Implicit prices of attributes of fine German Riesling: magnitude and heterogeneity

Abstract

Purpose: The authors analyse how wine attributes affect prices of fine German Riesling wines, provide estimates of the magnitude and heterogeneity of the attributes' implicit prices and draw conclusions on the pricing of fine wine and the research methodology. Design/methodology/approach: Implicit prices of attributes of fine German Rieslings are estimated with fixed-effects regressions and their heterogeneity across quantiles of the conditional price distribution is tested with quantile-regression techniques. The analysis is based on a unique online data set for prices and characteristics of collectible wines. Findings: Quality levels according to the German Prädikat system, additional quality awards for exceptional quality, the wine region, age or vintage as well as ullage and the bottle condition are relevant when explaining the price of cellarable wine. Additionally, the influence of the firm´s individual reputation is very strong. Relative price premiums for some major attributes of fine German Riesling change significantly across quantiles of the conditional price distribution. Other attributes are characterized by a rather stable relative (but not absolute) price premium. Originality/value: This is, to the best of our knowledge, the first hedonic price analysis which concentrates exclusively on fine German Riesling wine. By applying both classical and quantile regressions, the authors are able to derive new insights on quality-price linkages in this growing segment of collectible wine and on the research methodology.