California Wine Supply Chain

What is it about?

I investigate factors influencing coordination of the California grape and wine supply chain (arms-length exchange, contracts, and vertical integration). Quality considerations and investments in specialized or dedicated assets significantly increase use of contracts and vertical integration among grape and wine production phases. Such investments are associated with greater contract complexity and inclusion of enforcement provisions, while trade partners’ prior experience working together decreases contract complexity. Results also suggest that quality considerations extend to greater use of formal contracts with wholesalers and retailers.

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Why is it important?

The results corroborate prior findings about exchange among grape growers and wineries, but offers previously unknown insights about usage of contract terms or provisions at this stage. The study is the first to document that the relationship between quality considerations and contract usage extend further downstream in this industry as well.