GASTRONO MIC HIERARCHIE S OF VALUE The Market for French AOC Wines Emily Gullickson International Thesis Forum May 5, 2010.

GASTRONOMICHIERARCHIESOFVALUE

The Market for French AOC Wines

Emily Gullickson International Thesis Forum May 5, 2010

The Food Economy

Agriculture& theGlobalMarkets

Fast Food vs. Slow Food

buono,pulito,egiusto

Value,Quality &Differentiation

Willingnessto Pay

Brands,Marketing,Reputation,& Standards

Labels“Good Source of Vitamin C”

“Prevents Cancer”

“425 Calories”

C.O.O.L.

GeographicIndications ofOrigin

What is theeffect of alabeling systemon prices?

France

Varietals,Vintages & Terroir

Appellation d’Origine Contrôlée

Bordeaux

vv

What is theeffect of alabeling systemon prices?

13 Regions

314 Appellations

77,590 bottles of wine

February 2010

The Model

Dependent Variable:

Price

Independent Variables:

AOCVintageRegion

AOC Area RatioAOC Production Ratio

Hedonic Price Model with Interactions:

Price = β 0+ β1×Q + β2×K + β3×R + β4×q + β5×r + λ0×Q +λ1(Q×K)+λ2(Q×R)+λ3(Q×q)+ λ4(Q×r)

A quality label alonedoes not increaseregional, anti-competitivedistortions inthe food economy.

ResultsQ = - %Q×Age = + 182%Q×Area = +33%Q×Prod = +79%Q×Age×Area = +84%Q×Age×Prod = +130%

France

Bordeaux

vv

What is the effectof a labelingsystem on thewine market?

The AOC systemboth solves &creates a marketfailure.

As a form of productdifferentiation, theAOC provides marketinformation whilesetting a standard.

If enough producers join thestandard, thenthey obtainmarket power.

What is the effectof a labelingsystem on thefood economy?

New Information Market

New Institutions

Globalism&Regionalism

Fast Food vs. Slow Food

Acknowledgments:My advisor, Professor Thierry Warin

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