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Organizational Structure and Operation of the Illinois Wine Industry

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  • Franken, Jason R. V.
  • Bacon, Kevin J.

Abstract

This study examines vertical coordination in the wine industry emerging in Illinois. We find that quality matters as temporal issues related to grape perishability increase the probability of written contracts being used to procure grapes. Holdup concerns related to sourcing adequate quality grapes and at-risk investments in grape storage and winemaking equipment lead to vertical integration. In general, larger wineries must obtain some grapes from outside vineyards and sell wine predominantly through tasting rooms and distributors. Smaller wineries rely more on direct sales to retailers, festivals, and farmers’ markets. Marketing outlet selection also reflects the types of wine produced.

Suggested Citation

  • Franken, Jason R. V. & Bacon, Kevin J., 2014. "Organizational Structure and Operation of the Illinois Wine Industry," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(01), pages 1-21, April.
    • Handle: RePEc:ags:arerjl:165907
    DOI: 10.22004/ag.econ.165907
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    References listed on IDEAS

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    Cited by:

    1. Jason R.V. Franken & Joost M.E. Pennings & Philip Garcia, 2018. "Graphical Illustration of Interaction Effects in Binary Choice Models: A Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 852-858, September.
    2. Fabio R. Chaddad & Jason R.V. Franken & Miguel I. Gómez & R. Brent Ross, 2017. "Coordination of Winegrape Supply Chains in Emerging Markets," Agribusiness, John Wiley & Sons, Ltd., vol. 33(3), pages 289-301, June.
    3. Miranda, Bruno & Chaddad, Fabio, 2016. "Transaction Costs, Capabilities, and Grape Procurement Strategies in U.S. Emerging Wine Regions," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235363, Agricultural and Applied Economics Association.

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