5.2 the Swiss Wine Market
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Research Collection Doctoral Thesis Four Essays in Wine Economics: An Empirical Approach with Swiss Panel Data Author(s): Mondoux, Alexandre Publication Date: 2018 Permanent Link: https://doi.org/10.3929/ethz-b-000266501 Rights / License: In Copyright - Non-Commercial Use Permitted This page was generated automatically upon download from the ETH Zurich Research Collection. For more information please consult the Terms of use. ETH Library Dissertation Series Four Essays in Wine Economics: An Empirical Approach with Swiss Panel Data Alexandre Mondoux Diss. ETH No. 24887 KOF Dissertation Series, No. 33, 2018 KOF Swiss Economic Institute Imprint Publisher KOF Swiss Economic Institute, ETH Zurich © 2018 Alexandre Mondoux DISS. ETH NO. 24887 FOUR ESSAYS IN WINE ECONOMICS: AN EMPIRICAL APPROACH WITH SWISS PANEL DATA A thesis submitted to attain the degree of DOCTOR OF SCIENCES of ETH ZURICH (Dr. sc. ETH Zurich) presented by ALEXANDRE MONDOUX Master of Arts in Economics, University of Fribourg born on 06.04.1984 Citizen of Châtonnaye (FR) accepted on the recommendation of Prof. Dr. Peter Egger, examiner Prof. Dr. Marko Köthenbürger, co-examiner 2018 “Nothing more excellent or valuable than wine was ever granted by the gods to man.” Plato, Greek philosopher, (c. 427-347 BC) Acknowledgements First of all, I would like to thank Professor Peter Egger for the valuable opportunity to write my PhD thesis under his supervision at one of the best universities in the world, as well as for his continued support and advice in my academic research. I am also grateful to have shared time for discussion and friendship with all his team of the Chair of Applied Economics: Innovation and Internationalization. At the same time, I am very thankful to my thesis committee, Professors Marko Köthenbürger and Massimo Filippini of ETH Zurich, for taking the time to read and comment on the dissertation presented here. I would especially like to thank Professor Michael Graff, as well as his team from the Research Division Economic Forecasting, where I was an economic researcher in parallel to preparing my doctorate. I acknowledge with gratitude Dr. Samad Sarferaz and Gabriel Loumeau for their precious help and advice. I am very grateful to Katha- rina Bloch, who helped and supported me during the whole period of my dissertation, in both the good times and the difficulties that I encountered; my thanks go also to Professor Jan-Egbert Sturm, director of the KOF, who created the ideal working con- ditions for conducting my doctoral studies. I thank also Susan Gilbert for carefully reading my text. During my dissertation, I had the chance to meet extraordinary people at national and international conferences, in particular within the American Association of Wine Economists (AAWE) and the European Association of Wine Economics (EuAWE). Among others, I met Philippe Masset and Jean-Philippe Weisskopf, both Professors at Ecole hôtelière de Lausanne, with whom I wrote in co-authorship the last research paper of this dissertation. All the seminars organized by the KOF, including the KOF Brown Bag by Heiner Mikosch, gave me a unique opportunity to present my research or attend presentations by well-known international professors in economics in my academic area of expertise. I am very grateful to the Swiss Wine Market Institute (OSMV), established at the University of Applied Sciences Western Switzerland (HES-SO) in Changins (Nyon), where I was scientific partner, for funding my dissertation. I would like to thank in particular Conrad Briguet and Philippe Delaquis for their trust and support all through the writing of my PhD, as well as Anne Planquart, Marie-Clémence Mouron, Caroline Schaub and Zeltia Rodriguez for the excellent teamwork. This experience went beyond all my expectations giving further fruitful cooperation. In the same way, I am truly thankful to Thierry Walz, Jean-Marc Amez-Droz and Olivier Savoy for giving me the keys to understanding the Swiss wine market. I would like to thank my wonderful wife Oleksandra, who always encourages me to go beyond my limits and without whom I would never be where I am today. My father Michel, my mother Isabelle and my brother Christophe have always helped and believed in me, each with their own competences and strong support from the beginning of my studies until the completion of my doctorate. To all of them I will always be extremely grateful. Zurich, December 2017 Alexandre Mondoux Contents List of Figures ................................. v List of Tables .................................. ix Abstract ..................................... xi Résumé ...................................... xiii 1 Introduction 1 1.1 Issues and Goals . 2 1.2 Data and Methodology . 5 1.3 Findings . 7 1.4 Contribution . 9 2 Price Endogeneity and Demand for Swiss Wines 11 2.1 Introduction . 12 2.2 Literature . 13 2.3 Data . 14 2.3.1 Descriptive statistics . 14 2.3.2 Statistical analysis . 16 2.3.3 Transformation and tests on the data . 17 2.4 Identification strategy: instrumental variable estimation . 18 2.4.1 Price endogeneity . 18 2.4.2 Discussion of the instruments . 20 2.4.3 Econometric model . 21 2.5 Results . 23 2.5.1 Baseline model . 23 2.5.2 Graphical analysis . 26 2.5.3 Pseudo panel and cross-price elasticity . 28 2.5.4 Robustness checks . 29 i 2.6 Conclusion . 30 2.7 Appendix . 32 2.7.3 Figures . 34 2.7.4 Tables . 52 3 Scenarios and Prospects for the Swiss Wine Market 67 3.1 Introduction . 68 3.2 Literature . 69 3.3 Data . 70 3.4 Identification strategy: Panel VAR . 72 3.4.1 Supply and demand shocks in the wine market . 72 3.4.2 Econometric model . 74 3.4.3 Lag order selection and stability of the model . 74 3.4.4 Granger causality test . 75 3.4.5 Impulse Response Function (IRF) . 76 3.4.6 Cholesky IRF . 77 3.5 Results . 78 3.5.1 Panel VAR . 78 3.5.2 Impulse response function . 78 3.6 Robustness checks . 80 3.6.1 Cholesky IRF . 80 3.6.2 Forecast . 81 3.7 Conclusion . 82 3.8 Appendix . 84 3.8.1 Tables . 84 3.8.2 Figures . 86 4 Should We Put Ice in Wine? A Difference-in-Differences Approach from Switzerland 97 4.1 Introduction . 98 4.2 Literature . 100 4.3 Data . 101 4.3.1 Data description . 101 ii 4.3.2 Descriptive statistics . 102 4.3.3 Statistical analysis . 103 4.4 Identification strategy: difference-in-differences . 104 4.4.1 Identifying assumptions and definitions . 104 4.4.2 Exogenous supply and demand shocks . 107 4.4.3 Econometric model (baseline) . 108 4.4.4 Econometric model (extension) . 109 4.5 Results . 110 4.5.1 Parallel time trend: visual evidence . 110 4.5.2 Baseline regression results . 112 4.6 Robustness checks . 115 4.6.1 Baseline regression results . 115 4.6.2 Extension of the regression results . 116 4.7 Conclusion . 117 4.8 Appendix . 119 4.8.1 Tables . 119 4.8.2 Figures . 130 5 Pricing Strategies for High-End Experience Goods in a Very Com- petitive and Opaque Market – The Case of Swiss Fine Wines 137 5.1 Introduction . 138 5.2 The Swiss wine market . 142 5.3 Data . 145 5.4 Methodology . 149 5.5 Results . 152 5.6 Robustness checks and extensions . 154 5.7 Conclusion . 155 5.8 Appendix . 157 Bibliography 165 Curriculum Vitae 175 iii List of Figures 2.1 Swiss AOC wine price ............................ 15 2.2 Swiss AOC wine ln(price) .......................... 15 2.3 Seasonality of Valais wines (monthly frequency) . 16 2.4 The six Swiss wine regions (SWP, 2015) . 34 2.5 Proportion AOC color . 35 2.6 Proportion AOC region . 35 2.7 Proportion AOC region color . 35 2.8 Proportion AOC color region . 35 2.9 Proportion VDP color . 36 2.10 Proportion VDP region . 36 2.11 Proportion VDP region color . 36 2.12 Proportion VDP color region . 36 2.13 Proportion Foreign color . 37 2.14 Proportion Foreign country . 37 2.15 Proportion Foreign country color . 37 2.16 Proportion Foreign color country . 37 2.17 Proportion Total color . 38 2.18 Proportion Total type . 38 2.19 Proportion Total type color . 38 2.20 Proportion Total color type . ..