Wine Prices and Quality Ratings: A Meta‐Regression Analysis

19 Pages Posted: 15 Apr 2020

See all articles by Edward Oczkowski

Edward Oczkowski

Charles Sturt University - Faculty of Commerce

Hristos Doucouliagos

Deakin University

Date Written: January 2015

Abstract

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.

Keywords: Hedonic wine prices, incomplete information, meta-regression, wine quality

Suggested Citation

Oczkowski, Edward and Doucouliagos, Hristos, Wine Prices and Quality Ratings: A Meta‐Regression Analysis (January 2015). American Journal of Agricultural Economics, Vol. 97, Issue 1, pp. 103-121, 2015, Available at SSRN: https://ssrn.com/abstract=3574212 or http://dx.doi.org/10.1093/ajae/aau057

Edward Oczkowski (Contact Author)

Charles Sturt University - Faculty of Commerce ( email )

Wagga Wagga, NSW 2678
Australia
061 02 69332521 (Phone)
061 02 69332125 (Fax)

Hristos Doucouliagos

Deakin University

75 Pigdons Road
Victoria, 3216
Australia

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