Globalization and taste convergence: The cases of wine and beer

We’ve heard too much discontents of globalization. Globalization however is unstoppably changing every aspects of our life. Take alcohol consumption as an example.  Joshua Aizenman and Eileen L. Brooks at the University of California (“wine country” campus?) examine historic data in 38 countries around the world and discover that there is clear convergence in the consumption of wine relative to beer between 1963 and 2000 . Relative consumption of wine can be explained well in 1963 by grape production and latitude, but these variables are much less significant in 2000. Now you don’t need to live in wine country to be able to enjoy great wines!

Tip for our readers: In another paper "Products and Prejudice: Measuring Country-of-Origin Bias in U.S. Wine Imports" , Professor Brooks discovers a secret that a “Product of Italy” label can raise the price of a bottle of wine by more than 50% without raising the quality, which means that:  if you see two bottles of wine with same price, one is “Product of Italy” and the other from Argentina, don’t buy the Italian one! Curious why folks beleive that Italian wine should sell at higher prices? because they are better economists?

Globalization and taste convergence: The cases of wine and beer
Abstract: This paper investigates changes in cultural consumption patterns for a low concentration industry: wine and beer. Using data on 38 countries from 1963-2000, there is clear convergence in the consumption of wine relative to beer between 1963 and 2000. Convergence occurs even more quickly within groups of countries that have a higher degree of integration. A key prediction of international trade is confirmed in the data: greater trade integration weakens the association between production and consumption patterns – although the relative consumption of wine can be explained well in 1963 by grape production and latitude, these variables are much less significant in 2000. Despite these “scientific” explanations for the consumption of wine, there is also a cultural angle to wine consumption. While the relative wine consumption of France and Germany is converging, several Latin American countries fail to converge. The patterns of convergence are consistent with dynamics of adjustment in an overlapping generation habit formation model.