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How Rain Affects Profitability in the Wine Sector

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Document pages: 15 pages

Abstract: Climate change largely influences the operations of companies that, due to their nature, are exposed to weather risks. One of the sectors that is widely exposed to weather conditions is the wine sector. Rain, together with temperature, is one of the weather variables that most influences the growth of grapevines. The present work wonders whether the volatility induced by the increasing unpredictability of rain, not only causes problems to the growth of grapevines, but also affects the profitability of the wine sector. We try to answer the previous question through an application to two wine regions located in Northern Italy: Franciacorta and the province of Trento. In particular, we propose a methodology, based on cluster analysis, regression trees, and broken-stick regression, to detect a relationship between profitability of wineries and rain.

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