How competitions have a beneficial effect on wine prices

Wednesday January 31 2018 by Vitisphere

- Photo credit : Creative Commons CC0

Do competitions affect wine prices? Every now and again, the issue rears its head in the wine industry. Two French researchers, Emmanuel Paroissien (Bordeaux University) and Michel Visser (Paris-Saclay University) decided to tackle a question which constantly niggles the world of wine. They have just published the results in a working paper titled “The Causal Impact of Medals On Wine ProducersPrices and the Gains From Participating in Contests” in the journal of the American Association of Wine Economists.  

 

To answer these two questions, the researchers compiled a database of Bordeaux wine prices registered by a major Bordeaux brokerage firm. The transactions, which relate to vintages from 2005 to 2014, could be in the form of bulk wine, bulk wine with estate bottling or bottled wine. The average age of the wines was 19 months and 83% of them were produced by an independent winery.

 

What the researchers prove is that participating in competitions is undeniably worthwile: producers do indeed witness an increase in the prices of their wines when they receive at least one medal. In practical terms, the study estimates that winning at least one medal in a competition increases the price of wine by 13%. “This is the “average” effect estimated by making the simplifying assumption that the effect is the same for all competitions and all types of medals. Obviously, the effect of a contest varies according to the seller, the buyer and the terms of the transaction”, explains Emmanuel Paroissien.

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