The True Value of California Wine Grapes

Olena Sambucci and Julian M. Alston (Associate Director of AIC)
ARE Update

The method used to calculate average statewide returns per ton of wine grapes in the California Grape Crush Report understates the true total value of the crush significantly. We suggest an alternative method that will provide more accurate estimates.

Click here for full paper:

Napa Wine Growers Optimistic About Recovery After California Fires  Oct 19 2017

The wildfires in Northern California hit Napa’s wine country at one of its busiest times of the year. But the impact to the wine industry, while terrible for some, hasn’t been as bad as it could have been.

Here & Now‘s Robin Young speaks with Jim Lapsley, researcher at the Agricultural Issues Center at the University of California Davis.

Click here for link to audio:

Napa and Sonoma County Fires and the Wine Industry

James T. Lapsley and Daniel A. Sumner
Morning October 12, 2017

On-going wildfires have created great devastation in Napa and Sonoma Counties and have spread into Mendocino and Solano Counties as well. This region is among California’s best known wine-growing regions and many are interested in how these fires damage the wine industry and affect grape and wine supply and markets.

Click here for full paper: and Sonoma County Fires and the Wine Industry.pdf

California fires shake winery owners

CNNMONEY  Oct 11 2017

Many growers are worried about “smoke taint.” This can occur when grapes are exposed to smoke while they’re still on the vine — causing them to develop an ashy taste profile.

“If [smoke taint] does settle in, those grapes couldn’t be used for what they’re typically used for,” said Daniel Sumner, a professor of agricultural economics at the University of California, Davis.

For full article, click here:

California wildfires will hit higher-end wines hardest

Reuters 11 Oct 2017

“Dan Sumner, an agricultural economist at University of California, Davis, said consumers buying wines priced at $60 or more may see higher price tags due to smaller volumes of some vintages.

“They’re going from wines you can’t afford to wines you really, really can’t afford,” he said.”

For full article, click here:

Northern California fires and wineries

“The harvest in Sonoma and Napa counties is mostly finished, said Daniel Sumner, an agricultural professor at the University of California at Davis. Still, fires can damage grapes yet to be collected and can also destroy vines and wineries, he said.

“It’s bound to be a significant and substantial impact on the high-quality wine industry,” Sumner said.”

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Best paper, Agricultural Economics journal 2016 – Consumer knowledge affects valuation of product attributes: Experimental results for wine

Winner of best paper in Agricultural Economics Journal 2016

Christopher R. Gustafson, Travis J. Lybbert, Daniel A. Sumner
Journal of Behavioral and Experimental Economics, 12 August 2016


While a substantial literature on the effect of professional expertise in markets exists, consumers’ “homegrown” knowledge has received little attention in economics. We combine data from a novel valuation experiment, in which participants received information about and bid on wines sequentially, with data on participants’ wine knowledge to examine knowledge and bid updating. High knowledge participants did not value wines differently, but did update bids more with objective information, such as appellation and expert rating, than did low knowledge participants. Both low and high knowledge participants updated their bids significantly after taste-testing the wines. Our findings provide evidence that knowledge and preference are separable, and that knowledge captures a factor giving consumers the ability to process information to form expectations of product quality. Though both low and high knowledge consumers use sensory information, we find differences in preference for wines based on sensory information between low and high knowledge consumers. Our results suggest that knowledge is an important variable to consider in markets for complex, multi-attribute products.

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AIC researcher Alicia Hoepfner presented at the 3rd Annual Sustainable Winegrowing Workshop for Agricultural Professionals.

 Click here for the presentation:

AIC graduate student researcher, Alicia Hoepfner, presented at the 3rd annual Sustainable Winegrowing Workshop for Agricultural Professionals on June 16th, 2017, at UC Davis. In a year-long project, the AIC worked with the Wine Institute and the California Association of Winegrape Growers to evaluate the costs associated with increasing in sustainability. Daniel A. Sumner, Hyunok Lee, and Donald Stewart worked on the project starting in 2016, and Alicia Hoepfner reported and presented the findings at the Workshop. The cost evaluation by the AIC is part of a much larger project developing economic tools to assess costs and benefits for sustainability. Here is a link to the Economic Tools to Assess Costs & Benefits of Sustainable Winegrowing Practices, developed by many partners, including the AIC, in conjunction with the California Sustainable Winegrowing Program.

 Link to the economic tools webpage:

Process of making the presentation

After finishing the draft of the paper, we sat down and discussed the costs that were associated with different criteria in the workbook. We asked ourselves, what costs span across the different criteria in the workbook? The costs that were repeated as well as consequential included hired farm labor, cost of operator time, fixed cost for equipment, and consultants.

We spoke to owner-operated Sonoma grape growers who felt that these cost categories caused financial constraints when trying to improving sustainability according to the workbook. Generally, the growers thought sustainability category 2 was almost universally the set of standard practices, and many of them adopted up to sustainability category 3 in some criteria. In moving to category 4, the growers felt that required investments in capital or equipment did not improve outcomes.

Not all grower costs have a monetary amount. Many costs were associated with owner-operator scarce time, thus we were unable to attribute dollar costs to all criteria. In conclusion, cost of both time and money prevented Sonoma grape growers from operating at sustainability category 4. The cost of sustainability for the growers in Sonoma is weighed in both time and money, and is very dependent on elements such as location, climate, soil, and vineyard landscape.

AIC’s Goldstein to present research on premium price effects in wine, beer, and cannabis industries

Robin Goldstein, the Agricultural Issues Center’s Principal Economic Counselor, will present his research on premium pricing and the price-quality relationship in the wine, beer, and California cannabis industries at three academic conferences during the month of June: NeuroPsychoEconomics, Beeronomics, and the American Association of Wine Economists.

The research includes new empirical results from the Agricultural Issues Center’s California Cannabis Retail Price Survey, which AIC Director Dan Sumner and Robin have been running, with the help of a team of AIC research assistants, since November 2016. The survey has been conducted in conjunction with the AIC’s ongoing work with the California state government to assess the economic impact of the Bureau of Cannabis Control’s proposed regulations for the fully legalized cannabis industry, which are slated to take effect on January 1, 2018.

The work to be presented also includes some new data analysis of a series of blind-tasting experiments and online consumer surveys that Robin conducted in Berkeley and Davis, and builds on his experimental work over the past decade on consumer taste preferences, cognitive neuroscience, and seemingly irrational price effects (e.g. “Do More Expensive Wines Taste Better,?” Journal of Wine Economics, 2008; “Can People Taste the Difference Between Pâté and Dog Food?,” Chance, 2010; “Capuchin Monkeys Do Not Show Human-Like Price Effects,” Frontiers in Decision Neuroscience, 2014; “Hide the Label, Hide the Difference?,” American Association of Wine Economists working paper, 2015).

The first of Robin’s three June presentations will take place on June 9 at the 2017 NeuroPsychoEconomics conference in Antwerp, Belgium (preliminary program here). Next, he’ll present on June 14 at the Fifth Beeronomics conference in Copenhagen, Denmark (preliminary program here). Finally, he’ll present on June 29 in Padova at the 11th annual conference of the American Association of Wine Economics.

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