Advanced Search
MyIDEAS: Login to save this paper or follow this series

New challenges and opportunities for Italian exports of table wines and high quality wines

Contents:

Author Info

  • Carlucci, Domenico
  • De Blasi, Giuseppe
  • Santeramo, Fabio Gaetano
  • Seccia, Antonio

Abstract

Competition in international wine market has recently become more intense because of several factors and, in particular, the progressive reduction in world-wide consumption, the addition of new producing countries such as Australia, Chile, the USA and South Africa (the so called New World wine producers) and the increasing trade liberalization. In order to achieve a competitive advantage in the international marketplace, it is very important to identify which markets are characterized by bigger attractiveness. In particular, the ability of a producer, a region or a country to provide effective communication and promotion actions towards more profitable local markets is strategic in international trade. Italy, one of the first wine producing country in the world, exports its wines to almost all countries of the five continents. However, the five greater importing countries account for 70 percent of Italy’s total wine exports (the USA, Germany, the United Kingdom, Switzerland, and Canada) and so Italy shows only a moderate market diversification. In this paper, an econometric model able to explain the size of wine export flows from Italy to its main importing countries was elaborated and estimated. This model provides useful information that can help to identify the main growing markets where all participants in the wine supply-chain, such as private wineries, joint-ventures, regional and national agencies, and producers’ associations, can unite to concentrate product communication and promotional efforts. The model is an extended version of the “gravity model” that many economists believe a very powerful tool for international trade analysis. In fact, at the empirical level, the gravity model gives very robust estimates and provides a good fit to the observed data. The basic concept of the gravity model for trade analysis borrows the gravity equation from physics: the volume of trade between two countries is proportional to their economic “mass” and inversely proportional to their respective distance. In this work, the investigation about the features of Italian wine export flows is conducted through the estimation of two different econometric models; the first one is related to QWPDR and second one is related to table wine category. Both models derive from an extended version of the basic gravity model where dummies for groups of countries have been added. An important result is that Italy should increase the production of high quality wine because there are favorable conditions in place which would increase exportation. At the same time, Italy should decrease the production of table wine because its international demand is declining. Moreover, estimation results show that both QWPDR and table wine exportations are income elastic. Hence, if Italian wine producers intend to expand their exportations, it is natural to look at those countries where income growth is high but also constant and solid. It is interesting to highlight that, among countries with the highest income growth rates, there are three very big countries, China, Russia and India, where expansion possibilities for Italian wine exports are very attractive. Currently, these countries import less than 1% of total exports of Italian wine. At the same time, it is important to highlight that the main countries importing Italian wine (the United States, Germany, the United Kingdom, Switzerland, Canada, Japan and almost all western European countries) show a moderate but stable income growth and therefore it would be strategic to defend and consolidate Italian market shares against any possible aggressions by the new wine producing countries. The recent enlargement of the EU could represent a great opportunity for the exporters of Italian wine. In particular, it is interesting to note that all new EU members and, in particular, the Baltic Republics (Latvia, Estonia, Lithuania) show high income growth rates. In addition, as widely known, there are no customs barriers within the European Union but instead there is a common external tariff applied to imports from non-EU countries. Therefore, these countries represent very interesting, and as yet untapped, markets even if, in the next years, there are real possibilities to expand mainly table wine exports because the income, although rapidly increasing, remains still moderate.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/8728/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8728.

as in new window
Length:
Date of creation: May 2008
Date of revision:
Handle: RePEc:pra:mprapa:8728

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Italian Wine; Trade; Gravity model; Exports;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 20(3), pages 363-368, 05.
  2. James Harrigan, 2001. "Specialization and the volume of trade: do the data obey the laws?," Staff Reports, Federal Reserve Bank of New York 140, Federal Reserve Bank of New York.
  3. Howard J. Wall, 2000. "Gravity model specification and the effects of the Canada-U.S. border," Working Papers, Federal Reserve Bank of St. Louis 2000-024, Federal Reserve Bank of St. Louis.
  4. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, American Economic Association, vol. 94(1), pages 98-114, March.
  5. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D., 2003. "Augmented gravity model: An empirical application to Mercosur- European trade flows," International Trade, EconWPA 0309019, EconWPA.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Agostino, Mariarosaria & Trivieri, Francesco, 2014. "Geographical indication and wine exports. An empirical investigation considering the major European producers," Food Policy, Elsevier, Elsevier, vol. 46(C), pages 22-36.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:8728. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.