link between the score awarded by the guide and the price charged. The link between quality and price is positive, in line with the literature. In a deeper inspection, however, hedonic regressions show that the price premium attached to higher quality is significant only for “superstar” wines with more than 90 points (on a 50–100 scale), while prices of wines between 50 and 90 points are not statistically different from each other. Furthermore, an analysis performed through normal heteroskedastic and quantile regression models shows that the dispersion of quality-adjusted prices is described by an asymmetric U-shaped function of the score; that is, products with the lowest and highest quality have the highest residual standard deviation. Pursuing excellence is a risky strategy; the average price is significantly higher only for wines that achieve top scores, and the price premium becomes more volatile.

Spirits represent around 50% of global alcohol consumption. This sector is much less studied than other alcoholic beverages such as wine or beer. This paper reviews the economic history of spirits and analyzes recent trends in the spirits markets. The technology to produce spirits is more complex than for wine or beer. Distillation was known in ancient Chinese, Indian, Greek, and Egyptian societies, but it took innovations by the Arabs to distill alcohol. Initially, this alcohol was used for medicinal purposes. Only in the Middle Ages did spirits become a widespread drink. The Industrial Revolution created a large consumer market and reduced the cost of spirits, contributing to excess consumption and alcoholism. Governments have intervened extensively in spirits markets to reduce excessive consumption and to raise taxes. There have been significant changes in spirits consumption and trade over time. Over the past 50 years, the share of spirits in global alcohol consumption increased from around 30% to around 50%. In the past decades, there was strong growth in emerging markets, including in China and India. Recent developments in the spirits industry include premiumization, the growth of craft spirits, and the introduction of terroir for spirits. (JEL Classifications: L51, L66, N40, Q11, Q18)

I am an economist, appearing on this panel as an individual at the request of FTC staff. I own a small vineyard in Napa Valley, California, have sold grapes to large and small wineries, and am familiar with the positions taken by many of the people in the wine industry regarding the opportunities and limitations surrounding direct sales of wine to consumers. My intention, however, is to speak here as an advocate for consumers rather than as an advocate for the wine business. My work as a professional economist concentrates primarily on consumer behavior, with applications in marketing, health, and the environment. I do not have a specialty in the economics of the wine industry. I am the E. Morris Cox Professor of Economics at the University of California, Berkeley, and have served as President of the Econometrics Society and as vice-president of the American Economics Association. In 2000, I won the Nobel Prize in Economics for my work on consumer choice behavior.

In common with most economists, I believe that consumers benefit from free markets operated with the minimum government regulation required for consumer protection. The history of government regulation of markets is littered with examples of restrictions, ostensibly adopted on behalf of consumers, that instead protect concentrated economic interests at the consumers' expense. The restrictions on direct purchase of premium wines and their interstate shipment that have been adopted by a number of States are, I believe, another example of abuse of the regulatory process to protect concentrated economic interests, going far beyond the minimum regulations needed to maintain the integrity of State taxation and to protect minor consumers.

For centuries West Africans have made wines from palm sap, and hard liquor (“gin”) from palm wine. This essay describes the role of palm wine in West African society, attempts to regulate its production and consumption since colonial times, the basics of the production process, and the appearance, bouquet and flavor of unpasteurized palm wine as it ages through its useful life of a day or two. (JEL Classification: L66, L51,118)

Wine investment returns can come from overall market trends or price increases with age. Because of the short wine price histories available, market and maturation effects are difficult to separate. Consequently, researchers often obtain dramatically different estimates of investment returns. We find that data sample bias may be the hidden cause of the disparate estimates. In wine auction data, the sample bias refers to a shift in the distribution of which wines are traded as a function of their age. Such sample bias in panel data sampled across many different wine labels can distort the estimation of price increases versus age and consequently impact the estimation of market trends. This analysis shows that segmenting the analysis such that the data panels contain wine labels with similar trading characteristics can lead to a more stable estimation.

The analysis here looks at data from Bordeaux, Italy, Australia, and California. An Age-Period-Cohort (APC) analysis is applied to data panels from each region. Then the data in each region is segmented by a measure of popularity in order to reduce sampling bias. Data thus segmented is then re-analyzed to demonstrate the difference in estimating price appreciation lifecycles and market trends.

An unrestricted source differentiated LA/AIDS model was used to estimate Korean wine demand. In doing so, this study tested the null hypotheses of product aggregation, block separability and substitutability. The test results show that the unrestricted source differentiated model is significantly different from the aggregated model, separated model, and restricted source differentiated model at the conventional level. By using this system-wide model, this study estimated price and expenditure elasticities to identify the price effect on Korean wine consumption. (JEL Classification: F10, F11, F13)

Student's exacting theory of errors, both random and real, marked a significant advance over ambiguous reports of plant life and fermentation asserted by chemists from Priestley and Lavoisier down to Pasteur and Johannsen, working at the Carlsberg Laboratory. One reason seems to be that William Sealy Gosset (1876–1937) aka “Student” – he of Student's t-table and test of statistical significance – rejected artificial rules about sample size, experimental design, and the level of significance, and took instead an economic approach to the logic of decisions made under uncertainty. In his job as Apprentice Brewer, Head Experimental Brewer, and finally Head Brewer of Guinness, Student produced small samples of experimental barley, malt, and hops, seeking guidance for industrial quality control and maximum expected profit at the large scale brewery. In the process Student invented or inspired half of modern statistics. This article draws on original archival evidence, shedding light on several core yet neglected aspects of Student's methods, that is, Guinnessometrics, not discussed by Ronald A. Fisher (1890–1962). The focus is on Student's small sample, economic approach to real error minimization, particularly in field and laboratory experiments he conducted on barley and malt, 1904 to 1937. Balanced designs of experiments, he found, are more efficient than random and have higher power to detect large and real treatment differences in a series of repeated and independent experiments. Student's world-class achievement poses a challenge to every science. Should statistical methods – such as the choice of sample size, experimental design, and level of significance – follow the purpose of the experiment, rather than the other way around? (JEL classification codes: C10, C90, C93, L66)

The increasing industrialization of the wine supply chain is often associated with a greater vertical coordination. Our paper shows that a spot market institutional arrangement like brokerage can still be a relevant coordination mechanism to mitigate the contractual hazards due to quality problems. Indeed, a broker can be viewed as an expert that can help the merchant to monitor the grower's wine quality process. More precisely, if the merchant cannot credibly monitor the wine making process, it is Pareto improving to delegate this task to a broker. (JEL Classification: D82, L80, M12)

In this study, we estimate a cross-sectional hedonic price function for Port wines in order to determine the price influence of several Port wine characteristics. Drawing on a large sample of more than 14,000 sales from the biggest Port wine firms we find that market prices can be explained by objective characteristics such as age, type of Port and type of brand appearing on the bottle label and subjective characteristics such as firm reputation. The Port type is the main price determinant. (JEL Classification: C21, Q11)

As part of a classic article in this journal, Richard Quandt identified 123 wine descriptors that he deemed to be bullshit. In this paper, I examine whether wine consumers are willing to pay any more (or less) for wine if it is described by one of those “bullshit” descriptors. I use three methods to examine that. The first method involves applying a hedonic regression to a dataset of prices and expert descriptions for about 50,000 wines. The second method involves applying a matching estimator to the same dataset. The third method involves a stated-preference survey of about 500 wine consumers. The three methods suggest that for most of the descriptors Quandt deemed to be bullshit, most consumers’ marginal willingness to pay for a descriptor is zero or near-zero. Yet, for some of the descriptors, some consumers do seem to have a non-zero marginal willingness to pay, perhaps because the descriptors shape a consumer's subjective experience or because they signal objective aspects of wine. (JEL Classifications: D12, D83, L66)

Previous work has quantitatively analyzed expert wine descriptions to identify some so-called “expensive” and “cheap” words that are indicative of a wine's price. This paper revisits that work. In particular, I examine whether words previously identified as expensive and cheap ones are still indicative of a wine's price when using the same methods and a different, larger dataset. My findings mostly confirm previous conclusions, although many directions for further research into expensive and cheap wine words remain open. (JEL Classifications: D83, L66)

As for all traded products, aggregated wine imports build on numerous trades at the firm level. To ensure consumers access to a variety of wines with different qualities, importers need to connect to different wine exporters. Some of these relationships will last for a long time, while the duration of others may be short. In this article, we employ transaction-level data to analyze the duration of trade relationships in wine imports to Norway from 2004 to 2014. We find that most relationships are short-lived, as more than 75% of trade relationships end after less than two years. Furthermore, we find that higher-quality wines, as indicated by the import price, increase trade duration. Deeper firm-to-firm trade relationships for more exclusive wines are likely due to higher search costs for high-quality products. The results also show that the size of the initial trade between the partners, or degree of commitment, is a positive determinant for persistent relationships. (JEL Classifications: C41, F14, Q27)

Issues with the Cordorcet method used in the subject paper to aggregate rankings are presented. These arise because critical information contained in each voter's ranking is ignored. The mathematically superior Borda Count, which uses the complete information provided by each voter, is used to aggregate the rankings and the results are compared.