Components of Wine Prices for Australian Wine: How Winery Reputation, Wine Quality, Region, Vintage, and Winery Size Contribute to the Price of Varietal Wines

Abstract

Australian wines are identified by the varietal names of the grapes rather than the regions as in France and other traditional wine producing countries. This paper uses the concept of hedonic price theory to investigate a range of extrinsic characteristics’ ability to predict prices for different climate regions (warm and cool) and four major wine varieties of Australian wines, two reds (shiraz and cabernet) and two whites (chardonnay and riesling). The effects of winery reputation (wine company/brand), winery size (production scale), age of the wine, and region of origin (wine grape source) contributing to the relationship between price and quality attributes of Australian wines are investigated, based on 1880 observations of bottled wines. Wine quality rating and winery/brand reputation have major effects on the price, while region and size of winery have differential effects depending on the variety of grape. Vintage has only a minor effect.