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Why Do Distilleries Produce Multiple Ages of Whisky?

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  • Page, Ian B.

Abstract

Unlike many other vintage goods, distilleries often opt to mature their stocks to different ages, selling a heterogeneous line of products which vary in quality. We develop a theoretical model to examine the maturation decisions of a whisky distillery and find that it is possible for a profit-maximizing distillery to produce multiple ages of whisky under perfect competition. Based on an analysis of retail whisky prices, we find evidence suggesting that most distilleries that produce multiple ages of whisky do not operate under perfect competition. However, a hedonic estimation of whisky prices does not find any strong link between a distillery’s size and its ability to influence market prices, suggesting that distilleries may achieve market power through brand recognition.

Suggested Citation

  • Page, Ian B., 2013. "Why Do Distilleries Produce Multiple Ages of Whisky?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150430, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150430
    DOI: 10.22004/ag.econ.150430
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    Cited by:

    1. Richter, Magnus, 2017. "Time and quality efficiency of Scotch single malt whisky production: An empirical two-model DEA approach," Ilmenauer Schriften zur Betriebswirtschaftslehre, Technische Universität Ilmenau, Institut für Betriebswirtschaftslehre, volume 2, number 22017.

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    Keywords

    Demand and Price Analysis; Production Economics;

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