Does Blind Tasting Work? Investigating the Impact of Training on Blind Tasting Accuracy and Wine Preference Qian Janice Wan & Domen Prešern Abstract Blind wine tasting refers to the practice of tasting a wine without seeing the label, and deducing the grape variety, location of origin, and vintage of the wine based on what one perceives…
The growth of social media outlets in which individuals post opinions on publicly consumed goods provides an interesting and relatively unexplored area for examination of the role of crowd sourcing amateur opinions in areas traditionally relegated to experts. In this paper we use wine as an illustrative example to investigate the interaction between social media and expert reviews in the market for high end consumer goods. In particular, we exploit a novel data set constructed from the social media website CellarTracker, which is composed of the averaged individual reviews for 355 distinct wines on a quarterly basis from 2004 through 2017, and pair this with a similarly dimensioned panel of average auction prices for these wines as well as the reviews from three leading experts. We develop a signal extraction model to motivate the interaction between amateurs and experts in revealing a measure of the quality of the wine. The model is then used to motivate the adaptation of an empirical panel structural VAR approach based on Pedroni (2013) by embedding the expert reviews as an event analysis within the panel VAR, which is used to decompose information into components that signal the quality of the liquid in the bottle versus other aspects of the wine that are valued by the market. The approach also allows us to decompose the influence of the expert reviews into components associated with what we define as the quality of the wine versus the pure reputation effect of the expert. The results on expert reviews are consistent with the idea that experts can substantially impact prices through channels other than their signals of quality.
Using an original dataset hand collected on an online trading platform specialized in whisky investment, this article aims to estimate the main determinants of price differences for whiskies. We find strong evidence that distiller’s reputation, age of whisky and vintage affect positively the price. Other findings include a negative effect for independent bottling (i.e. not in-house by the distiller) and a positive “collector” effect for bottles identified as “extremely rare” by the website.
We investigate the effect of excellence on firm profitability focusing on markets where vertical integration is necessary to achieve product quality and there is limited business scalability. Using data from Italian wine guides, we show that excellence – as measured by wine quality – and vertical integration – as measured by private instead of cooperative ownership – do lead to higher prices of the bottles sold. However, in a second exercise we study the determinants of Italian wineries’ Return of Invested Capital (ROIC) and obtain mixed results. We show that excellence – as measured by firm and collective reputation – is irrelevant. Vertical integration – as measured by in house production of grapes and wine – ensures a better performance, but the most profitable firms are bottlers, which deliver the worst products. Results suggest that excellence and vertical integration are valuable assets, but also that their importance might heavily depend on the scalability of business.
When studying the emergence of new global markets it is essential to consider how countries and companies compete to obtain advantageous positions. Our objective is to study how France obtained an initial leadership position in the new global wine market which it subsequently consolidated. We will also analyse the main determinants of its exporting success. In order to do this we have quantified its exports and examined its evolution and its principal export markets. We have also used a gravity model for both ordinary wine and high quality wine in order to establish the key variables that explain this evolution. The article highlights the great efforts made by the exporters to improve the quality of their products and increase their sales using modern marketing techniques. Our econometric results also show some significant differences between the determinants of exports for the two types of wine. However, the exports of both products suffered the strong impact of a series of major events, such as The First World War, the Russian Revolution, the Prohibition in the United States and the Great Depression. The case of wine shows that the collapse of the first globalisation was not the same for all types of product.
The world’s first geographical indications (GIs) were in the wine sector and focused on the delineation of the location of production, the ‘terroir’: the Burgundy wines in the fifteenth century, the Port wines and Chianti wines in the eighteenth century, and the Champagne wines in the early twentieth century. We analyze the causes for the introduction of these GIs (‘terroirs’) and for changes in their delineation (expansion) later on. Our analysis shows that trade played a very important role in the creation of the ‘terroirs’ but not always through the same mechanisms. For the Port and Chianti GIs it was exports to Britain that were crucial; for Burgundy it was domestic trade to Paris; and for the Champagne GI it was not exports but pressure from wine imports and new wine regions that played a crucial role. For the expansions of the GIs later in history, other factors seem to have been equally important. Expansions of the GIs in the years and centuries after their introduction followed major changes in political power; the spread of a new philosophy in liberal and free markets across Europe; and infrastructure investments which opened up markets and made exports cheaper from “new” producers.
The aim of this paper is to analyze risk attitudes of winegrowers in France. An inter- esting feature of French viticulture is that most of the production is carried out under an appellation regime, bearing constraints in terms of maximal yield authorized. We estimate a translog cost function under the constraint of this maximal yield. We jointly estimate cost function parameters, factor share equations and winegrowers’ attitudes to the risk function. Our estimates are based on the FADN database (2005-2014), data from the National Cultural Practices survey (2006, 2010, 2013), data from the French National Institute of Origin and Quality (INAO) and data from guides on production costs in viticulture and œnology (from 2005 to 2014). We find that pesticide demand is inelastic and all types of winegrowers are risk-averse. For the majority of them, risk aversion declines with expected profit (DARA), but for the Champagne region, it is the contrary. Expected profit is far higher than in the other regions and these winegrowers are more averse to risk when expected profit increases (IARA).
The objective of this paper is threefold. First, we estimate the causal effect of wine medals on pro- ducers’ prices. Second, we calculate the expected profit obtained by producers from participating in competitions. Third, we investigate the efficiency of wine competitions by measuring to what extent the attributed awards are good quality indicators. Our dataset combines information on transactions be- tween wine producers and wholesale traders (these data are registered by a wine broker who acts as a middleman in this market), with the records from eleven important wine competitions. Our identifica- tion strategy exploits a particularity in our data, namely that medals are not only awarded before the transaction dates but sometimes also thereafter. Under weak restrictions, a regression of price on dum- mies indicating past and future medals (plus controls) allows to uncover two interesting features: i) the difference in the respective dummy estimates identifies the causal effect of a medal, ii) the estimate of the future medal coefficient identifies the correlation between unobserved quality and medal. We find a strong medal impact: our preferred estimate indicates that producers of medaled wines can increase their price by 13%. The impact for gold is much larger than for silver and bronze, but we cannot reject that the correlation with quality is the same across the three colors. Only a minority of contests attribute medals that are significantly correlated with quality (primarily the ones founded a long time ago, and whose judges are required to evaluate relatively few wines per day). Our profit calculations show that the incentives to participate in wine contests are high.
Concentrated or Competitive? An Overview of the Wine Industry in British Columbia, 2011-2015 Katarzyna Pankowska Introduction The fact that Canada domestically grows Vitis vinifera and produces various types of table wines may still come to some as a surprise, yet it is true. The geographic location and common association of Canada with a cold climate,…
Little empirical research has considered the impact of physical changes in the climate on firm behaver nor relied on natural stakeholder-based theory (NSBT) to explore such a relationship. For a sample of 2,348 wine firms operating in Australia, this study captures changes in both temperature and rainfall for the year 2012 relative to the year 1982 (30 years), and finds that these climatic changes are positively associated with organic products. Further, because of their sensitivities to the natural environment and positions of influence, the study predicts that women in leadership will moderate the relationship between climatic changes and organic products. This postulate finds support. The study advances research on climate change and the use of NSBT. Contributions of the findings are discussed along with limitations and future research opportunities.