Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-23T22:59:26.541Z Has data issue: false hasContentIssue false
  • English
  • Français

Wine as an Experience Good: Price Versus Enjoyment in Blind Tastings of Expensive and Inexpensive Wines*

Published online by Cambridge University Press:  29 April 2014

Robert H. Ashton
Robert H. Ashton*
Affiliation:
Fuqua School of Business, Duke University, 100 Fuqua Drive, Durham, NC 27708; e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

Economic theorists maintain that wine is an experience good, a product whose quality can be evaluated only after purchase and consumption. Theory holds that consumers often rely on the price of experience goods as one cue to judge their quality. In this paper, however, I provide evidence that an important segment of wine consumers do not consider price a useful cue to quality. Specifically, I test the robustness of Goldstein et al.,'s (2008) finding that, in blind tastings, average wine drinkers consider less expensive wines to taste better than more expensive wines. Four blind tastings of 2006 red Bordeaux and 2009 white Burgundy with a price range of $20–$119 were conducted, in which members of a wine club rated their extent of enjoyment of each wine. In three of the tastings, there was no relationship between price and enjoyment, while in the other the relationship was negative, lending additional credibility to the contention that an important segment of wine consumers do not find enjoyment to increase with price. (JEL Classification: C91)

Keywords

blind tastingsexperience goodsred Bordeauxwhite Burgundy
Type
Articles
Information
Journal of Wine Economics , Volume 9 , Issue 2 , August 2014 , pp. 171 - 182
Copyright
Copyright © American Association of Wine Economists 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

I am indebted to Alison Ashton for insightful comments on an earlier version, to Mani Sethuraman for excellent research assistance, and to Lila Cruikshank for help in arranging the blind tastings. I am also indebted to the anonymous reviewer, and especially to the editor, for numerous comments that have improved the paper.

References

Allen, F. (1984). Reputation and product quality. Rand Journal of Economics, 15, 311–327.CrossRefGoogle Scholar
Amerine, M.A., and Roessler, E.B. (1983). Wines: Their Sensory Evaluation. New York: W.H. Freeman.Google Scholar
Ashenfelter, O. (2010). Predicting the quality and prices of Bordeaux wine. Journal of Wine Economics, 5, 40–52.CrossRefGoogle Scholar
Ashenfelter, O., and Jones, G.V. (2013). The demand for expert opinion: Bordeaux wine. Journal of Wine Economics, 8(3), 285–293.Google Scholar
Bagwell, K., and Riordan, M.L. (1991). High and declining prices signal product quality. American Economic Review, 81, 224–239.Google Scholar
Bodington, J.C. (2012). 804 tastes: Evidence on preferences, randomness, and value from double-blind wine tastings. Journal of Wine Economics, 7, 181–191.Google Scholar
Brochet, F. (2001). Chemical object representation in the field of consciousness. Application presented for the Grand Prix of the Académie Amorim following work carried out toward a doctorate from the Faculty of Oenology, University of Bordeaux.Google Scholar
Brook, S. (2012). Corton quality on a Chablis budget. Decanter, July, 24–30.Google Scholar
Cox, E.P. (1980). The optimal number of response alternatives for a scale: A review. Journal of Marketing Research, 17, 407–422.Google Scholar
Darby, M.R., and Karni, E. (1973). Free competition and the optimal amount of fraud. Journal of Law and Economics, 16, 67–88.Google Scholar
Deliza, R., and MacFie, H.J.H. (1996). The generation of sensory expectation by external cues and its effect on sensory perception and hedonic ratings: A review. Journal of Sensory Studies, 11, 103–128.CrossRefGoogle Scholar
Dubois, P., and Nauges, C. (2010). Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine. International Journal of Industrial Organization, 28, 205–212.Google Scholar
Gerstner, E. (1985). Do higher prices signal higher quality? Journal of Marketing Research, 22, 209–215.CrossRefGoogle Scholar
Gibbs, M., Tapia, M., and Warzynski, F. (2009). Globalization, superstars, and reputation: Theory & evidence from the wine industry. Journal of Wine Economics, 4, 46–61.Google Scholar
Goldstein, R. (2008). The Wine Trials. Austin: Fearless Critic Media.Google Scholar
Goldstein, R., Almenberg, J., Dreber, A., Emerson, J. W., Herschkowitsch, A., and Katz, J. (2008). Do more expensive wines taste better? Evidence from a large sample of blind tastings. Journal of Wine Economics, 3, 1–9.CrossRefGoogle Scholar
Hadj Ali, H., Lecocq, S., and Visser, M. (2008). The impact of gurus: Parker grades and en primeur wine prices. Economic Journal, 118, 158–173.Google Scholar
Hanf, C., and von Wersebe, B. (1994). Price, quality, and consumers’ behavior. Journal of Consumer Policy, 17, 335–348.Google Scholar
Hay, C. (2010). The political economy of price and status formation in the Bordeaux en primeur market: The role of wine critics as rating agencies. Socio-Economic Review, 8, 685–707.Google Scholar
Jones, G.V., and Storchmann, K. (2001). Wine market prices and investment under uncertainty: An econometric model for Bordeaux crus classés. Agricultural Economics, 26, 115–133.Google Scholar
Keller, K.L. (2009). Managing the growth tradeoff: Challenges and opportunities in luxury branding. Brand Management, 16, 290–301.CrossRefGoogle Scholar
Keller, K.L. (2012). Strategic Brand Management. Upper Saddle River, NJ: Prentice-Hall.Google Scholar
Lecocq, S., and Visser, M. (2006). What determines wine prices: Objective vs. sensory characteristics. Journal of Wine Economics, 1, 42–56.Google Scholar
Lee, L., Frederick, S., and Ariely, D. (2006). Try it, you'll like it: The influence of expectation, consumption, and revelation on preferences for beer. Psychological Science, 17, 1054–1058.Google Scholar
Mahenc, P., and Meunier, V. (2003). Forward markets and signals of quality. RAND Journal of Economics, 34, 478–494.CrossRefGoogle Scholar
Malter, D. (2012). On the causality, cause, and consequence of returns to organizational status: Evidence from the grands crus classés of the Médoc. Working paper, University of Maryland.Google Scholar
Mantonakis, A., Rodero, P., Lessehaeve, I. and Hastie, R. (2009). Order in choice: Effects of serial position on preferences. Psychological Science, 20, 1309–1312.Google Scholar
Milgrom, P., and Roberts, J. (1986). Price and advertising signals of product quality. Journal of Political Economy, 94, 796–821.Google Scholar
Miller, G.A. (1956). The magical number seven, plus or minus two: Some limits on our capacity for processing information. Psychological Review, 63, 81–97.CrossRefGoogle ScholarPubMed
Miller, J.R., Genc, I., and Driscoll, A. (2007). Wine price and quality: In search of a signaling equilibrium in 2001 California cabernet sauvignon. Journal of Wine Research, 18, 35–46.Google Scholar
Nelson, P. (1970). Information and consumer behavior. Journal of Political Economy, 78, 311–329.Google Scholar
Nelson, P. (1974). Advertising as information. Journal of Political Economy, 81, 729–754.CrossRefGoogle Scholar
Oczkowski, E. (1994). A hedonic price function for Australian premium table wine. Australian Journal of Agricultural Economics, 38, 93–110.Google Scholar
Peynaud, E. (1987). The Taste of Wine: The Art and Science of Wine Appreciation. (Schuster, M., Trans.). San Francisco: Wine Appreciation Guild.Google Scholar
Plassmann, H., O'Doherty, J., Shiv, B., and Rangel, A. (2008). Marketing actions can modulate neural representations of experienced pleasantness. Proceedings of the National Academy of Sciences, 105, 1050–1054.Google Scholar
Preston, C.C., and Colman, A.M. (2000). Optimal number of response categories in rating scales: Reliability, validity, discriminating power, and respondent preferences. Acta Psychologica, 104, 1–15.Google Scholar
Rao, A.R., and Monroe, K.B. (1989). The effect of price, brand name, and store name on buyers’ perceptions of product quality: An integrative review. Journal of Marketing Research, 26, 351–357.Google Scholar
Riesz, P.C. (1979). Price-quality correlations for packaged food products. Journal of Consumer Affairs, 13, 236–247.Google Scholar
Riordan, M.H. (1986). Monopolistic competition with experience goods. Quarterly Journal of Economics, 101, 265–279.Google Scholar
Roberts, P.W., and Reagans, R. (2007). Critical exposure and price-quality relationships for new world wines in the U.S. market. Journal of Wine Economics, 2, 56–69.Google Scholar
Schmalensee, R. (1978). A model of advertising and product quality. Journal of Political Economy, 86, 485–503.CrossRefGoogle Scholar
Schnabel, H., and Storchmann, K. (2010). Prices as quality signals: Evidence from the wine market. Journal of Agricultural & Food Industrial Organization, 8, 1–21.Google Scholar
Shapiro, C. (1983). Premiums for high quality products as returns to reputations. Quarterly Journal of Economics, 98, 659–679.Google Scholar
Storchmann, K., Mitterling, A., and Lee., A. (2012). The detrimental effect of expert opinion on price-quality dispersion: Evidence from the wine market. AAWE Working Paper No. 118.Google Scholar
Tellis, G.J., and Wernerfelt, B. (1987). Competitive price and quality under asymmetric information. Marketing Science, 6, 240–253.CrossRefGoogle Scholar
Tirole, J. (1996). A theory of collective reputations (with applications to the persistence of corruption and to firm quality). Review of Economic Studies, 63, 1–22.CrossRefGoogle Scholar
Weil, R.L. (2001). Parker v. Prial: The death of the vintage chart. Chance, 14, 27–31.Google Scholar
Weil, R.L. (2005). Analysis of reserve and regular bottlings: Why pay for a difference only the critics claim to notice? Chance, 18, 9–15.Google Scholar
Weinberg, J. (2008). Taste how expensive this is: A problem of wine and rationality. In Allhoff, F. (Ed.), Wine & Philosophy: A Symposium on Thinking and Drinking. Malden, MA: Blackwell, 257–274.Google Scholar