Why Most European Wine comes from Companies with a Bad Reputation: Cooperative Wineries in Spain and Beyond

Abstract

Cooperative wineries are one of the cornerstones of the wine industry in Europe today. To understand how they reached this condition, I use the case of Spain and pay special attention to the period in which they took off in the country, namely, during the Franco dictatorship (1939-75). Wine economists often believe that cooperatives produce mediocre wines because they cannot avoid the opportunistic behavior of their members. I argue that they can and that the poor quality of their wine in some regions was the result of the perverse stimuli provided by a badly designed wine market regulation policy.