The 'Digital Grapevine' and the Global Flow of Wine: A Gravity Model of ICT in Wine Trade

Abstract

Wine has always been traded over long distances. Global trade in wine has, however, experienced accelerated growth and change during the past quarter century. First, 'New World' wines from Australia, California and New Zealand penetrated markets that 'Old World' suppliers from Europe considered as theirs; later, other new entrants to the world wine market, such as Chile, South Africa and Argentina, added to global trade in wine. Moreover, wine traders ostensibly have employed ICT and modern transport technologies, and global wine supply chains have evolved. What impact has the digital grapevine exerted on global trade in wine? Has it been commensurable with its impact on trade in other goods? We address these questions with a gravity model of international trade in wine that includes the major wine trading countries and covers the period from 1995 to 2008. The model explains the value of wine trade in terms of the adoption levels of internet access and mobile phone, and we include fixed telephone for nostalgic completeness. We control for a broad range of other factors that might also affect bilateral wine trade. Results show that ICT variables have had varied impacts on wine trade, with the magnitudes varying between the different forms of ICT, between their effects in wine-exporting countries and wine-importing countries, and between near and distant trading partners. The two major positive impacts are of mobile phones in importing countries and internet effects in both sets of countries for remote trading partners. Fixed telephone usage, on the other hand, proved not to be a significant determinant of wine trade values.