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What Is the Value of Terroir?

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  • Robin Cross
  • Andrew J. Plantinga
  • Robert N. Stavins

Abstract

We examine the value of terroir--the set of special characteristics of a location that impart unique qualities to the wine produced. We conduct a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes--such as slope, aspect, elevation, and soil types—or designated appellations are more important determinants of price. We find that prices are strongly determined by appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, but that the reality of terroir--as proxied by locational attributes--is not significant.

Suggested Citation

  • Robin Cross & Andrew J. Plantinga & Robert N. Stavins, 2011. "What Is the Value of Terroir?," American Economic Review, American Economic Association, vol. 101(3), pages 152-156, May.
    • Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:152-56
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    References listed on IDEAS

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    1. Orley Ashenfelter & Karl Storchmann, 2010. "Using Hedonic Models of Solar Radiation and Weather to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 333-349, May.
    2. Gergaud, Olivier & Ginsburgh, Victor, 2010. "Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?," Journal of Wine Economics, Cambridge University Press, vol. 5(1), pages 3-21, April.
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    5. Gergaud, Olivier & Ginsburgh, Victor, 2010. "Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?," Journal of Wine Economics, Cambridge University Press, vol. 5(01), pages 3-21, March.
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    Cited by:

    1. Mérel, Pierre & Ortiz-Bobea, Ariel & Paroissien, Emmanuel, 2021. "How big is the “lemons” problem? Historical evidence from French wines," European Economic Review, Elsevier, vol. 138(C).
    2. Carlo Altomonte & Italo Colantone & Enrico Pennings, 2016. "Heterogeneous Firms and Asymmetric Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 64(4), pages 835-874, December.
    3. Ay, Jean-Sauveur & Le Gallo, Julie, 2021. "The Signaling Values of Nested Wine Names," Working Papers 321851, American Association of Wine Economists.
    4. Lacœuilhe, Jérôme & Louis, Didier & Lombart, Cindy, 2017. "Impacts of product, store and retailer perceptions on consumers’ relationship to terroir store brand," Journal of Retailing and Consumer Services, Elsevier, vol. 39(C), pages 43-53.
    5. Catherine Haeck & Giulia Meloni & Johan Swinnen, 2019. "The Value of Terroir: A Historical Analysis of the Bordeaux and Champagne Geographical Indications," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(4), pages 598-619, December.
    6. Stefano Castriota, 2018. "Does Excellence Pay Off? Evidence from the Wine Market," BEMPS - Bozen Economics & Management Paper Series BEMPS49, Faculty of Economics and Management at the Free University of Bozen.
    7. Swinnen, J. & Meloni, G. & Haeck, C., 2018. "What is the Value of Terroir? Historical Evidence from Champagne and Bordeaux," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277221, International Association of Agricultural Economists.
    8. Charters, Steve & Spielmann, Nathalie, 2014. "Characteristics of strong territorial brands: The case of champagne," Journal of Business Research, Elsevier, vol. 67(7), pages 1461-1467.
    9. Pierre Mérel & Ariel Ortiz-Bobea & Emmanuel Paroissien, 2021. "How big is the “lemons” problem? Historical evidence from French wines," Post-Print hal-04148936, HAL.
    10. Filippis, Fabrizio De & Giua, Mara & Salvatici, Luca & Vaquero-Pineiro, Cristina, 2021. "The International Competitiveness of Geographical Indications: Hype or Hope?," 2021 Conference, August 17-31, 2021, Virtual 315147, International Association of Agricultural Economists.
    11. Gergaud, Olivier & Plantinga, Andrew J. & Ringeval-Deluze, Aurelie, 2015. "Anchoring and Property Prices: The Influence of Echelle Des Crus Ratings on Land Sales in the Champagne Region of France," Working Papers 231136, American Association of Wine Economists.
    12. Jean‐Sauveur Ay, 2021. "The Informational Content of Geographical Indications," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 523-542, March.
    13. Cristina Vaquero-Piñeiro, 2020. "A voyage in the role of territory: are territories capable of instilling their peculiarities in local production systems," Departmental Working Papers of Economics - University 'Roma Tre' 0251, Department of Economics - University Roma Tre.
    14. Garavaglia, Christian & Mariani, Paolo, 2015. "How Much Do Consumers Value PDO Certifications? Estimates of WTP for PDO Dry-Cured Ham in Italy," 145th Seminar, April 14-15, 2015, Parma, Italy 200376, European Association of Agricultural Economists.
    15. Christopher R. Gustafson & Travis J. Lybbert & Daniel A. Sumner, 2016. "Consumer sorting and hedonic valuation of wine attributes: exploiting data from a field experiment," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 91-103, January.
    16. Cross, Robin & Plantinga, Andrew J. & Stavins, Robert N., 2011. "The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices," Journal of Wine Economics, Cambridge University Press, vol. 6(1), pages 1-14, January.
    17. Meloni, Giulia & Swinnen, Johan, 2018. "Trade and terroir. The political economy of the world’s first geographical indications," Food Policy, Elsevier, vol. 81(C), pages 1-20.
    18. Gergaud, Olivier & Plantinga, Andrew J. & Ringeval-Deluze, Aurelie, 2017. "Anchored in the past: Persistent price effects of obsolete vineyard ratings in France," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 39-51.
    19. Pecchioli, Bruno & Moroz, David, 2023. "Do geographical appellations provide useful quality signals? The case of Scotch single malt whiskies," Economic Modelling, Elsevier, vol. 124(C).
    20. Jérôme Lacoeuilhe & Didier Louis & Cindy Lombart, 2017. "Impacts of product, store and retailer perceptions on consumers’ relationship to terroir store brand," Post-Print hal-01672920, HAL.
    21. Gustafson, Christopher R. & Lybbert, Travis J. & Sumner, Daniel A., 2016. "Consumer knowledge affects valuation of product attributes: Experimental results for wine," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 85-94.
    22. Spielmann, Nathalie & Williams, Christopher, 2016. "It goes with the territory: Communal leverage as a marketing resource," Journal of Business Research, Elsevier, vol. 69(12), pages 5636-5643.
    23. Waldman, Kurt B. & Kerr, John M., 2015. "Is Food and Drug Administration policy governing artisan cheese consistent with consumers’ preferences?," Food Policy, Elsevier, vol. 55(C), pages 71-80.
    24. De Filippis, Fabrizio & Giua, Mara & Salvatici, Luca & Vaquero-Piñeiro, Cristina, 2022. "The international trade impacts of Geographical Indications: Hype or hope?," Food Policy, Elsevier, vol. 112(C).
    25. Kelly Grogan, 2015. "The value of added sulfur dioxide in French organic wine," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-25, December.

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