A forecast of Cava wine sales applied to vine planting authorizations

Abstract

PurposeThis paper aims to establish the determinants of production in the Spanish Designation of Origin (DO) area for Cava wine and forecasts sales to establish vineyard area variations that maintain market equilibrium.Design/methodology/approachBy applying a vector autoregressive (VAR) model, the authors forecast demand and the consequent requirements for base wine production.FindingsThe results show that Cava sales determine the base wine supply. After forecasting demand and the consequent requirements for base wine, the authors’ results show that, to avoid oversupply, the vineyard area for Cava wine should not be increased.Practical implicationsThe paper develops a simple and effective method for DOs affected by the current European wine plantation regulations to forecast from a supply and demand perspective and their surface needs in response to market changes.Originality/valueThis study contributes to the literature because, to the best of the authors’ knowledge, no other study has investigated the determinants of Cava supply and demand or defines a model to assess the effects of changes in growing areas. The model is applicable to other European protected designations of origin wines and would help policymakers to accurately establish vine planting authorizations.