Wine Prices Research Articles

Exploring the wine sector in the Nashik district of India

Purpose In India, Nashik District of Maharashtra State is a major Indian wine-producing region. This study aims to critically explore multiple aspects of an area and bring to the forefront of various sociological or educational variables (Kerlinger, 1973). The variables can help in the generation of the conjectures and premises. Design/methodology/approach Methodologically, to explore the wine sector in the Nashik District of India total 304 number of wine products and its pricing along with a total 26 number of wineries attributes has evaluated by collecting details of different product attributes of wine products and retail pricing. These were regressed with backward integration to arrive at the characteristics that govern wine prices. Concerning their motivation for wine tourism, a survey of 197 visitors conducted. Seven winery owners/ officials were interviewed that includes the Coordinator of the Wineries association. The interview schedule included open-ended questions. Thus, providing more in-depth insight into the wine sector in the Nashik District of India. Findings An investigation of the wine industry in the Nashik district of India suggests the potential for combined effects between wineries, local communities and the economy by discovering the sociological or educational variables associated with the considered geographic region. Research limitations/implications The research is the field study aimed at discovering the relations or interactions among sociological or educational variables. There can be variables beyond the considered variables affecting the wine product mix and pricing, wine tourism motivation factors and the factors responsible for the economic development of the region. Originality/value The empirical research throws light on an unexplored wine-producing region and its potential impact on livelihood. The exploratory study discovers the interactions among educational variables, as asserted by Kerlinger (1973). It can also help in the generation of premises about the wine sector from the area.

The price of cider: empirical analysis in Québec province

PurposeThe purpose of this paper is to investigate the main factors and mechanisms that govern the price of cider, and to apply the analysis to the price of ciders in the Province of Québec, Canada.Design/methodology/approachThe analysis is following the methodology applied to the determinants of the price of wine. A model for the price of cider is estimated with 70 prices representing five regions and five types of products.FindingsThe analysis is limited to one geographical factor, i.e. the region of origin and factors related to the producer, i.e. the age and the size of the firm. The results conclude on the importance of geographical factors related to the region of origin. The relationship between the price of ciders and the region of origin is statistically significant at the 1 percent level for two regions and shows a high premium for ciders produced in these two regions. Production factors related to the age and the size of the production unit although showing the expected sign are not statistically significant to conclude on the impact. There is a small premium for producing effervescent cider compared to still or rosé cider but the most statistically significant results at a 1 percent level are for ice ciders and fortified ciders which are two typical products from Québec.Research limitations/implicationsThe analysis has important potential implications on the role of certification of origin. Cider regions in Québec, Canada have recently defined quality standards applied to specialties like Ice cider and Fire ciders. The choice of high quality products is reflected in the premium associated to the price of these products.Originality/valueContrary to the wine sector, there is a lack of research and literature on the determinants of the price of ciders. This study is the first to propose a pricing model to examine some of the determinants of prices.

Empirical evidence of lumping and splitting: Expert ratings’ effect on wine prices

Categorization is essential to everyday cognition, aiding in the organization and comprehension of information and salient stimuli. In many cases, we partake in the process of “lumping” and “splitting,” where similar items are lumped together, while dissimilar items are split apart in an exaggerated manner. To test whether or not lumping and splitting plays a role in how expert ratings affect prices, we examined pinot noir wines from the Willamette Valley AVA with the Wine Spectator's ratings (1984–2008). Regression analyses revealed a sharp distinction in the relationship between price and bottle quality between wines rated below 90, and wines with 90 + ratings. Wines with ratings below 90 were lumped together in to a “single mental cluster.” Wines with 90 + ratings were similarly lumped together. Not only is getting into a higher mental cluster statistically and economically significant, but there is also a “mental quantum leap” from a rating of 89–90. Moreover, the impact of expert scores on prices was magnified by an additional premium, attributable to two status indicators—sub-AVA and single vineyard—in higher clusters.

Evaluating the Underlying Qualities of Items and Raters from a Series of Reviews

Consumers and businesses rely on others' ratings of items when making choices. However, individual reviewers vary in their accuracy and some are biased -- either systematically over- or under-rating items relative to others' tastes, or even deliberately distorting a rating. We describe how to process ratings by a group of reviewers over a set of items and evaluate the individual reviewers' accuracies and biases, in a way that provides unbiased and consistent estimates of the items' true qualities. We provide Monte Carlo simulations that showcase the added value of our technique even with small data sets, and we show that this improvement increases as the number of items increases. Revisiting the famous 1976 wine tasting that compared Californian and Bordeaux wines, accounting for the substantial variation in reviewers' biases and accuracies results in a ranking that differs from the original average rating. We also illustrate the power of this methodology with an application to more than forty-five thousand ratings of ``en primeur'' Bordeaux fine wines by expert critics. Those data show that our estimated wine qualities significantly predict prices when controlling for prominent experts' ratings and numerous fixed effects. We also find that the elasticity of a wine price in an expert's ratings increases with that expert's accuracy.

Does Vintners Quality Alliance (VQA) certification benefit winemakers in British Columbia (BC), Canada?

PurposeThis paper aims to analyze the significance of British Columbia Vintners Quality Alliance (BC VQA) certification that constitutes BC’s wine appellation and its influence on wine prices, the volume of wine sales and winemakers’ revenues.Design/methodology/approachA three-stage endogenous dummy variable specification that addresses the endogeneity of the VQA certification is used. The data used in this research come from the BC liquor distribution branch, and it is composed of a monthly scanner wholesales data of all wines sold by the BC estate wineries located in the Okanagan and Similkameen Valleys of BC in 2011-2015.FindingsThe obtained results suggest that VQA certification has a positive and marginally significant effect on the average volume of sales of BC produced wines, but it seems not to influence the average wine prices and the average revenue share. The results imply then that VQA certification allows rent dissipation via over-certification, which, in turn, allows arbitraging away of producers’ rents.Originality/valueThe research constitutes the first attempt of the use of three-stage endogenous dummy variable modeling approach to correct for the endogeneity of the VQA certification in BC. The analysis is essential for BC winemakers as it can inform them about the current role of the VQA certification in BC. This knowledge is especially important now when the BC wine region is developing its collective, regional reputation and is in the process of introduction of new appellations and sub-appellations.

The relation between Australian wine show results and prices

This paper assesses wine show results and their relation with wine prices across seven Australian shows. Consistent with previous studies, only a moderate degree of agreement for medals exists among shows. The correlation of wine show points across shows is also only moderate. Hedonic wine price functions, which employ show medal/points as direct measures of quality, indicate that for some shows estimated premiums are statistically significant and may possibly be practically important. The relation of show opinion with prices, however, is reduced for models which recognise the separate impact of objective quality and show opinion on prices. The results imply that producers should seek to improve the objective quality of their wines to achieve price premiums. Producers could also selectively target some wine show opinions to gain additional higher prices.

Book Reviews

A. Alonso Ugaglia of Bordeaux Sciences Agro UMR INRA 1065 SAVE reviews “World Scientific Reference on Handbook of the Economics of Wine,” by Edited by Orley Ashenfelter, Olivier Gergaud, Karl Storchmann, and William Ziemba. The Econlit abstract of this book begins: “Provides an introduction to the main research strands in wine economics. Discusses wine and the natural environment, hedonic analyses of wine prices, wine and finance, wine tastings and competitions, wine and expert opinion, reputation, wine and regulation, wine auctions, supply and its implications, and organization.”

Korzyści zewnętrzne prowadzenia zrównoważonych winnic w Polsce w warunkach zmian klimatu

Głównymi celami badań było określenie rodzajów korzyści zewnętrznych związanych z prowadzeniem winnicy zgodnie z zasadami zrównoważonej produkcji, a następnie, w oparciu o wnioski z oceny rozwoju upraw winiarskich w Polsce w warunkach zmian klimatu, zbadanie opinii konsumentów na temat ich warunkowej skłonności do zapłaty wyższej ceny za wino pochodzące z upraw generujących pozytywne efekty zewnętrzne. Stwierdzono, że uprawa winorośli odbywająca się w sposób zrównoważony cechuje się występowaniem korzyści zewnętrznych. Korzyści te wynikają z lokalnego charakteru dóbr publicznych, do których można zaliczyć przede wszystkim dany ekosystem, określany jako terroir i powiązane z nim sieciowo elementy takie jak bioróżnorodność czy krajobraz. Oddziałują one w sposób synergiczny na inne korzyści zewnętrzne o charakterze społecznym, takie jak atrakcyjność turystyczna czy dziedzictwo kulturowe. Wykazano, że uprawa winorośli z przeznaczeniem na wino i produkcja wina w Polsce dynamicznie wzrastają, a zmiany klimatu będą wpływały na dalsze potencjalne możliwości rozwoju tego sektora. Badani konsumenci wskazali, że ważne są dla nich takie atrybuty wina jak ekologiczny sposób produkcji czy praktyki odpowiadające na zmiany klimatu. W większości deklarowali oni gotowość zapłaty za nie więcej niż za cechy związane z innymi korzyściami zewnętrznymi, takimi jak bioróżnorodność czy krajobraz. Ukierunkowanie polskich winnic na produkcję generującą korzyści zewnętrzne, np. ekologiczną, pozwoli na skorzystanie z efektu sieciowego, co może przełożyć się na chęć konsumentów do zapłaty wyższej ceny za wino.

Not everything has been still explored: Further thoughts on additional price for the organic wine

Several studies have been conducted on organic wine consumption, but no specific study has yet fully explored how the set of attributes explored by existing research affects the additional price for organic wine. To fill this gap, the objective of this paper was to examine whether and to what extent consumers are inclined to pay for buying organic wine and what are the attributes that significantly influence the additional price of organic wine compared to conventional one. With this aim, a quantitative study over a representative sample of wine consumers in Sicily (Italy) was carried out. Results allowed to observe that consumers attached greater importance to personal motivations such as environmental protection, distinctness and curiosity as well as to explicit label information such as brand renown and local production. In addition, male gender and income are positively correlated to the willingness to pay an additional price for organic wine. Our results have important implications for the actors involved in the wine sector as the adoption of marketing practices explicitly related to the label and motivations attributes can lead to value augmentation of organic wine that could increase consumers’ valuation for it.

On the Constancy of Hedonic Wine Price Coefficients over Time

AbstractThis article tests the stability of the main hedonic wine price coefficients over time. We draw on an extensive literature review to identify the most frequently used methodology and define a standard hedonic model. We estimate this model on monthly subsamples of a worldwide auction database of the most commonly exchanged fine wines. This provides, for each attribute, a monthly time series of hedonic coefficients time series data from 2003 to 2014. Using a multivariate autoregressive model, we then study the stability of these coefficients over time and test the existence of structural or cyclical changes related to fluctuations in general price levels. We find that most hedonic coefficients are variable and either exhibit structural or cyclical variations over time. These findings shed doubt on the relevance of both short- and long-run hedonic estimations. (JEL Classifications: C13, C22, D44, G11)

Fine wine returns: a review of the literature

This paper provides a critical review of research on fine wine returns issues. To date, no review article has assessed the various findings of studies analyzing the benefits of wine investment in the context of portfolio diversification. In the recent past years, the quantity and variety of work have increased dramatically. The paper reviews investments in fine wine assets in a mixed-asset portfolio strategy or in a wine-only portfolio context. The paper also addresses the question of price dynamics based on cointegration and contagion effects, i.e., the role of the market and under what conditions it can explain the differences between the prices of different wines.

Consumer personality, attitudes and preferences in out-of-home contexts

Purpose This study aims to focus on consumers’ preferences towards rosé wine and explore whether and how the consumption context may influence consumers’ choices. Design/methodology/approach Using social networks platform, the authors conducted a choice experiment, to evaluate Italian consumers’ preferences for a glass of rosé in two consumption contexts, restaurant and wine bar. Characteristics of the rosé wine also included price, origin and type of wine. The authors applied a latent class analysis to define rosé wine consumers’ segments and incorporated personality traits in the model. Findings The results define three rosé wine drinkers’ profiles: “Wine bar visitors”, “The unenthusiastic” and “Restaurant visitors”. Socio-demographic characteristics and personality traits significantly affect consumers’ membership to the different segments. Who prefers to drink a rosé glass at the wine bar is younger, more opened to new experiences and, therefore, more inclined towards more sophisticated choices. Consumers at the restaurants tend to be more extrovert and sensitive to price. Practical implications This study offers insight for practitioners of both wine and hospitality industries in the development of strategies for new products market placement and, at the same time, for academics who are interested in the understanding of behavioural reasoning of consumers’ wine purchase choices. Originality/value This research investigates the effect of consumption context on individuals’ preference formation for a less familiar wine, such as rosé in Italy. To the authors’ knowledge, no previous studies explored how personality traits may affect consumers’ wine consumption context choices.

Grapevine or informed selection: Significance of quality attributes in India’s emerging wine market

Indian wine market is in a nascent state as compared to its counterparts in Europe, America and Asia. However, with rapid growth in GDP and consequent changes in lifestyle, the absolute size of the market is growing rapidly. The market size was about Rs. 3 billion in 2008 and by 2015 it had already reached Rs. 6 billion. Wine is a highly differentiated product, characterized by the presence of multifarious quality attributes. In this context, it becomes imperative to know the premiums attached to different wines and their attributes, resulting from selections made by producers and consumers. We undertake a hedonic price analysis of retail wine prices and their quality attributes. Results indicate that Ceteris Paribus, there is no premium attached to red wines in general over white wines. Reserve wines and a select few red wines do earn a premium though. Substantive premium is earned by foreign brands. Wines with higher alcohol content, club-shaped bottles, and cork closures carry a premium over other types of wines. Results may give cues both to producers and consumers on what new wines they could produce or consume.

Community and Expert Wine Ratings and Prices

This paper assesses the relative impact community consumer ratings and expert ratings have on Australian wine prices. Results suggest community ratings may better explain price variations than expert scores; however, the performance difference is not definitive. Expert scores are found to have some additional unique power beyond community ratings in explaining prices. These results hold for both models based on current quality and reputation ratings and a number of robustness checks. The results suggest that producers may need to monitor both expert and community assessments of wines based on numerous vintages to accurately assess wine prices.

Does passion for wine matter? The effects of owner motivation on pricing and quality decisions in emerging US wine regions

AbstractIncreasing the success rate of start‐up wineries and fostering the wine–hospitality‐tourism clusters in emerging wine regions with substantial entrepreneurial activities have attracted considerable attention among public and private stakeholders. Understanding entrepreneur's motivation to enter the industry is crucial to understand winery behaviors and industry dynamics. Some entrepreneurs enter the industry motived by passion for wine whereas others are motived by profits. Differences in motivation may contribute to the high variability in quality and quality‐adjusted prices of wines in emerging wine regions. We used ordinary least square and Tobit regression models to investigate the influence of motivation on winery pricing and quality decisions using data on 700 wines from 102 wineries in emerging US wine regions. We find that passion‐oriented owners produce higher quality wines and set higher quality‐adjusted prices relative to profit‐oriented owners. Recognizing differences in owner motivation is critical to establish appropriate policies to support the development of the wine industry in emerging regions. [EconLit citations: Q13; L83; O25].

Wine consumption in China: profiling the 21st century Chinese wine consumer

This article determines the factors that influence Chinese wine consumption and, thus, contribute to define an average Chinese wine consumer profile for the years 2000 to 2014. The article proposes a model that explains the variations in the consumption of wine in China, because of traditional factors of the theory of demand (price of wine, income, and price of a substitute good), and sociodemographic factors (age, gender, marital status, level of education, geographical area, and tourism activities). The article reveals that an increased income, a married marital status, living in an urban area, and tourism activities, significantly and positively contributed to the increase of wine consumption in China. In addition, the article demonstrates that wine is not a substitute of beer in China, and that it is hard to associate an increase of wine consumption with the gender and the educational level of the average Chinese. In contrast, age negatively and significantly influenced the wine consumption in China, meaning that wine consumers are becoming younger.

Corrigendum to: On the effects of storytelling on wine price

Corrigendum to: On the effects of storytelling on wine price

On the effects of storytelling on wine price

Thanks to the new developments of internet technology and social media, communication is giving consumer newfound awareness. Additionally, thanks to the technological development, the modern consumer is getting always more informed and interactive, both with other consumers and brands. He requires traditional products to be experience-based, with strong links to local culture and tradition. Storytelling based marketing is having strong impact on brand loyalty and emotional connections of consumers to wine. The study presents a review of the literature on food&wine storytelling and social media use, and draws hypotheses to the study of the wine marketing for the future.

Prices in Toledo (Spain): Sixteenth and Seventeenth Centuries

Differences in material conditions are a determinant that explains the little divergence between northwestern and southern Europe. This article approaches the evolution of prices in early modern Toledo (Spain). The price index includes new items such as housing and employs different baskets over time, reflecting changes in consumption patterns. During the city’s golden age, prices grew faster than in London, Paris, or Amsterdam. Wine, urban rent, and food prices experienced a great increase, coinciding with demographic growth and the arrival of the American precious metals. Prices slowed in the first half of the seventeenth century, throughout Castile’s demographic and economic decay.

A hedonic price analysis for the Portuguese wine market: Does the distribution channel matter?

ABSTRACTPrice is a core component of both wine firms’ and consumers’ decision-making and so there has been a lot of analysis of the determinants of wine price. Most of the research has used the hedonic price function and assumed that the wine market is homogeneous with respect to both distribution channel and price segments. In this paper, a hedonic price function is estimated using data from a specialist retailer and a large supermarket, i.e., retailers in two different consumer market segments, niche and mass market, respectively. We conclude that the wine market is heterogeneous, and the importance of the various price determinants differs between distribution channels and, in the case of the specialist retailer, throughout the conditional statistical distribution of the price. This result may help the wine companies to place themselves in the market value chain.