Margins of Fair Trade Wines Along the Supply Chain: Evidence from South African Wine on the U.S. Market

Robin M. Back, Britta Niklas, Xinyang Liu, Karl Storchmann and Nick Vink

No 295015, Working Papers from American Association of Wine Economists

Abstract: In this paper, we analyze profit margins and mark-ups of Fair Trade (FT) wines sold in the United States. We are particularly interested in whether and to what extent the FT cost impulse in production is passed on along the supply chain. We draw on a limited sample of about 470 South African wines sold in Connecticut and New Jersey in the fall of 2016; about 90 of them are certified FT. For these wines we have FOB export prices, wholesale prices, and retail prices, which allows us to compute wholesale and retail margins and analyze the FT treatment effect. We run OLS, 2SLS and Propensity Score Matching models and find evidence of asymmetrical pricing behavior. While wholesalers seem to fully pass-through the FT cost effect, retailers appear to amplify the cost effect. As a result, at the retail level, FT wines yield significantly higher margins than their non-FT counterparts

Keywords: Agricultural and Food Policy; Industrial Organization (search for similar items in EconPapers)
Pages: 34
Date: 2019
New Economics Papers: this item is included in nep-agr and nep-int
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Citations: View citations in EconPapers (1)

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Journal Article: Margins of Fair Trade Wine along the Supply Chain: Evidence from South African Wine in the U.S. Market (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aawewp:295015

DOI: 10.22004/ag.econ.295015

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