Original Research Article
Published 2021-04-07
Keywords
- country-based comparison,
- hedonic analysis,
- pricing,
- quantile regression models,
- specialist retailer prices
How to Cite
Gonçalves, T., Rebelo, J. ., Lourenço-Gomes, L., & Caldas, J. (2021). Wine price determinants. Is there a homogeneous international standard?. Wine Economics and Policy, 10(1), 33–55. https://doi.org/10.36253/wep-8879
Funding data
-
Fundação para a Ciência e a Tecnologia
Grant numbers UIDB/SOC/04011/2020 -
VINCI
Grant numbers SOE3/P2/F0917
Abstract
This article presents an international comparison of the main determinants of wine prices in specialist online wine shops. Hedonic price functions were estimated for 9624 wines spread among four datasets from France, Italy, Germany and Australia. To explain price variation data was collected on wine classification, closure type, wine origin, medals or awards, vintage, alcohol content, color, and grape variety. Results from quantile regression models show that the wine vintage is a common price driver in all markets and quantiles. A quite similar effect was found for alcohol content. In terms of color, the implicit prices for red and white wines are also structurally different between countries, particularly in origin, blend, closure, awards and age. Thus, the markets should be assumed as heterogeneous, and the extrapolation of the results from one market to another may lead to erroneous management decisions.
References
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[31] Levaggi, R., Brentari, E., The Hedonic Price for Italian Red Wine: Do Chemical and Sensory Characteristics Matter? Agribusiness. 30(4) (2014) 385-397. https://doi.org/10.1002/agr.21377
[32] Lima, T., Price and quality in the California wine industry: an empirical investigation, J. Wine Econ. 1(2) (2006) 176-19. DOI: 10.1017/S1931436100000201
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[36] Oczkowski, E. and Doucouliagos, H., Wine Prices and Quality Ratings. A Meta-Regression Analysis, American J. Agric. Econ. 97(1) (2014) 103-121. https://doi.org/10.1093/ajae/aau057
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[42] Rebelo, J., Lourenço-Gomes, L., Gonçalves, T., Caldas, J., A hedonic price analysis for the Portuguese wine market: Does the distribution channel matter? Journal of Appl Econ. 22(1) 2019 40-59. doi: 10.1080/15140326.2018.1550596
[43] Roma, P., Di Martino, G., Perrone, G., What to show on the wine labels: a hedonic analysis of price drivers of Sicilian wines, Appl Econ. 45(19) (2013) 2765-2778. DOI: 10.1080/00036846.2012.678983
[44] Rosen, S., Hedonic prices and implicit markets: Product differentiation in pure competition, J Polit Econ. 82(1) (1974) 34–55. DOI: https://www.jstor.org/stable/1830899
[45] San Martin, G., Brummer, B., Troncoso, J., Determinants of Argentinean wine prices in the U.S. market, J. Wine Econ. 3(1) (2008) 72-84. DOI: https://doi.org/10.1017/S1931436100000560
[46] Seccia, A., Carlucci, D., De Meo, E., De Devitiis, B., Viscecchia, R., E-commerce retail of wine: a hedonic price analysis of Italian supply, Foods. (2019).
[47] Schamel, G., A hedonic pricing model for German wine, German J. Agric. Econ. 52 (2003) 247-254. DOI: 10.22004/ag.econ.97975
[48] Schamel, G., Geography versus Brands in a Global Wine Market, Agribusiness. 22(3), (2006) 363-374. https://doi.org/10.1002/agr.20091
[49] Schamel, G., Dynamic analysis of brand and regional reputation, J. Wine Econ. 4(1) (2009) 62–80. https://doi.org/10.1017/S1931436100000687
[50] A. Ugaglia, J-M. Cardebat, L. Jiao, The French Wine Industry, in: A. Ugaglia, J-M. Cardebat, A. Corsi (Eds), The Palgrave Handbook of Wine Industry Economics. Palgrave Macmillan, Cham, 2019
[51] Wood, D., Anderson, K., What determines the future value of an icon wine? New evidence from Australia, J. Wine Econ. 1(2) (2006) 141-161. https://doi.org/10.1017/S1931436100000171
[2] Ashenfelter, O., Ashmore, D., Lalonde, R., Bordeaux wine vintage quality and the weather, Chance. 8(4) (1995) 7-14. https://doi.org/10.1080/09332480.1995.10542468
[3] Ashenfelter, O., Predicting the Quality and Prices of Bordeaux Wine, The Economic Journal. 118 (529) (2008) 174-184. https://doi.org/10.1111/j.1468-0297.2008.02148.x
[4] Ashenfelter, O., Predicting the Quality and Prices of Bordeaux Wine. J. Wine Econ, 5 (1) (2010) 40-52. https://doi.org/10.1017/S193143610000136X
[5] Ashenfelter, O., Jones, G., The Demand for Expert Opinion: Bordeaux Wine, J. Wine Econ. 8(3) (2013) 285-293. https://doi.org/10.1017/jwe.2013.22
[6] Ashenfelter, O., Storchman, K., Climate Change and Wine: a review of the economic implications, J. Wine Econ. 11(1) (2016) 105-138. https://doi.org/10.1017/jwe.2016.5
[7] Ashton, R. H., Is there consensus among wine quality ratings of prominent critics? An empirical analysis of red Bordeaux, J. Wine Econ. 8(2) (2013) 225-234. https://doi.org/10.1017/jwe.2013.18
[8] Asgari, A., Reed, M., Price determinants of California wines in the U. S. market: Does the type matter? Agricultural and Applied Economics Association (AAEA). Annual Meeting, Boston, MA, 2016.
[9] Benfratello, L., Piacenza, M., Sachetto, S., Taste or Reputation: what drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wine, Appl Econ, 41(17) (2009) 2197-2209. https://doi.org/10.1080/00036840701222439
[10] Caldas, J., Rebelo, J., Portuguese wine ratings: An old product a new assessment, Wine Econ Policy. 2 (2013) 102–110. https://doi.org/10.1016/j.wep.2013.11.004
[11] Caracciolo, F., D´Amico, M., Di Vita, G., Pomarici, E., Dal Bianco, A., Cembalo, L., Private vs. collective reputation, Int. Food Agribusiness Manag. Rev. 19(3) (2016) 191–209. DOI:10.22004/ag.econ.244704
[12] Castriota, St., Delmastro, M. 2008. Individual and Collective Reputation: Lessons from the Wine. Available at SSRN: https://ssrn.com/abstract=1349992 or http://dx.doi.org/10.2139/ssrn.1349992
[13] Combris, P., Lecocq, S., Visser, M., Estimation of a hedonic price equation for Bordeaux wine: Does quality matter? The Economic Journal. 107 (1997) 390–402.
[14] Combris, P., Lecocq, S., Visser, M., Estimation of a hedonic price equation for Burgundy wine, Appl Econ. 32 (2000) 961-967. https://doi.org/10.1080/000368400322011
[15] Costanigro, M., McCluskey, J. J., Mittlehammer, R. C., Segmenting the Wine Market Based on Price: Hedonic Regression when Different Prices mean Different Products, J. Agric. Econ. 58 (3) (2007) 454-466. https://doi.org/10.1111/j.1477-9552.2007.00118.x
[16] Di Vita, G., Caracciolo, F., Cembalo, L., Pomarici, E., Pomarici, E., D´Amico, M., Drinking wine at home: Hedonic analysis of Sicilian wines using quantile regression, Am. J. Appl. Sci. 12(10) (2015) 679–688. DOI:10.3844/ajassp.2015.679.688
[17] Dressler, M., The German Wine Market: A Comprehensive Strategic and Economic Analysis, Beverages. 4 (92) (2018) 11-28. https://doi.org/10.3390/beverages4040092
[18] Dubois, P., Nauges, C., Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine, Int. J. Ind. Organ. 28(3) (2010) 205-212. https://doi.org/10.1016/j.ijindorg.2009.08.003
[19] Faye, B., Le Fur, E., On the constancy of hedonic wine prices coefficients over time, J. Wine Econ. 14(2) (2019) 182-207. https://doi.org/10.1017/jwe.2019.24
[20] Frick, B., Simmons, R., The impact of individual and collective reputation on wine prices: empirical evidence from the Mosel valley, J. Bus. Econ. 83(2) (2013) 101-119. https://doi.org/10.1007/s11573-013-0652-x
[21] Gergaud, O., Livat, F., Warzynski, F. 2012. Collective reputation effects: an empirical appraisal. SSRN Electronic Journal. DOI:10.2139/ssrn.1708464.
[22] Ginsburgh, V., Monzak, M., Monzak, A., Red Wines of Médoc: What is Wine Tasting Worth, J. Wine Econ. 8(2) (2013) 159-188. https://doi.org/10.1017/jwe.2013.17
[23] Hadj Ali, H., Lecocq, S., Visser, M., The impact of gurus: Parker grades and en primeur wine prices, J. Wine Econ. 5(1) (2010) 22-39. https://doi.org/10.1017/S1931436100001358
[24] Haeger, J. W., Storchmann, K., Prices of American Pinot Noir wines: climate, craftsmanship, critics, Agric Econ. 35(1) (2006) 67-78. https://doi.org/10.1111/j.1574-0862.2006.00140.x
[25] D.E. Hinkle, W. Wiersma, S.G. Jurs, Applied Statistics for the Behavioral Sciences, fifth ed., Houghton Mifflin, Boston, 2003.
[26] Jones, G., Storchmann, K., Wine market prices and investment under uncertainty: an econometric model of Bordeaux Crus Classés, Agric Econ. 26(2) (2001) 115-133. https://doi.org/10.1016/S0169-5150(00)00102-X
[27] Koenker, R., Basset, G., Regression quantiles, Econometrica. 46(1) (1978) 33–50. DOI:10.2307/1913643
[28] Landon, S., Smith, C.E., The Use of Quality and Reputation Indicators by Consumers: The case of Bordeaux Wine, J. Consum. Policy. 20(3) (1997) 289-323. https://doi.org/10.1023/A:1006830218392
[29] Landon, S., Smith, C.E., Quality Expectations, Reputation and Price, South. Econ. J. 64(3) (1998) 628-647. https://www.jstor.org/stable/1060783
[30] Lecocq, S., Visser, M., What determines wine prices: objective vs. sensory characteristics, J. Wine Econ. 1(1) (2006) 42–56. https://doi.org/10.1017/S1931436100000080
[31] Levaggi, R., Brentari, E., The Hedonic Price for Italian Red Wine: Do Chemical and Sensory Characteristics Matter? Agribusiness. 30(4) (2014) 385-397. https://doi.org/10.1002/agr.21377
[32] Lima, T., Price and quality in the California wine industry: an empirical investigation, J. Wine Econ. 1(2) (2006) 176-19. DOI: 10.1017/S1931436100000201
[33] Ling, B. H., Lockshin, L., Components of wine prices for Australian wine: how winery reputation, wine quality, region, vintage and wine size contribute to the price of varietal wines, Australas Mark. J. 11(3) (2003) 19-32, https://doi.org/10.1016/S1441-3582(03)70132-3
[34] Oczkowski, E., A hedonic price function for Australian premium wine, Australian J. Agric. Econ. 38 (1994) 93–110. https://doi.org/10.1111/j.1467-8489.1994.tb00721.x
[35] Oczkowski, E., Hedonic Wine Price Functions and Measurement Error, Econ Rec. 77 (239) (2001) 374-382. https://doi.org/10.1111/1475-4932.00030
[36] Oczkowski, E. and Doucouliagos, H., Wine Prices and Quality Ratings. A Meta-Regression Analysis, American J. Agric. Econ. 97(1) (2014) 103-121. https://doi.org/10.1093/ajae/aau057
[37] Oczkowski, E., Hedonic price functions with different prices, Aust J Agric Resour Econ. 60(2) (2015) 196-211. https://doi.org/10.1111/1467-8489.12112
[38] Oczkowski, E., Identifying the effects of objective and subjective quality on wine prices, J. Wine Econ. 11(2) (2016) 249–260. https://doi.org/10.1017/jwe.2016.1
[39] Outreville, J-F., Le Fur, E., Hedonic Price Functions and Wine Price Determinants: A Review of Empirical Research, J. Agric. Food Ind. Organ. (2020). DOI: https://doi.org/10.1515/jafio-2019-0028.
[40] Pomarici, E., Recent trends in the international wine market and arising research questions, Wine Econ Policy. 5 (2016) 1-3. DOI: 10.1016/j.wep.2016.06.001
[41] Rabobank, 2019. Wine Quarterly Q1 2019: Online Wine Is Growing in Europe (available at https://research.rabobank.com/far/en/sectors/beverages/wine-quarterly-q1-2019.html)
[42] Rebelo, J., Lourenço-Gomes, L., Gonçalves, T., Caldas, J., A hedonic price analysis for the Portuguese wine market: Does the distribution channel matter? Journal of Appl Econ. 22(1) 2019 40-59. doi: 10.1080/15140326.2018.1550596
[43] Roma, P., Di Martino, G., Perrone, G., What to show on the wine labels: a hedonic analysis of price drivers of Sicilian wines, Appl Econ. 45(19) (2013) 2765-2778. DOI: 10.1080/00036846.2012.678983
[44] Rosen, S., Hedonic prices and implicit markets: Product differentiation in pure competition, J Polit Econ. 82(1) (1974) 34–55. DOI: https://www.jstor.org/stable/1830899
[45] San Martin, G., Brummer, B., Troncoso, J., Determinants of Argentinean wine prices in the U.S. market, J. Wine Econ. 3(1) (2008) 72-84. DOI: https://doi.org/10.1017/S1931436100000560
[46] Seccia, A., Carlucci, D., De Meo, E., De Devitiis, B., Viscecchia, R., E-commerce retail of wine: a hedonic price analysis of Italian supply, Foods. (2019).
[47] Schamel, G., A hedonic pricing model for German wine, German J. Agric. Econ. 52 (2003) 247-254. DOI: 10.22004/ag.econ.97975
[48] Schamel, G., Geography versus Brands in a Global Wine Market, Agribusiness. 22(3), (2006) 363-374. https://doi.org/10.1002/agr.20091
[49] Schamel, G., Dynamic analysis of brand and regional reputation, J. Wine Econ. 4(1) (2009) 62–80. https://doi.org/10.1017/S1931436100000687
[50] A. Ugaglia, J-M. Cardebat, L. Jiao, The French Wine Industry, in: A. Ugaglia, J-M. Cardebat, A. Corsi (Eds), The Palgrave Handbook of Wine Industry Economics. Palgrave Macmillan, Cham, 2019
[51] Wood, D., Anderson, K., What determines the future value of an icon wine? New evidence from Australia, J. Wine Econ. 1(2) (2006) 141-161. https://doi.org/10.1017/S1931436100000171