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JWE Volume 2 | 2007 | No. 1

Journal of Wine Economics Volume 2 | 2007 | No. 1

Introduction to Quantitative Gastronomy

The Editors
Pages: 1
Introduction

The American Association of Wine Economists is pleased to welcome the newly founded Society for Quantitative Gastronomy, whose chef-coq is Olivier Gergaud. The Society has joined the American Association of Wine Economists as its food division. Henceforth, once each year, beginning with this issue, the Journal of Wine Economics will host a sym- posium on gastronomy.

The first paper is on French and Italian hotel breakfasts. Does “petit déjeuner compris” mean that breakfasts are free? George E. Johnson, who is the keynote speaker at the First Annual Meeting of the American Association of Wine Economists on May 23–26, 2007, in Trier, answers this question and shows that a “free” breakfast increases the room price by as much as 10–15%.

In the second paper, Olivier Gergaud, Linett Montano Guzman, and Vincenzo Verardi take readers on a tour to the best and the worst Paris restaurants. They show how the celebrated Michelin Guide distorts the market for good food. As a practical guide for Paris visitors, their appendix provides a list of the 100 best restaurant deals from an econometri- cian’s perspective.

Readers of the Journal of Wine Economics are familiar with the authors of the third food symposium paper. In the inaugural issue of the Journal, Pierre Combris, Christine Lange and Sylvie Issanchou examined the effect of packaging information on the reservation price of Champagne, and found disturbing results. In this issue, they conduct experiments with consumers of orange juice, and find that choices are rational and consistent, leaving room for speculation.

The editors

“Pétit Déjeuner Compris” – Is it Really Free?

George E. Johnson
Pages: 2-23
Abstract

Despite the old claim in economics that “there is no such thing as a free lunch,” some of the recent work in behavioral economics and in other fields of study implies the contrary. In this paper I study whether French and Italian hotels actually provide a “free” breakfast when, as is done by many hotels around the world, its provision is included in the room price. The data indicate, using both cross-sectional comparisons and hotel-specific changes in breakfast provision, that there is no such thing as a free breakfast. In France and Italy hotels that offer, respectively, “petit déjeuner compris” and “compresa la prima colazione” appear to raise their room prices by 10 to 15 percent.

Stardust over Paris Gastronomic Restaurants

Olivier Gergaud, Linett Montano Guzman & Vincenzo Verardi
Pages: 24-39
Abstract

In this paper, we study if the leading French gastronomic guidebook, the “Guide Rouge Michelin,” only rates the quality of food, as it claims, or if it also considers environmental variables when attributing stars. We then check how Michelin ratings affect the market, and more specifically, the price charged by restaurants. Using some simple econometric techniques, we find that a small improvement in environment boosts the probability of receiving Michelin stars. Since we also find that a Michelin star is associated to a high price premium stuck (independently of the quality of food), we conclude that expertise induces distortions in the market.

Product Information, Hedonic Evaluation, and Purchase Decision: an Experimental Study of Orange Juice

Pierre Combris, Christine Lange & Sylvie Issanchou
Pages: 40-54
Abstract

Two randomly sampled groups of subjects were endowed with real budgets and placed in 5 different budget/price situations. In each situation they had to evaluate 6 orange juices and complete a demand table. At the end of the experiment, one demand table was randomly selected and participants had to buy the corresponding products. In one group, participants choose after looking at the packaging in the other they could also taste the products. Results show that participants who chose without tasting, made quicker decisions, selected a larger number of variants and were more influenced by prices than those who could taste the products. Although choices appeared very heterogeneous, most participants exhibit coherent behaviors.

French Wine and the U.S. Boycott of 2003: Does Politics Really Affect Commerce?

Orley Ashenfelter, Stephen Ciccarella & Howard J. Shatz
Pages: 55-74
Full Text PDF
Abstract

In early 2003, France actively tried to thwart the plans of the Bush administration to build international support for a war to depose Iraqi ruler Saddam Hussein. In response, calls in the United States for a boycott of French products, wine in particular, rebounded through all forms of media. In the spring of 2003, French business people even reported that the boycott calls were hurting their U.S. sales. Using a dataset of sales of nearly 4,700 individual wine brands, we show that there actually was no boycott effect. Rather, sales of French wine dipped for two reasons. First, they experience a cyclical peak at holiday time, from November through early January, and the boycott was called during the February to May period. Second, sales of French wine have been in a secular decline in the United States. Sales in February through May 2003 merely stayed on trend. We contrast our results with other recent work that has found evidence of a boycott effect but that omits the holiday effect from several specifications. French wine producers may be having economic problems, but it is not because of their government’s foreign policy.

The Military Action in Iraq 2003: Did U.S. Consumer Boycott of French Wines have any Economic Effects?

Jan Bentzen & Valdemar Smith
Pages: 75-83
Abstract

The public opinion in the US turned against France and to some extent Germany for not supporting the armed intervention in Iraq. From early 2003 a boycott of French goods, especially wines, by American consumers became an issue which affected sales of French wines in the US. This paper analyses how the boycott affected the demand for French wine on the American market using international trade data. The effect may have been only temporary. We estimate it at some 120 million US dollars.

Critical Exposure and Price-Quality Relationships for New World Wines in the U.S. Market

Peter W. Roberts & Ray Reagans
Pages: 84-97
Abstract

Notwithstanding the observed positive correlations between critics’ quality ratings and wine prices, the range of these correlations is quite high. In light of this, researchers must consider the factors that either strengthen or weaken the association between quality ratings and prices. In this paper, we propose that the slope of the relationship between quality ratings and wine prices is moderated by the amount of attention that producers receive. Because attention increases with a producer’s critical exposure (i.e., its history of critical coverage), price-quality relationships will be steeper for producers with more critical exposure. This prediction is confirmed in an analysis of New World wines selling into the U.S. market over the 1987 to 2001 period. While a wine’s price is a positive function of its own quality rating, the strength of the price-quality relationship increases with a producer’s critical exposure.

A Note on a test for the Sum of Ranksums

Richard E. Quandt
Pages: 98-102
Full Text PDF
Introduction

In wine tastings, in which several tasters (judges) taste several wines, it is important to insure objectivity to the extent possible. This is usually accomplished by holding the tast- ing “blind,” i.e., covering the bottles so that the tasters do not know which wine is in which bottle. At some agreed upon point in the proceedings, the tasters reveal what they think about the various bottles. Ideally, this revelation would take place by secret ballot, lest a taster’s choices be influenced by what he or she hears another taster say. But in any event, there are two standard ways of rating the wines. The older method is to assign them “grades” on a scale of, say, up to 100 points (Parker) or up to 20 points as in the famous face-off between California wines and French Bordeaux wines in 1976 (see Ashenfelter et al., 2007). As Ashenfelter at al. point out, this has the distinct disadvantage that a judge with greater dispersion in his or her grades will have a greater influence on the average score that each wine achieves.

A preferable method for rating the wines is to rank them, i.e., rank the most favored wine “1”, the second most favored wine “2”, etc. The winner, that is to say the wine that is liked “on the average” best by the group, is the one that achieves the lowest rank total. Of course, there will always be a wine that has a lower rank total than the other wines (with the proviso that there may be more than one wine tied for the lowest rank total) and we need to know whether this lowest rank total could have occurred by chance, even if there were no difference among the wines. Fortunately, a statistical significance test exists for the lowest rank total, originally due to Kramer (1956) and discussed in Quandt (2006).

But there are occasions when knowing which is the most favored wine and whether its performance is statistically significant is not all that we want to know. The typical case in point is when there are two types of wines being tasted, as in the California vs. French face-off, where we want to know whether the wines of type A are together and on the whole more favored than the wines of type B. The question we would want to ask then is whether the sum of the ranksums over the subset of wines comprising type A is significantly smaller than the sum of the ranksums over the wines comprising type B. The ranksums for the wines in any subgroup are not independent of each other and the distribution of the sum of the ranksums under the null hypothesis that the two groups are identical is not obvious. In the next section we produce critical values for the sum of ranksums by employing Monte Carlo experiments.

Book & Film Reviews

Making Sense of Italian Wine: Discovering Italy’s Greatest Wines and Best Values

By: Matt Kramer
Reviewer: Domenic V. Cicchetti
Pages: 103-105
Full Text PDF
Book Review

Having had the good fortune and distinct pleasure of reading the original in this latest series, Making Sense of Wine; having become addicted to reading his sage one page column in each issue of the Wine Spectator; and having listened to his riveting wine presentations at the annual meetings of the Wine Spectator sponsored California and New York Wine Experience; I cannot help but be impressed by Matt Kramer’s high level of scholarship, linguistic expertise, thorough knowledge of his subject matter, and literary style.

In setting the stage for what is to follow, Kramer introduces the wine enthusiast to three broad principles that are of particular relevance to the Italian wine industry, and sometimes are applicable more generally. These include the concepts of Bella Figura, Campanilismo, and Mezzadria.

Kramer defines Bella Figura succinctly as “The Italian love of the beautiful gesture”. It is also the title of Beppe Severgnini’s 2006 book subtitled “A field guide to the Italian Mind” (NY: Broadway Books). Bella Figura encompasses some guiding principles that Italians use to make their social and/or business contacts more successful (ones that cut across socioeconomic status); in the context of the Italian Wine Industry, Kramer notes that the famed wine producer Angelo Gaja introduced a very long, non-standard sized cork. Gaja claimed that the new cork was required to insure the “highest quality;” to counteract what Gaja considered to be the lack of attention to quality control of corks produced in Portugal and Sardinia. The approximately 2 and one-half inch cork was a perfect example of the bella figura concept at work. When waiters complained that the corkscrews they employed were not capable of removing the elongated corks, Gaja happily sold the restau- rants that served his wines the special corkscrews that were required. He made additional money over the long haul because the amount of wine needed to accommodate the larger corks was less than the usual 750 milliliters.

Bella Figura is also utilized by Italians who, unlike Angelo Gaja, are anything but wealthy. One example is the person of limited economic means who insists upon paying the restaurant bill for his party of eight so that he would not be viewed as a poor sponger!

Perhaps the most appealing aspect of the bella figura way of life can best be understood in the context of winners and losers in an eventual conflict resolution. There are, of course, three possibilities: both parties lose (Brutta (ugly) Figura); one wins, the other loses (the usual outcome); or both parties win (the Bella Figura outcome).

The second overarching concept is one Kramer refers to as Campanilismo, or the Italian love of location. This can be seen in the pride concerning one’s place of birth, or say the specific location of the vineyards that house the varietals that produce the wines of Italy. One has only to visit Italy once or to watch Mario Batali do a cooking event to know how regional Italian cooking really is. And so the pairing of which food with which wine takes on again the inevitable force and reality of regionality. The term itself has its origins in the word “campanile” that translates as a bell. The concept embodied here resides in the idea of the comfort that the Italian resident takes when she/he is no farther away from home than the sound emanating from the nearest bell tower.

And, finally, there is the concept of the Mezzadria or the Italian sharecropper. The disappearance or demise of sharecropping-beginning in the 1940’s, finally ending in the 1980’s-ushered in the era of the production of great Italian wines. Once land potentially useful for wine growing became available for purchase, it was now possible for the new owners of wineries to have pride, excel, or take capitalist risks. It was now possible, for the first time, to beginning a wide spread establishment of first rate Italian wineries.

Although Kramer modestly claims at the outset that the book is intended only for those who are Italian wine amateurs and aficionados, but not connoisseurs, the creative manner in which he has crafted the book suggests otherwise. No matter the knowledge level of Italian wines of any of the readers of this book, without this comprehensive format, they would not have been able to sensibly organize and store the oenologic information gleaned over the years.

The oenologic glue, then, that forms the binding of the book, follows a specific Kramerian format consisting of the following entities: the type or name of the wine (from “A” as in Aglianico to”V”, as in Vino Nobile di Montepulciano); the Region or Geographical Location of a given wine type (e.g., Lombardy, Tuscany, Sicily); the uva or grape varietal (e.g., arneis, nebbiolo, sangiovese); the tradition (historical roots) of each wine that is described; how it has changed (the current and projected future history of a given wine varietal); noteworthy producers (sub-classified as “the traditionalists” and the “modern- ists”); what the locals eat with a particular wine (e.g., roasts of beef, lamb, and goat for Aglianico; polenta, aged steaks, game, for Barbera; crème caramel for Moscato d’Asti); a section designated as “One Man’s Taste-Whose Wine Would I Buy?” This section embodies Matt Kramer’s comparative rankings of specific vineyard choices – from Allegrini to Zenato; a category that answers the question “Is the Wine Worth Searching For?” This has been cleverly classified into the following distinctive categories: “Don’t die without trying it”; “Absolutely worth an effort; and “If you happen to see it.” The final category describes “Similar Wines from the Same Neighborhood.” For the ancient white wine Orvieto-that consists of the varietals Trebbiano Toscano, Verdello, Grechetto, Drupeggio, and Malvasia Toscana-this would include the much more familiar Chardonnay and Sauvignon Blanc varietals.

Allow me to close with Kramer’s lucid and scholarly description of what he hails as the best example of Sicily’s red wine:

“The most impressive wine is fancifully called Mille e Una Notte (A Thousand and One Nights), which is 90% Nero d’Avola rounded out with other native red varieties. This is simply gorgeous red wine: intense, rich, polished, and yet absolutely original tasting. It is arguably the finest Nero d’Avola in Sicily-at least it’s the finest that this taster has come upon so far. “Luxurious” might be the best descriptor. (The palace shown on the artisti- cally drawn label is, in fact, the Donnafugata of The Leopard, the one in Santa Margherita di Belice.)

Donnafugata is easily one of the stars of Sicilian wine. And if the wines inspire you to read The Leopard, all the better, as it’s a star of Italian literature in its own right (p. 223).”

Having had the opportunity to buy and taste this wine in Sicily, I can only agree whole-heartedly!

What else need be said? The book is an oenologic treasure and should find a place in every wine lover’s library!

Tasting Pleasure: Confession of a Wine Lover

By: Jancis Robinson
Reviewer: Robert N. Stavins
Pages: 106-108
Full Text PDF
Book Review

One could not ask for a better travel companion for what is surely one of the most beauti- ful train routes in the world — from Frankfurt to Bonn along the Rhine River. After an overnight flight from Boston, I had the joy of sharing that train ride with Jancis Robin- son, whom Robert Parker has called “the most gifted” of wine writers … “witty, brilliant, authoritative.” To be accurate, I shared the train ride and my subsequent days in Bonn not with Ms. Robinson directly, but with her thoughts, as she told the story of her life with wine in Tasting Pleasure: Confessions of a Wine Lover.

Jancis Robinson is well known to oenophiles the world over — as the editor of the authoritative Oxford Companion to Wine, co-author with Hugh Johnson of The World Atlas of Wine, Financial Times columnist, host of the television mini-series, Wine Course, former Wine Spectator columnist, and most recently host of her epynonomous web site. Tasting Pleasure presents an opportunity to sit down with Ms. Robinson, and join her as she describes in prose that are concise, entertaining, and modest her remarkable voyage of more than three decades as a lover of wine.

Jancis Robinson’s serious interest in wine began — as it does for so many oenophiles — with an epiphany, a single transformative and unforgettable experience. For Robinson, it was during her student days at Oxford in the early 1970s. Out for dinner with her generous boyfriend of the time, she shared a bottle of 1959 Chambolle-Musigny, Les Amoureuses. In English, “Les Amoureuses” means “the lovers.” Alas, Ms. Robinson apparently did not fall in love with the boyfriend, but most certainly did begin her love affair with red Burgundy, and — more broadly — with the world of wine.

Just as I finished reading about Jancis Robinson’s seminal experience at Oxford with fine Pinot Noir, my train entered a long tunnel above the Rhine. I closed my eyes, and was transported back to my own wine epiphany decades earlier. Our good friends, John and Lilli, had joined my wife and me for dinner at our house on New Year’s Eve, and brought with them three remarkable bottles, which opened my eyes, or rather my nose, my palate, and my heart to the transcendent experience that enjoying wine can be. I remem- ber little about the evening’s cuisine, but I have never forgotten the wines: 1976 Chateau Lafite Rothschild, 1976 Beaulieu Vineyards Georges de Latour Private Reserve, and 1982 Penfolds Grange. The joy of that experience remained with me as my train emerged from the tunnel into the daylight.

By the mid-1980s, Jancis Robinson was already an accomplished wine writer, having written several books and a regular column in the Sunday Times. In Tasting Pleasure, she takes the reader through the joys of being a wine writer — visiting the greatest cellars, the most splendid vineyards, the best restaurants — and also through the trials of becoming the first journalist to pass the battery of exams to become a “Master of Wine.” And we learn just enough about her life outside of wine, including her family with husband Nick Lander, a former restaurateur turned restaurant critic of the Financial Times.

Throughout, Robinson reminds us that she considers herself a wine writer, not a wine critic. For contrast, she offers the example of Robert Parker (and tells a wonderful story about when she first met him in Bordeaux in 1985). In her columns, books, and web site, you will not find Jancis Robinson awarding numerical scorers to wines. She views wine taste as inherently subjective, and describes wine criticism as being analogous to film criti- cism. We may read the reviews of a number of film critics, and over time we can perhaps calibrate those critics’ tastes with our own, at which point their assessments can become useful guides to what we are likely to enjoy.

That is a far cry from the respect — indeed the allegiance — often given to Robert Parker’s and others’ numerical ratings. Robinson offers a delicious anecdote which illus- trates just how foreign was the notion of quantitative scoring of wine before Parker. When Hugh Johnson was sent the proofs of Parker’s first book, Bordeaux, he thought that the curious numerical entries throughout the book adjacent to descriptions of specific wines were printer’s marks!

To be clear, Jancis Robinson does not disparage Robert Parker nor his great success. Indeed, she comments admiringly on his self-confidence and consistency. And, as with most of the characters who show up in this book, we are invited to come along to lunch or dinner, and learn about the meal — and, of course, the wines — that were enjoyed. At Parker’s Maryland home, Robinson is delighted to share an excellent dinner accompanied by 1976 Taittinger Comtes de Champagne, 1971 Chateau Petrus, 1966 Chateau Latour, 1964 La Mission Haut-Brion, 1949 Chateau Chasse-Spleen, and 1980 Chateau d’Yquem.

That is one of many days and evenings Jancis Robinson shares throughout the book. Along the way, she introduces us to a wonderful cast of characters with whom she has worked and interacted over her career — Michael Broadbent, Anthony Barton, Clive Coates, Frances Ford Coppola, Ernest Gallo, Hugh Johnson, Alexis Lichine, Corine Mentzelopoulos, Robert Mondavi, Robert Parker, Emile Peynaud, Frank Prial, Baron Philippe and Baroness Philippine de Rothschild, Marvin Shanken, Peter Sichel, Serena Sutcliffe, and Alice Waters, to name just a few.

Early in the book, Robinson confesses that during her student days at Oxford she failed to exploit the university’s renowned wine cellars. But she tells the story of once going down to inspect the cellar of All Souls College, where she was stunned to see case after case of first growths from 1961 and earlier vintages.

As I finished my breakfast aboard the train and returned to my seat, we entered another tunnel. In the dark, I pictured those marvelous wine cellars at Oxford and Cambridge. And I thought about the reality that despite my own university’s claims to have patterned itself after the Oxbridge model, stellar wine cellars do not seem to have been part of the intellectual and social inheritance. As my train emerged from the tunnel into another stunning landscape above the Rhine, I reflected on that flawed academic inheritance with some disappointment.

But there was no disappointment for me with Jancis Robinson’s confessions of a wine lover. From first page to last, the book was a joyful read. There is a striking passage near the end of the book that is reminiscent of Maya’s beautiful explanation to Miles in Sideways of her great affection for Pinot Noir. Here is Jancis Robinson telling us what makes it so rewarding to be a wine writer:

“For me wine is so much more than a liquid in a glass; the liquid is merely our link to what is so often a fascinating story, a spot on the globe, a point in time, a fashion in wine-making, an argument between neighboring farmers, rivalry between old schoolmates, perhaps proud new owners who want to make their mark at any cost.”

Robinson’s life in wine is indeed one of tasting pleasure, and by reading this book we have an opportunity to join her on a remarkable journey — sometimes fascinating, some- times funny — but always remarkably pleasant. For your next train ride, your next cruise, or your next flight, you deserve a great companion. Take Jancis Robinson with you.

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