Macroeconomic Determinants of Wine Production in the European Union

Abstract

This paper focuses on the determinants of wine production in the European wine industry. In the last two decades, the European wine industry has undergone many changes due to the entry of new countries into the world wine market. Although increasing competitiveness became the priority of the European Common Agricultural Policy, wine production and consumption in the EU have decreased in the last two decades, and therefore the aim of this research is to analyse and identify the macroeconomic determinants of wine production, i.e. what factors besides the price influence wine production in selected EU countries and in how they can be controlled. Empirical research was conducted using data for EU member states traditionally engaged in wine production. Panel data on wine production, wine consumption, average wine price, wine imports, wine exports and EU support to the wine sector were collected from secondary sources for 15 wine-producing EU countries and for the period 2009-2018. We estimated the econometric model using pooled OLS, as diagnostic tests indicated that this estimator was the best fit for our data. Our results suggest that domestic demand and domestic (EU) subsidies are the main drivers of wine production. To keep up with New World wine producers, even more emphasis should be placed on promoting the wine drinking culture.

Economic and institutional aspects of wine consumption in the context of globalization and climate change in Europe and Russia

“…In the 2010s, substantial changes occurred in the structure of wine production in the countries with the largest volumes of production. In part, this can be attributed to the reforms that were induced in the EU wine sector (several of these reforms have taken place) (Katunar et al, 2021;Pomarici, Sardone, 2020). In 2020, global wine production was 260 million hl, an increase of 1% compared to 2019 .…”

“…The EU has long been involved in viticulture under the Common Agricultural Policy, and the wine sector is still a very important part of EU agriculture (Katunar et al, 2021;Pomarici, Sardone, 2020). Ferrer Lorenzo et al (2018) note that the European wine sector has undergone significant changes in recent years.…”