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Wine prices and quality eatings: a meta-regression analysis

journal contribution
posted on 2015-01-01, 00:00 authored by E Oczkowski, Chris DoucouliagosChris Doucouliagos
This article examines the empirical support for the hypothesized hedonic theoretical relation between the price of wine and its quality. The examination considers over 180 hedonic wine price models developed over 20 years, covering many countries. The research identifies that the relation between the price of wine and its sensory quality rating is a moderate partial correlation of +0.30. This correlation exists despite the lack of information held by consumers about a wine’s quality and the inconsistency of expert tasters when evaluating wines. The results identify a moderate price-quality correlation, which suggests the existence of strategic buying opportunities for better informed consumers. Strategic price setting possibilities may also exist for wine producers given the incomplete quality information held by consumers. The results from the meta-regression analysis point to the absence of any publication bias, and attribute the observed asymmetry in estimates to study heterogeneity. The analysis suggests the observed heterogeneity is explained by the importance of a wine’s reputation, the use of the 100-point quality rating scale, the analysis of a single wine variety/style, and the employed functional form. The most important implication from the analysis is the relative importance of a wine’s reputation over its sensory quality, inferring that producers need to sustain the sensory quality of a wine over time to extract appropriate returns. The reputation of the wine producer is found not to influence the strength of the price quality relationship. This finding does not contradict the importance of wine producer reputation in directly influencing prices.

History

Journal

American journal of agricultural economics

Volume

97

Pagination

103-121

Location

Oxford, Eng.

ISSN

0002-9092

eISSN

1467-8276

Language

eng

Publication classification

C Journal article, C1.1 Refereed article in a scholarly journal

Copyright notice

2014, The Authors

Issue

1

Publisher

Oxford University Press