This paper investigates the relative importance of various attributes, including varietal, brands, and geographic origin, in explaining retail wine prices for the United States market. We use a metric based on the Shapely value, from cooperative game theory, in the context of an empirical hedonic price equation estimated using a large sample of retail wine sales for home consumption over the period 2007–2019. We find that brands alone explain more than 70% of the variation in wine prices, but geographic origin and varietals retain additional explanatory power. Furthermore, information about the geographic origin appears to be a considerably more important attribute than varietals.

Viruses and related graft-transmissible pathogens cause diseases that cost the grape industry billions of dollars annually if left uncontrolled. The National Clean Plant Network (NCPN), a USDA Farm Bill program, is an organization of clean plant centers that produce and maintain virus-tested foundation vine stocks and distribute propagation material derived thereof to nurseries and growers to minimize the introduction of viruses and virus-like diseases into the vineyard. Foundation Plant Services (FPS) is the major NCPN-grapes center. We examined the economic impacts of public investments in FPS from 2006 to 2019. By focusing on grapevine leafroll disease, our analyses revealed a benefit-cost ratio ranging from 22:1 to 96:1, with a 5% and a 20% disease infection rates in commercial vineyards, respectively. A welfare analysis was consistent with grape growers and nurseries capturing most (64–98%) of the benefits from adopting clean planting material compared with winemakers and other actors in the downstream wine supply chain system. This study provided new insights into the returns to public investments in a clean plant center and documented strong financial incentives for higher adoption of clean vines derived from virus-tested stocks, while justifying continued support of NCPN centers from public and private sectors.

As the market for fine-wine investing matures, basic questions of portfolio strategy remain unexplored. I evaluate how adding fine wine from the superstar châteaux of Bordeaux's Right Bank might complement the traditional focus on the five first-growths of Bordeaux's Left Bank. Fundamentals for the Right Bank's superstars are attractive: they produce roughly an order of magnitude less, face different production conditions, and receive equally impressive critical reviews. However, they receive far less attention than their Left Bank counterparts. To examine returns over the long run, I hand-collected 10,885 prices for eight wines from an archive of 391 Sherry-Lehmann catalogs, a New York City retailer, which began at the end of Prohibition. Using these historical price records, I compare the real returns from investing in the five Premier Cru to a portfolio that adds three superstar châteaux from the Right Bank: Ausone, Cheval Blanc, and Petrus. I find the geometric-average annual return was 6.78% in real terms from 1938 to 2017 for the joint portfolio, less than 0.01% different, but with better risk-reward as measured by the Sharpe ratio. Additionally, I find the life cycle of aging is substantially different across the two Banks, which could provide further diversification benefits for the strategic investor.

We study the effect of proximity to other wineries on the formation of new wineries and how this effect depends on winemaking history in a location. Clustering is common in the wine industry, but it also depends on other factors, such as proximity to vineyards and high-reputation wineries. Using panel data with annual observations from 1994 to 2014 on 598 zip codes within Washington State, we estimate empirical models that control for proximity to wineries, proximity to vines, proximity to income, and the presence of star wineries. We find that the elasticity of the number of wineries with respect to proximity to wineries outside the zip code hinges on the length of local winemaking history. For locations with 11 or more winery years prior to our sample, the elasticity is at least 0.44. The presence of elite wineries is also found to have an effect, with about 0.5 additional wineries per year starting in a zip code per star winery. The effect of history suggests that policies to seed winery start-ups will help cluster formation, but only with a substantial critical mass of winemaking activity.