American Association of Wine Economists Aawe

The objective of the research is to identify the locational factors that influenced the decision to expand winemaking activity into other regions of Brazil. In recent years, winemaking has expanded into new regions in the state of Rio Grande do Sul (Serra do Sudeste and Campanha) and into the São Francisco River Valley (states of Bahia and Pernambuco) regions where this activity had not previously been carried out. Rio Grande do Sul, the state with the largest production volume, produces around 90% of all Brazilian wine. Expansion has taken place both inside and outside the state. Primary data were collected through direct interviews with winemakers for the purpose of identifying the factors that drive the locational decision-making process. It was shown that the Brazilian winemaking activities are conditional to the spatial distribution of the productive resources: the companies are concerned about the quality of the end product (wine), which is optimized by the quality of the raw materials (grapes). This, in turn, depends on the edaphic and climatic conditions in the productive region. Another factor that is considered important in winemaking expansion decision-making activities in the country has arisen from the current physical constraints in Serra Gaúcha: a large part of the available land lies in Permanent Protection Areas (APP), and the rest would be very expensive to acquire. This has had also an influence on the decision to shift activities to other regions. JEL Classification: Q13, R12, R3