Economic performance of the Portuguese wine industry: a microeconometric analysis.

The wine industry is an example of how globalisation is reshaping the market structure, on both sides. The supply side has registered an increase in competition, as a result of new entrants. On the demand side, there has been a decrease in consumption in traditional producing countries, as a result of consuming behaviour and a proliferation of other alcoholic beverages. In order to survive, wineries need to adapt their strategies and internal resources to these market challenges. The main goal of this paper is to provide new knowledge on the topic, striving for the main determinants of Portuguese wineries' economic performance, using a micro-econometric approach. Both fixed-effect two-stage least square and generalised method of moments models are applied to a panel of 412 Portuguese wineries, controlling for firm-specific effects, heteroskedasticity and persistence effects. The results show that firm size, labour productivity, financial autonomy and short-term debt ratio are positively related to economic performance. Firm age is shown to have a non-linear relationship with economic performance. The persistence effect of earnings before interests, tax, depreciations and amortisations is shown to be negative. [ABSTRACT FROM AUTHOR]