WINE MNGMT Wine Economics Terrorism and Wine Tourism

WINE MNGMT Wine Economics Terrorism and Wine Tourism The recent case of France Bordeaux wines Florine Livat-Pécheux, Ph. D Florine Livat RMS, May 2011 KEDGE Business School, France & Cornell University florine. livat@kedgebs. com 1 Agricultural and food Business Oultook - January 2019

Terrorism and wine tourism § How do some events affect the food and beverages industry? Agenda § Terrorism and tourism § The wine producing regions in France § Effect of terrorism on wine tourism in France: some results Agricultural and food Business Oultook - January 2019 2

As a precaution against misunderstanding § I am an economist § Facts and statistical analysis § Some surprising results § Terrorism can generate some positive externalities § Not a promotion of terrorism Agricultural and food Business Oultook - January 2019 3

Terrorism § § § A global challenge that affects numerous societies and economies around the world. Refers to acts of premeditated violence or threats of violence by organised groups against civilians or unarmed military personnel that are designed to attain political, religious, or ideological goals. In essence, terrorism is a violent form of political communication that depends heavily on modern means of communication (e. g. , television, the Internet) to transmit messages to a mass audience (the government or the public) that are designed to modify the recipients’ emotions and/or behaviour. Impacts several levels of society, including the business environment. Large effect on economic outcomes, on consumer behaviour and consumer satisfaction. Agricultural and food Business Oultook - January 2019 4

Terrorist violence that occurred worldwide between 1970 and 2015 Source: https: //www. start. umd. edu/gtd/images/START_Global. Terrorism. Database_Terrorist. Attacks. Concentration. Intensity. Map_45 Years. png Provided by the University of Maryland Agricultural and food Business Oultook - January 2019 5

Terrorism in France § France has a long history of terror attacks from Algerian nationalists, Armenian nationalists, Palestinian nationalists, Carlos the Jackal, far-left and far-right groups, islamist groups… Terror incidents over time in France 1970 -2017 Source: https: //www. start. umd. edu/gtd/search/Results. aspx? start_yearonly=&end_yearonly=&start_year=&start_m onth=&start_day=&end_year=&end_month=&end_day=&country=69&asm. Select 1=&dtp 2=all&success=ye s&casualties_type=b&casualties_max= Agricultural and food Business Oultook - January 2019 6

Terrorism in France § In the wake of the shootings at the magazine Charlie Hebdo in 2015, France experienced an unprecedented wave of terror attacks. § The spike in 2015 is over 6 times the previous maximum since 1970. Source: https: //alexandreafonso. me/2015/11/15/paris-shootings-some-data-in-perspective/ Agricultural and food Business Oultook - January 2019 7

Terrorism in France § Increasingly frequent terrorist attacks from 2010 to 2017. § Most of terrorist attacks have occurred in or near the urban Paris area. In these cases, urban tourism faces greater risks than rural (wine) tourism. Paris city https: //history. libraries. wsu. edu/spring 2017/01/19/terrorist-attacks-in-europe/ Agricultural and food Business Oultook - January 2019 8

Terrorism and tourism § § § Paradoxically, international tourism and terrorism share similar characteristics: they involve activities that cross national borders, citizens of different countries, and the use of travel and communications technologies. Tourist sites, which are usually a focus of media attention, are preferred by terrorists. Attacks on tourist areas can have significant effects on the national and local economies and generate negative feelings among the targeted populations. Although terrorists may not intentionally target tourists, the latter often become victims because they are in the wrong place at the wrong time. Agricultural and food Business Oultook - January 2019 9

Terrorism and tourism § Negative impact on tourism: immediate decline, more permanent effects, long recovery process, contagious effect for neighbouring destinations § § According to the Comité Régional du Tourisme, losses in the Paris metropolitan area stood at around 1. 5 million tourists in 2016 compared with 2015 (CRT, 2016). Substitution effect: some other/neighbouring destinations gain from the incident targeted destination because tourists opt to change their travel plans and substitute high-risk locations with low-risk destinations. § We can expect that, within a single destination, urban tourism faces greater risks than rural (wine) tourism. Agricultural and food Business Oultook - January 2019 10

Source: https: //www. pinterest. fr/pin/170996117082321512/ Wine regions in France Agricultural and food Business Oultook - January 2019 11

Wine tourism in France Wine tourism: 10 millions people in 2016 who spent 5. 2 billions euros § 2009 -2016: +33%, with more and more foreign tourists Source: Atout France, (études Tourisme et vin, les Chiffres de la fréquentation œnotouristique) § Agricultural and food Business Oultook - January 2019 12

Effect of terrorism on wine tourism in France: Some results § The attack severity immediately, significantly and negatively affects the total inbound tourism demand, wherever the attack took place. § § § Immediate effect. Lasts several months. Terrorist attacks generally have significant, positive effects on the market shares of the wine destinations. Terrorist attacks with varying levels of severity have different effects on market share. § § Less severe attacks: tourists move to regions not so far from the Paris city. Severe attacks: tourists move quickly to regions not so near Paris. Agricultural and food Business Oultook - January 2019 13

Effect of terrorism on wine tourism in France: Some results • • A wine museum case study. La Cité du Vin, located in the Bordeaux city in the largest wine region in France, was inaugurated on June 1, 2016. Google Trends (GT) data offer insight into the intensity with which people search for information on the Internet. We searched for the keyword “terrorism” in both French and English to proxy the intensity of people’s concern about terrorist attacks suggest some varied effects on the number of visitors at La Cité du Vin. Agricultural and food Business Oultook - January 2019 14

Effect of terrorism on wine tourism in France: Some results § The museum lost about 5, 000 visitors over 426 days, during which fourteen successive terrorist attacks occurred. This corresponds to almost 1% of the total number of visitors during the sample period. § Foreign visitors seem to have visited La Cité du Vin in greater numbers one week after the attack and in smaller numbers three weeks after the attack. § § § Positive effect: decision made by foreign visitors already present in France to escape the areas directly affected by the attack. Negative effect: decision made by a significant number of cautious visitors to cancel their trips to France. We observe opposite effects for the keyword “terrorisme”. A significant proportion of local visitors probably decided to avoid visiting public spaces immediately after the attack and thus postponed their visits by about two weeks. Agricultural and food Business Oultook - January 2019 15

Conclusion § § Terrorist attacks reduced the inbound tourist flow to France. Wine tourism seems to serve as a substitute for urban tourism after terror attacks, suggesting that the consumer reaction toward terrorism is complex. French and foreign tourists have different behaviors. Despite its detrimental effects on economic outcomes, terrorism may also offer opportunities to introduce new products and new markets. Agricultural and food Business Oultook - January 2019 16

Thank you for your attention ! Questions, remarks & comments: florine. livat@kedgebs. com Agricultural and food Business Oultook - January 2019 17