Exports of Italian High Quality Wine: New empirical evidences from a Gravity-type Model

Italian wine industry is facing two main challenges: a significant reduction in wine consumption and the growing competition on international markets. Consequently, market liberalisation and the aggressive international competition are threatening Italian wine producers. On the other hand, demand for high quality wines, which includes a large number of Italian wines, is increasing. The purpose of this study is to understand the determinants of trade flows' magnitude for Italian high quality wines to the main importing countries. In order to give a quantitative response, an econometric model derived from an extended version of the 'gravity model' was estimated. This model has been broadly applied to the analysis of international trade because it provides robust estimates. Nevertheless, applications referred to a single product are still limited in number. Estimates are useful to predict potential trends for trades of high quality Italian wines. Moreover, the model allows for the identification of growing markets that Italian firms could exploit, obviously using ad hoc promotional and communication strategies. Finally, relatively to Italian high quality wine, estimates evaluate the gains achieved by its exportation, which might be the consequence of a higher level of liberalisation of international trades.