Third-party ratings and the US wine market

Abstract

Purpose

This paper aims to provide insight into the three most prevalent expert wine rater sources and how they separately affect retail prices post-release across a sample of French and US wines from the 2012 vintage.

Design/methodology/approach

Empirical research using regression models built on data scraped from Web sources provides the source for the substance of the paper.

Findings

The findings suggest that all rating sources affect release price (approximately $3-4 per point), but more indicative of market performance, only Wine Advocate ratings significantly influence price change in the market post-release. Other results suggest some, but far from complete, consistency among raters. Red wines and French wines typically fetch better scores from the raters, and they are less subject to price drops in the marketplace.

Research limitations/implications

The nature of the data does not allow for consumers’ individual difference characteristics, such as wine knowledge, among others, to be included as potential factors explaining why and when expert ratings influence consumers.

Practical implications

Third-party wine ratings do indeed matter both in terms of release price and post-release price performance. In particular, following release, Wine Advocate ratings provide the most influential quality signal in the marketplace.

Social implications

Scrutiny on the manner in which ratings information is used by retailers is appropriate, given the influence such ratings have on consumers as demonstrated by their effects on market behaviors.

Originality/value

The research examines the top three US expert ratings and considers their consistency and impact, not just on release price but also on price following release, as a direct indicator of product performance in the marketplace.

Citation

Babin, B.J. and Bushardt, C. (2019), "Third-party ratings and the US wine market", International Journal of Wine Business Research, Vol. 31 No. 2, pp. 151-162. https://doi.org/10.1108/IJWBR-08-2017-0052