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Red Wines of Médoc: What is Wine Tasting Worth?*

  • Victor Ginsburgh (a1), Muriel Monzak (a1) and Andras Monzak (a1)

Abstract

Winemaking is a highly complex technology. It needs inputs over which there is no control (good weather conditions), initial endowments which can hardly be modified (soil, exposure of the slopes), inputs which take 20 to 30 years before producing good quality outputs (vines), manual operations (picking), mechanical operations (crushing, racking) and chemical processes (during fermentation). In the paper, we disentangle the production technology, and try to quantify the impact on prices (qualities) of each of the many inputs (including weather conditions) and steps used in producing wine in Médoc. We show that technology and weather conditions are able to explain two thirds of the variance of prices; when reputation effects (based on the wine classification made in 1855) are included, this proportion rises to almost 85%. This suggests either that “classified” producers are able to charge higher prices, or that the classification is a measure of quality reflected by prices. We also show that two of the more recent attempts at classifying wines are not as good at explaining prices than the official (and old) 1855 classification. (JEL Classification: L66, Z19, C5, D4)

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This is a printed version of a paper that was presented at the Vineyard Data Quantification Society in Verona in 1992. We are grateful to the owners, managers and régisseurs of 102 out of the 104 châteaux visited for their kindness and the time they spent in answering the questions included in our survey; their names appear in Appendix 1. The Institut de Météorologie Française in Mérignac-Cissac was kind enough to provide the data on weather conditions. We are largely indebted to Luc Bauwens and Jean Waelbroeck for excellent comments and recommendations on the testing procedures of Section VI. We also thank Albert di Vittorio, Marjorie Gassner, Cécile Guasch and Moncef Hadhri for many helpful discussions.

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References

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Red Wines of Médoc: What is Wine Tasting Worth?*

  • Victor Ginsburgh (a1), Muriel Monzak (a1) and Andras Monzak (a1)

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