RT Journal Article
SR Electronic
T1 Worth the Hype? Tall Vines Raise Profits for Some – Tradeoffs for All
JF Catalyst: Discovery into Practice
FD American Society for Enology and Viticulture
SP catalyst.2021.20009
DO 10.5344/catalyst.2021.20009
A1 Kiely, Sean
A1 Langone, Madeleine
A1 McPhail, Lindsay
A1 Ren, Lifeng
A1 Campos-Gatica, Jesus
A1 Joo, Minjung
A1 Martindill, Jon
A1 Lybbert, Travis J.
YR 2021
UL http://www.asevcatalyst.org/content/early/2021/02/15/catalyst.2021.20009.abstract
AB Goals: The sudden popularity of tall vines among grape growers took some nurseries by surprise. Is this popularity rooted in economic reality? This analysis quantifies the claimed benefits of tall vines relative to regular vines from the grower’s perspective using a net present value (NPV) model. We leverage these potted green vine value estimates to discuss the forces that explain the recent emergence of tall vines in the California grape industry and their prospects for the future.The NPV of planting tall vines instead of regular vines varies widely by grape variety and region in California because of regional differences in input costs and grape prices.Under reasonable assumptions, the estimated profit differential of tall vines over regular vines ranges from $1.64/vine to $7.31/vine.A break-even analysis indicates that tall vines are more profitable if the yield drag (i.e., reduced future yield due to pushing young vines into early production) is less than 15%, while regular vines are more profitable if the yield drag is greater than 21%.Impact and Significance: The expected future profits generated by a grapevine at the time of planting accrue slowly over its productive lifespan, which can complicate growers’ investment decisions. Our NPV model captures key elements of a grower’s decision to plant tall vines versus regular vines. While the true value of planting tall vines may vary by grower depending on their production conditions and market circumstances, the model, results and discussion of this paper can help growers to evaluate more objectively the potential benefits of tall vines. This paper also informs stakeholders more generally about the potential impact of vine height differentiation in the broader industry.