The impact of different names for a wine variety on prices

Abstract

PurposeThe purpose of this study is to illustrate a general method for identifying the price impact of using a different varietal name for a wine.Design/methodology/approachA revealed preference research approach is employed using marketed wines and prices. Price impacts are estimated using hedonic price models which control for the influence of other factors on prices. The technique is applied to the use of accepted synonyms to describe different varieties of Australian wine.FindingsThe use of varietal synonyms in the Australian market is suggested to be more of a marketing strategy designed to command a higher price rather than because of wine stylistic reasons. Important premiums are estimated for the use of the terms Syrah, Pinot Gris and to a lesser extent for Fumé Blanc.Practical implicationsAustralian wine producers may be able to command price premiums by strategically choosing a name for a particular varietal. It appears no significant stylistic changes are needed to “justify” any varietal name change, and as such, only a label name change may be required. A switch to French-associated or -sounding names for a wine varietal may result in price premiums for Australian producers.Originality/valueThe paper illustrates a general revealed preference method for identifying wine varietal name price premiums and further illustrates the importance of “Frenchness” in wine name use.