Rapel Valley in Chile is renowned for its ability to produce high-quality wine at a fraction of the cost of many other vineyards around the world. Rapel Valley produces over 20 million bottles of wine annually, of which 5 million are exported to the United States. Each bottle entering the United States is subjected to a $0.50 per bottle excise tax, which generates about $2.5 million in tax revenues. Strong La Nia weather patterns have caused unusually cold temperatures, devastating many of the wine producers in that region of Chile.

How will La Nia affect the price of Chilean wine? Assuming La Nia does not impact the California wine-producing region, how will La Nia impact the market for Californian wines?