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Abstract
The use of contracts to coordinate the relationship between a grape grower and a winery has become common practice in DOC Rioja. In this paper, the role and the characteristics of contracts in coordinating the supply of grapes between independent wine grape growers and wineries in DOC Rioja is examined. A review of existing theories on contractual choice in the wine industry indicates that although contracts are important to facilitate the coordination of the relationship, they are subject to a number of problems such as the measurement of grape quality. Finally, we distil the main lessons of this research and present them as advice for wineries and grape growers designing contracts.
Notes
The average price of a kilogramme of grapes decreased from 2.70 euro in 1999 to 0.88 euro in 2007.
An oral contract is as legally binding as a written contract; the issue with an oral contract is in providing its existence. One way is to use witness testimony.
Each Denomination of Origin has a governing control board that enforces wine regulations and evaluates each to ensure that it is true to type.
Several wineries' managers commented in their survey return that “Our own minimum levels of quality are stricter than the Board's”.