Wine quality and pricing in the global wine export market: the case of Chilean wines

ABSTRACT

This paper hypothesizes that, from 1985 to 1999, Chilean export wine producers achieved significant quality improvements, which led to successful product differentiation in the global export market. Concomitantly – as the monopolistic competition theory predicts – they increased their wine prices, which represent the value wine consumers attach to the wine attributes (including the quality). Using the wine rating score as an approximation of quality, the paper tests this hypothesis using the nonparametric Wilcoxon rank-sum test. The results strongly support the hypothesis.

KEYWORDS:

• Wine
• Chile
• pricing
• Wilcoxon rank-sum test

JEL CLASSIFICATION:

• C14
• D43
• Q17

Acknowledgments

I thank an anonymous reviewer for useful suggestions. Also, I thank M. Shanken Communications (Wine Spectator) for permission to use Wine Spectator rating scores and release prices.

Disclosure statement

No potential conflict of interest was reported by the author(s).