Do expensive wines really taste better?

I was watching a video this week on YouTube called "Expensive wine is for suckers" and it raised a few very good points. 

  • For amateur wine drinkers who aren't connoisseur's of wine it probably makes little sense for them to spend large sums of money on expensive wines. Conversely if you're into wine, you are much more likely to notice the finesse and complexity of an expensive wine versus an on-promotion supermarket wine.
  • Professional wine experts who judge wines aren't consistent with their ratings
  • Wine consumers are disproportionately influenced by price and country of origin when its comes to perceived quality, the actual taste is much less important - so expensive wines taste better as long as you know they're expensive! How a wine is branded is very important.

So before many wine drinkers rush out to buy that bottle of Château Le Pin for $3000 a bottle they should consider that the same wine would probably taste a lot worse in their minds if they had only paid $20! The same rule applies if you bought a barrel of mid range Bordeaux wine and bottled it with labels of Château Petrus. 

If you're really not into your wines, paying large sums for complex, quality wines is not a good idea. This is why bog standard end gondala supermarket wines from the likes of Gallo, Wolf Blass and Yellow Tail are so popular.For mass wine drinkers they want big, fruity wines with plenty of alcohol and certainly no heavy tannins or acidity which would be tempered by cellaring. 

The evidence that expensive wines taste better

Journal of Wine Economics, Volume 3, Number 1, Spring 2008, Pages 1–9 Do More Expensive Wines Taste Better? Evidence from a Large Sample of Blind Tastings* Robin Goldsteina , Johan Almenbergb, Anna Dreberc , John W. Emersond, Alexis Herschkowitscha , and Jacob Katza

The authors state that 

"Individuals who are unaware of the price do not derive more enjoyment from more expensive wine. In a sample of more than 6,000 blind tastings, we find that the correlation between price and overall rating is small and negative, suggesting that individuals on average enjoy more expensive wines slightly less. For individuals with wine training, however, we find indications of a non-negative relationship between price and enjoyment. Our results are robust to the inclusion of individual fixed effects, and are not driven by outliers: when omitting the top and bottom deciles of the price distribution, our qualitative results are strengthened, and the statistical significance is improved further. These findings suggest that non-expert wine consumers should not anticipate greater enjoyment of the intrinsic qualities of a wine simply because it is expensive or is appreciated by experts. "

What are the implications for most wine drinkers:

  • When drinkers are unaware of the price and hence the perceived quality they enjoy expensive (more complex) wine slightly less
  • For wine drinkers with training the higher the price of wine the higher the enjoyment
  • non-expert wine drinkers should not anticipate greater enjoyment of a wine because it is expensive or is appreciated by experts. 

The evidence that wine experts are inconsistent in their ranking in wine competitions

Journal of Wine Economics, Volume 4, Issue 1, Spring 2009, Pages 1–9 An Analysis of the Concordance Among 13 U.S. Wine Competitions* Robert T. Hodgsona

The authors state:

"An analysis of over 4000 wines entered in 13 U.S. wine competitions shows little concordance among the venues in awarding Gold medals. Of the 2,440 wines entered in more than three competitions, 47 percent received Gold medals, but 84 percent of these same wines also received no award in another competition. Thus, many wines that are viewed as extraordinarily good at some competitions are viewed as below average at others. An analysis of the number of Gold medals received in multiple competitions indicates that the probability of winning a Gold medal at one competition is stochastically independent of the probability of receiving a Gold at another competition, indicating that winning a Gold medal is greatly influenced by chance alone. "

"To lift their brand above the competition, wineries spent more than $1 million in entry fees in 2003 at just 13 of these venues. The benefit of this expense is the belief by wineries that entry fees offer a valid return on investment: Gold medals sell wine."

"An examination of the results of 13 U.S. wine competitions shows that (1) there is almost no consensus among the 13 wine competitions regarding wine quality, (2) for wines receiving a Gold medal in one or more competitions, it is very likely that the same wine received no award at another, (3) the likelihood of receiving a Gold medal can be statistically explained by chance alone."

Hodgson shows that Gold medals awarded at wine competitions are in line with the distribution predicted by pure chance

The evidence that consumers rate wine / food based on price & country more than taste

3rd International Wine Business & Marketing Research Conference, Montpellier, 6-7-8 July 2006 Refereed paper 1 The role of intrinsic (sensory) cues and the extrinsic cues of country of origin and price on food product evaluation Roberta Veale Pascale Quester Amal Karunaratna School of Commerce The University of Adelaide Adelaide, South Australia

The authors state:

"Consumers use both intrinsic and extrinsic cues when forming opinions regarding product quality. Research has shown that consumers are often unable to assess these cues accurately and may ignore product attributes that significantly influence product quality in favor of others that contribute little. Country-of-origin and price have been found to be examples of extrinsic cues repeatedly used by consumer to form product quality opinions, both before and after purchase.

Furthermore, objective and subjective consumer knowledge and self-confidence have been shown to moderate consumer reliance on both extrinsic and intrinsic cues, although these variables have not been examined in terms of their potential moderating effects on product quality evaluations. The results of exploratory qualitative research and a pilot scale conjoint analysis suggest that country of origin and price influence quality expectations in the case of chardonnay and cheese. In the case of cheese, the intrinsic cue (fat content) also contributed significantly to quality expectations, with the lowest fat level deemed the most desirable. This is despite the fact that increasing levels of fat in cheese results in creamier texture and better flavor compared to the low fat products. Measures of objective knowledge were also found to be much lower than expected for consumers of these commonly purchased products, suggesting respondents’ inability to accurately assess intrinsic cues. The study points to a number of future research directions.  "

"Consumers tend to believe there is a ‘natural’ ordering of products according to a price scale where higher quality products are more expensive and products of lesser quality are cheaper (Bredahl, 2003; Dickson & Sawyer, 1990; Glitsch, 2000; Jover et al., 2004; Kardes et al., 2004; Monroe, 1976). This price / quality relationship, described in the literature as the ‘price-reliance schema’, reflects consumers’ strongly held view that ‘you get what you pay for’ (M. Lee & Lou, 1996: p24). Indeed, this belief can sometimes be strong enough to overcome experienced product quality (Jover et al., 2004; Pechmann & Ratneshwar, 1992). For example Pechmann and Ratneshwar (1992) found, in their study involving consumer assessment of orange juice quality, that respondents would favour a lower quality juice if the price were relatively high, over a juice of lower quality if the price were correspondingly low, provided they did not have the opportunity to assess all juice samples simultaneously. Therefore, consideration of price leads consumers to accept conditional ‘trade offs’ when making a buying decision. If consumers believe that price and quality are tied then paying a lower price means accepting lower quality. Conversely, to gain better quality a monetary sacrifice must be made, perhaps beyond what is desirable to the payer. Finding a satisfactory balance in outcomes represents an important challenge for many consumers and means that price plays an important and unique role in the buying decision (Kardes et al., 2004; Rao & Olson, 1990). Consumers rely even more heavily on price when they possess limited knowledge of product category offerings. Further, consumers find it particularly difficult to assess quality if intrinsic cues are complex, leading them to sometimes be intimidated by price as found by (Jover et al., 2004) in their study measuring the impact of extrinsic variables on expectations and evaluation of wine quality. Thus as with CI, consumers with sound levels of objective knowledge will generally use price as an indicator of quality only when this is legitimate (e.g. there is a strong relationship between price and intrinsic product quality), and/or when other intrinsic product."