This article is the first of its kind to estimate econometrically the supply elasticity of California wine grapes. Wine grapes constitute the single largest crop in the state of California in terms of total receipts. Allowing for the dynamic adjustments of quasi-fixed inputs, we estimate simultaneous systems of equations for California's four major wine grape growing regions and eight of the most widely grown varieties. We find that California wine grape production is, on the whole, inelastic with respect to prices received. The variety showing the most price responsiveness is Chardonnay. There appears to be no significant difference in price responsiveness between the coastal and inland growing regions, or between red and white grape varieties. (JEL Classification: Qll, Q13, R14)

The Texas wine industry of the United States has experienced substantial growth in recent years and yet is constrained by a significant lack of supply of Texas grown grapes. Using a real options framework we examine the role that wine grape price uncertainty plays on the financial decision to invest in vineyard operations in the state of Texas. Given reasonable estimates of required rates of returns, investment and operating costs for typical Texas vineyards, it is found that grape price uncertainty results in a delay in investment and subsequently a lack of grape supply. This delay in investment, known as hysteresis, is often found in situations involving large fixed investments combined with uncertain returns. In general the results indicate that average prices for Texas grapes would have to increase by 30 to 40 percent in order for a significant expansion in Texas vineyards to take place. (JEL Classification: Q120, Q140, G310, D920)

As competition for water resources increases and water availability in arid regions declines, agricultural producers are encouraged to adopt water-conserving strategies. This study examines the economic feasibility of implementing wine grapes in northwest Nevada as a diversification and water conservation strategy. Results show profit potential when vitis interspecific wine grape varieties are produced in the region. Net returns based upon point estimates from two separate analyses show per-acre net returns at $1,065 and $3,022, respectively. However, the large variation in potential net returns shown in the risk analysis, combined with a high capital investment cost of more than $17,000 per acre, may preclude producers from exercising their option to adopt wine grape production. Also, including wine grapes in the on-farm crop portfolio will affect its risk and return characteristics, likely impacting producer preferred level of wine grape adoption. (JEL Classification: Q11, Q15, Q25, Q54)

This paper examines empirically two distinguishing aspects of the world's wine regions: their degree of specialization in certain varieties, as measured by a varietal intensity index; and their similarity with the varietal mix of other regions, as measured by a varietal-based regional similarity index. Twelve of the most important wine-producing countries, that together account for all but one-eighth of the world's winegrapes, are included in the analysis. The data refer to circa 2000 (or 1999 for EU member countries, since that is their most recent census data). These indexes provide a baseline against which to compare more recent and future vintages. They will be especially useful as producers and regulators respond at varying speeds to the impacts of climate changes, in addition to market developments, on the optimal location of production of different varieties around the world. (JEL Classifications: D24, L66, Q13, Q15)

There are two main players in the Champagne wine industry; grape growers and Champagne houses. The former grow grapes and either produce their own Champagne wine or sell their fruit to Champagne houses. The latter only produce Champagne wine and do not grow grapes. However, Champagne houses invest heavily in advertisements to establish and maintain their brand's reputation. The grape market is characterized by the dominance of long-term supply contracts over spot contracts. Drawing on various theoretical models we suggest that the Champagne houses' advertising strategy and its associated positive externalities (spillover effects) on grape growers is a way of stabilizing vertical relations, i.e., keeping grape growers from producing Champagne wine themselves and thus maintaining a certain degree of monopoly power. (JEL Classification: C78, M37, D86, L14, Q18)

This paper analyzes the position of wine in the Danish alcohol market from 1978 to 2008. During this time period the market share of wine has doubled, assumingly due to a tax-induced change in relative prices as well as behavioral changes. This paper models the yearly observed market share of wine by unobserved component models which allow for adaptive trends including regressions with time varying coefficients. I find that the market share of wine has a steady upward trend even if it was temporarily broken by a tax reduction for liquor in 2001. (JEL Classification: C22, D11, L66)