The paper investigates determinants of quality upgrading in the European Union agri-food exports using panel data models in the 2000-2011 period. Employing highly disaggregated data we show that export unit value is positively associated with level of economic development and the size of population. Our results indicate negative impacts of comparative advantages and trade costs on export quality upgrading. Estimations confirm the important role of income distribution in quality specialization. The income inequality increases specialization in high quality varieties for rich countries. Results are robust to alternative subsamples including vertical specialized and final agri-food products.