Individuals who are unaware of the price do not derive more enjoyment from more expensive wine. In a sample of more than 6,000 blind tastings, we find that the correlation between price and overall rating is small and negative, suggesting that individuals on average enjoy more expensive wines slightly less. For individuals with wine training, however, we find indications of a non-negative relationship between price and enjoyment. Our results are robust to the inclusion of individual fixed effects, and are not driven by outliers: when omitting the top and bottom deciles of the price distribution, our qualitative results are strengthened, and the statistical significance is improved further. These findings suggest that non-expert wine consumers should not anticipate greater enjoyment of the intrinsic qualities of a wine simply because it is expensive or is appreciated by experts. (JEL Classification: L15, L66, M30, Q13)

Wine judge performance at a major wine competition has been analyzed from 2005 to 2008 using replicate samples. Each panel of four expert judges received a flight of 30 wines imbedded with triplicate samples poured from the same bottle. Between 65 and 70 judges were tested each year. About 10 percent of the judges were able to replicate their score within a single medal group. Another 10 percent, on occasion, scored the same wine Bronze to Gold. Judges tend to be more consistent in what they don't like than what they do. An analysis of variance covering every panel over the study period indicates only about half of the panels presented awards based solely on wine quality. (JEL Classification: Q13, Q19)

This paper uses a large longitudinal database (nearly 6,000 observations) of all cabernet sauvignon wines rated by Wine Spectator from 1970 to 2004 in the Napa Valley region of California to investigate whether a quality-weather relationship and a price-weather relationship exist and, if so, whether they occur in a linear, quadratic, or log-linear fashion. The paper examines three different models of wine rating and wine prices to study the effect of weather variations. The results suggest that the weather affects both quality and wine prices, but the results are much stronger for prices than for ratings. A log-linear model can explain nearly 92 percent of the variation in wine prices, but only about 28 percent of the variation in wine ratings. (JEL Classification: C23, Q54)

The purpose of the study was to investigate the respective influences of price and country of origin as extrinsic cues on consumer evaluations of wine quality when all intrinsic cues are experienced through sensory perception. Taste testing experiments were conducted (N = 263) using Chardonnay as the test product in a 3 (country of origin, COO) × 3 (price) × 3 (acid level) conjoint analysis fractional factorial design. Price and COO were both found to be more important contributors to perception of wine quality than taste. Reliance on extrinsic cues was found to remain extremely robust even when all intrinsic cues were available through sensory experience for respondent evaluation. The research demonstrated that even when evaluating a product through consumption, consumer belief in the price/value schema dominates quality assessment. These findings mean that marketers cannot assume that intrinsic product attributes, even when experienced, will be weighted and interpreted accurately by consumers. The research significantly advances our understanding of consumers' use of extrinsic cues (price and COO specifically), and their respective influence in their determination of both expected and experienced quality. (JEL Classification: Q11, D12, M31)

The objective of the present study is to analyze the overall trajectory of Spanish table wine exports during the period 1871–1935 and provide convincing explanations of the pattern. Thus, we employ an approach that takes all of the possible explanatory factors into account, instead of adopting a narrower approach which focuses on a single principal factor. The methodology employed consists of using a gravity model to explain trade flows in Spanish table wine. Our results highlight the key role of trade policies in the determination of export possibilities and the difficulties derived from the export of products which are characterized by the low or non-existent change in demand when income changes. These results may shed a little more light on the determinants of trade in the first phase of globalization. (JEL Classification: F14, N73, N74, Q17)

In this paper we analyse wine demand in Italy with microdata. Instead of estimating a parametric model, we study the demand following a non parametric approach by means of Artificial Neural Networks. The input set includes the usual economic variables (price and income) and some sociodemographic factors that are also shown to be relevant for demand analysis. We compute price elasticities using two different nonparametric procedures. (JEL Classification: C14, C21, Q11, Q13)

Weather derivatives are a relatively new form of financial security, providing firms with the ability to hedge the impact of weather related risks to their activities. Participants in the energy industry have employed standardized temperature contracts trading on organized exchanges since 1999, and the availability and use of non-standardized contracts designed for specialized weather related risks is growing dramatically. The primary goal of this paper is to consider the potential design and use of a weather contract to hedge the risks faced in viticulture as measured by bioclimatic indices. Specifically we examine the Winkler and Huglin bioclimatic indices over a 43 year period for the Niagara region of Ontario, Canada's largest wine producing region, and identify a mixed jump diffusion stochastic process for cumulative growing season index values. We then employ Monte Carlo simulation to derive a range of benchmark prices for a “short condor” contract employing the Huglin index as the underlying variable. The results show that valuable hedging opportunities can be provided by such contracts. (JEL Classification: G13, G32, Q14, Q51, Q54)

For repeat transactions data from monthly auction hammer prices, we analyze the level and quality of Bordeaux wine returns using the Fama-French Three-Factor Model and the Capital Asset Pricing Model. Returns average up to 0.75% per month above those predicted by these models. Further, investment grade wines benefit from low exposure to market risk factors, thus offering a valuable dimension of portfolio diversification. These findings are consistent with simple theoretical considerations and support a documented growing interest in wine investments (JEL Classification: G11.G12).

The demand for wine is generally estimated on an aggregate level as a single commodity. However, as recent history shows us, the demand for wine not only varies considerably by varietal, but also by price point within each varietal. As a result, although estimates of the demand for wine may be beneficial to the wine industry as a whole, they provide little benefit to individual wine producers. Using scan data of purchases from US retail chain stores, this paper uses store keeping unit (sku) level data to overcome the limitations of prior research on the demand for wine by providing estimates for the demand for wine by varietal and price point. We also provide estimates of own price effects, income effects by color, varietal and price segment. Problems of endogeneity inherent in demand estimation are corrected by utilizing a novel instrumental variable technique using grape prices as the instrument. (JEL Classification: C23, D12)

A hedonic price function for Argentinean wines in the U.S market is estimated in order to evaluate the effect of the most important attributes of wine on price. Results show that labeling practices and the choice of the right wine quality attributes are far more influential on price than expert panel opinions or oenological wine improvements such as age. (JEL Classification: Q11, C21, D12)

The objectives of this paper are (1) to broaden the concept and importance of differentiating statistical significance from clinical or practical significance that was introduced in a recent oenologie application that appeared in this Journal (Cicchetti, 2007); (2) to highlight the major contribution of Economics to the clinical-statistical significance differentiation; (3) to provide oenologie researchers with the tools to accomplish this objective; and (4) to provide examples of oenologie applications using these biostatistical tools. Results indicate that the terms clinical significance, effect sizes, the just noticeable difference between stimuli, and the economic term marginal utility are conceptually related and when applied to the results of oenologie research, offer a richness of interpretation that levels of statistical significance alone cannot provide. (JEL Classification: C0, C1)

For centuries West Africans have made wines from palm sap, and hard liquor (“gin”) from palm wine. This essay describes the role of palm wine in West African society, attempts to regulate its production and consumption since colonial times, the basics of the production process, and the appearance, bouquet and flavor of unpasteurized palm wine as it ages through its useful life of a day or two. (JEL Classification: L66, L51,118)

A hedonic analysis is applied to a unique data set of Australian wines imported by the British Columbia Liquor Distribution Branch. The data included the important corporate red wine brands produced in Australia. Hedonic price functions are estimated for red Australian wines to show how price premia associated with the attributes of wine brands including the grape variety and alcohol content differ by corporate brands. Results show the positive effects on price of highly reputable brands, positive effect of grape variety Shiraz, and premia for alcohol content. (JEL Classification: D49, L15, L66, QII)