Price Premiums and Discounts for Australian Sparkling Wines

Edward Oczkowski

doi:10.1515/jafio-2020-0027

Abstract

Abstract This paper assesses the price premiums and discounts for nine sparkling wine types or names commonly employed in Australia. Hedonic wine price functions are estimated for 10 years of wine releases to identify the specific price impact of different sparkling wine types or names, after controlling for other wine price determining factors. Results identify that important price premiums occur with the use of blanc de blancs and other less common sparkling reds. An important price discount is estimated for prosecco wines. Sparkling wine type interactions with climatic regional conditions and cellaring potential also point to some interesting results. The estimates may have potentially important implications for the strategic use of wine types and names by producers and for consumers in identifying good valued sparkling wines.

Highlights

A significant body of literature exists on estimating the relation between a wine’s price and its attributes, Outreville and Le Fur (2020) identify over 100 papers which report estimates of hedonic wine price functions
An important issue in this context is how do wine prices of the various types of sparkling wines differ? In particular, after controlling for wine quality differences and other factors, do particular types of sparkling wines command price premiums or discounts? Further, does the relation between sparkling wine type and price depend upon other factors? Answering these questions is important for both producers in strategically allocating resources to the most financially attractive wine types and names, and for consumers to potentially identify price bargains or over-priced wines
The purpose of the study is to estimate the price premiums or discounts associated with the use of different sparkling wine types or names for wines produced in Australia over the 10 year period 2010–2019

Summary

Introduction

A significant body of literature exists on estimating the relation between a wine’s price and its attributes, Outreville and Le Fur (2020) identify over 100 papers which report estimates of hedonic wine price functions. E. Oczkowski (appellation d’origine contrôlee, AOC), Italian Prosecco (designation of controlled origin, DOC) and Spanish Cava (denominación de origen, DO) which produce relatively homogenous wines, Australia produces a wide range of sparkling wine types from different regions with different names including the relatively unique sparkling shiraz. Oczkowski (appellation d’origine contrôlee, AOC), Italian Prosecco (designation of controlled origin, DOC) and Spanish Cava (denominación de origen, DO) which produce relatively homogenous wines, Australia produces a wide range of sparkling wine types from different regions with different names including the relatively unique sparkling shiraz This variation in the use of types and names warrants a systematic analysis of any apparent price differences among Australian sparkling wines. The purpose of the study is to estimate the price premiums or discounts associated with the use of different sparkling wine types or names for wines produced in Australia over the 10 year period 2010–2019.

Literature Review

Data and Methods

As examples of precedence

Empirical Results

Discussion and Conclusion