Table 4, where more than 30 subsets of data are
shown, only in five cases were the results significant
at the 1 per cent level and another five at the 5
per cent level. We therefore conclude that in this
study we do not have a serious problem of dependence
between the quality ratings and the error term.
IV What Do the Results Show?
(i) Australia
Tables 5 and 6 present the estimation results for
Australia from the Halliday and
Winestate
samples,
respectively. Shiraz and Barossa Valley are chosen
as the comparator variety and region (necessary to
avoid the dummy variable trap). Thus, all coefficients
are relative to what a Shiraz produced in the
Barossa Valley would sell for. The columns show
the estimation results for each of the eight or nine
subsamples of individual vintages. For the Halliday
sample, the coefficients for ‘vintage rating’ and
‘winery rating’ measure the percentage price premia
for a one-point increase in the 100-point scale,
respectively. The dummy variable coefficients for
variety and regional origin can be interpreted as a
percentage price impact relative to a Barossa Valley
Shiraz. The coefficient for ‘classic wine’ reports the
percentage price premium for a wine that obtained
this special recognition. For the
Winestate
sample,
the coefficients for ‘rating’ measure the percentage
price premia for a one-point increase (on a 10 point
scale), which may in turn be interpreted as the percentage
price premium for a star rating increase.
Consider first the estimates using the Halliday data
(Table 5). The parameters for vintage rating are all
significant and fairly constant over time. The price
premium is 3.1 per cent on average and varies between
2.3 per cent and 4.1 per cent for a one-point
increase in the vintage rating for the 1992–2000
vintages. That amounts to between a 40 and 110
cents increase on an average-priced bottle of wine
for each vintage over that period (see second to