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Does Excellence Pay Off? Evidence from the Italian Wine Market

  • Stefano Castriota ORCID logo and Alessandro Fedele EMAIL logo
Published/Copyright: January 15, 2024

Abstract

Considering the Italian wine market, we investigate the relationship between product quality, on the one hand, and profits and profitability, on the other hand. Using data from 1052 wineries over the period 2006–2015, we find robust evidence of a positive relationship between product quality, measured by the wineries’ reputation for quality, and profits, measured by the Earnings Before Interest, Depreciation and Amortization. By contrast, we observe no relationship between reputation and profitability, measured by the Return on Invested Capital.

JEL Classification: L15; L66; D22

Corresponding author : Alessandro Fedele, Faculty of Economics and Management, Free University of Bolzano, Bolzano, Italy, E-mail:

Award Identifier / Grant number: WW202C

Acknowledgments

We thank the editor, Till Requate, two anonymous reviewers, Orley Ashenfelter, Marco Costanigro, Alessandro Gavazza, Philipp Kircher, Raffaele Miniaci, Steven Stillman, Karl Storchmann, Mirco Tonin, David Yanagizawa-Drott, and the participants at the AAEA Annual Meeting (Washington) and the Wine and Hospitality Management Workshop (Lausanne) for helpful discussions and suggestions. Alessandro Fedele gratefully acknowledges financial support from the Free University of Bolzano (research grant WW202C). The data that support the findings of this study are available upon request.

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Published Online: 2024-01-15

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