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Does cheap wine cost too much money?

Karl Storchmann

Karl Storchmann: "Significant overpricing of mediocre wines."

The answer may well be yes, according to study conducted by one of the leading wine economists in the country. New York University’s Karl Storchmann wanted to find out if scores helped better align the price of wine; that is, do good scores boost prices while bad scores lower the price? Instead, Storchmann, Alexander Mitterling, and Aaron Lee discovered just the opposite.

The key is what Storchmann calls noise – the publicity a good score gives a wine. “The noise raises the quality perception of the wine, and the noise is larger for bad wine,” he told me. In the study, cheap wine is defined as “bad” because it’s less expensive than “good” wine, and better quality wine should cost more.

What happens, says the study, is that a high score for one cheap wine influences the perception of the entire brand, as well as for different vintages – possibly raising the price of every wine in the brand. That means that if Winery X’s 2011 merlot gets a 92, that score gives consumers the idea that the rest of X’s wines, whether chardonnay or zinfandel or whether 2009 or 2010, are equally as good. Which isn’t necessarily the case.

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