common knowledge. But the fact that there are distinct
premia for particular varieties, over and above
a premium or discount for region of origin, distinguishes
the Antipodes from Western Europe
where varietal distinctions have until very recently
been downplayed.
There is much scope for further empirical work
of this sort. Two examples of other questions that
might be addressed are mentioned by way of conclusion.
First, to what extent are subnational regions
beginning to enjoy a price premium in markets abroad,
or is it still only national recognition (‘Brand Australia’)
and corporate brands that matter in those
export markets at this stage? An answer to this
question would help to fine-tune the promotional
efforts of wine companies and regional wine associations.
If national generic promotion can be shown
to pay abroad, the bodies responsible for national
promotion9 would find it easier to attract (i) funds
for that generic promotion and (ii) support for
regulation of wine exports to ensure the national
reputation for quality exports is not tarnished.10 This
is especially crucial in light of Tirole’s (1996) theoretical
result, and the bitter experiences following
wine scandals in Austria and Italy in the 1980s,
showing that producers can suffer for a very long
time from previous mistakes.
Second, how well could hedonic pricing models
be applied to better understand the demand for
wine grapes by wineries? Various technical features
of grapes contribute to the quality of the wines made
from them, but in ways that are not very transparent
to grape growers. As quantitative measures improve
for measuring in the vineyard and/or weighbridge
those attributes winemakers are looking for, so will
the scope for addressing this issue with hedonic price
modelling. This would build on the work begun by
Golan and Shalit (1993) with respect to Israeli
grapes, and a recent paper by Oczkowski (2002).
If indeed weather variables during the grape growing
season are crucial, as the empirical results of
Ashenfelter (2000) and Wood and Anderson (2002)
suggest, those too would need to be included in
addition to such variables as grape sugar level,
colour and acidity.