Impact of an exogenous shock (COVID-19) on the performance of Portuguese wine firms: a structural break analysis

ABSTRACT

The COVID-19 pandemic crisis was responsible for disruptions in most industries worldwide, being the wine industry a good example of how changes in the economic and social environment impacted firm performance. This research investigates whether such impacts represent a structural change to firms’ profitability and explore the internal sources of such change. We consider firm-level data from Portuguese wineries, from 2014 to 2020 and apply a series of structural break tests to the period. The results allow us to conclude that the entire profitability function suffered significant changes, being COVID-19 indeed a game-breaker for wineries’ profitability.

KEYWORDS:

• Structural break
• microeconometrics
• Covid-19
• winery performance

JEL CODES:

• C23
• D21
• L25
• Q14

Acknowledgements

This study has received support from: the FEDER – Interreg SUDOE project SOE3/P2/F0917, VINCI – Wine, Innovation and International Competitiveness, and the FCT – Portuguese Foundation for Science and Technology, project UIDB/SOC/04011/2020.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the Fundação para a Ciência e a Tecnologia [UIDB/SOC/04011/2020]; Interreg Sudoe [S0E3/P2/F0917].