Conclusion
In this paper we apply the hedonic technique to wines. In the price equation we include
objective characteristics appearing on the label, as well as sensory characteristics and quality,
as measured by expert tasters. We use three almost identically structured data sets (two
on Bordeaux wines, and one on Burgundy wines), which enable us to make comparisons
between two of the most important French wine regions and comparisons over time (the
two Bordeaux data sets are sampled at different points in time).
Our results indicate that characteristics that are directly revealed to the consumer upon
inspection of the bottle and its label (ranking, vintage and appellation) explain the major
part of price differences. Sensory variables do not appear to play an important role. Out of
some fifteen sensory characteristics, only two or three have a significant impact in the
hedonic price equation.
Wine prices are also hardly affected by the grades assigned by professional wine tasters.
Although jury grades have a significant effect, their impact on prices is very small compared
to the impact of ranking and vintage. This is surprising given that the jury grade
seems a reasonable measure of quality. A possible explanation for this result is that the jury
grade is an imperfect measure of quality due to measurement errors in the expert-specific
grades. Our most recent data set (Bordeaux II) allows to correct for these measurement
errors (see section 3), and our results suggest that the true effect of quality is much larger
than previously thought.
We also find that the jury grade, unlike the price, is primarily determined by sensory
characteristics: only one fifth of the variables that have a significant influence on the jury
grade equations are objective variables. Furthermore, ranking has no significant effect in
the Bordeaux equations, but does significantly affect grades for Burgundy wines, a result
that can be explained by the different classification systems used in the two wine-growing
regions.
It would be interesting to check whether the findings reported in this paper are typical
for Bordeaux and Burgundy wines, or whether they also hold for other regions and countries.
In a comment on the Combris, Lecocq and Visser (1997) paper, Brown (1999) uses a
sample of premium California wines to estimate a hedonic price equation and a jury grade
equation. Unlike the results of our hedonic price equations, many sensory characteristics of
California wines (six out of thirteen) do have a significant impact on prices. The results for
this jury grade equation are, however, more in line with ours in that the appreciation of
wine experts is essentially determined by sensory variables.