BiasesPricingProducts

Expensive wine tastes better. Right?

By June 26, 2021 No Comments

Just because wine is more expensive, doesn’t mean it has a better taste. It’s (in part) a marketing trick.

It’s 2002 and four Wall Street businessmen in New York City go for dinner at Balthazar. They order a bottle of expensive wine. What kind of expensive wine? Well, it was a Mouton Rothschild 1989, priced at $2000 a bottle. 

But why is it so expensive? You see, this specific wine is made on a grape field of 205 acres, located near Pauillac, Bordeaux, southwest of France. Now, during the year that these particular grapes were grown, Philippine de Rothschild was the owner of the vineyard. Yes, he is part of the famous Rothschild family. You can guess why their wine was placed at such a high price, they’re bankers after all. 

Liz Palmer, a well known wine critic, said that the Mouton Rothschild 1989 has an old school taste, mixed with hints of mint and the aromatic theme of tobacco.

To convince you how good this wine was, the Decanter Magazine rated this wine 97 out of 100. It wasn’t like the correspondent who rated it was bribed or anything. She just loved the wine. And so would these businessmen, if they would ever get their wine served.

A wine mixup that makes up for an experiment

Sadly, our Wall Street businessmen never received the expensive wine, they had the luxury to order. 

On the other hand, they got an 18 dollar Pinot Noir. How scandalous! Heh.

There was a little mix-up. You see, the staff prepared two different decanters of wine and accidentally served the wrong one to these gentlemen. 

When they came to their senses about their mistake, the manager of the restaurant hurried to the table to apologize to the gentlemen for the ghastly mistake. 

Yet, the businessmen couldn’t care less. Sure, they were a bit suspicious at first, but they would have never thought that they were drinking such cheap wine all the time.

Meanwhile, just across the hall, a couple was drinking the $2000 Mouton Rothschild wine, pretending they were drinking expensive wine. They were. They just didn’t know.

How did this happen?

Well, we already blamed the staff for the confusion, but we can’t hold them responsible for the couple’s reaction.

Look, it’s all a perception mistake. The staff overheard the couple make jokes about drinking expensive wine and they nearly wetted their outfits, thinking they had mixed up the wines. When in fact, there was no real way of telling which decanter was which.

Can you imagine the manager shouting at the responsible waiter: “You fool, how could you mix up a $2000 wine with a cheap wine from the stock.” The waiter replying like: “Ummm, sorry sir, they do look the same.”

Because most of the time, they are.

The science behind cheap vs expensive

Okay, let’s get this out of the way, shall we? Of course, expensive wine is more expensive because of its quality production. That counts for everything, from the higher quality grapes to the customized fertilizer, and the handpicking. Cheap wines on the other hand most likely use average quality grapes that are automatically picked by machinery. 

Now, let’s dive into the real reason why people think expensive wine should taste better, when in fact most people prefer the taste of that good, old, $5 brand. 

In all the truth of it, almost no one out there can tell which wine is expensive wine and which one is cheap. Go ahead and try it for yourself, just like Roman Weil did. Who’s Roman Weil? He used to work at the Oenonomy Society as a co-chairman, in the United States. 

He took two bottles of wine, both at different price ranges. He then filled four glasses of wine, two per bottle. Then he removed one glass and had participants try out the rest of the three glasses and try to guess from which bottle came which glass.

The results were kind of embarrassing. 

If people would try to guess which glass was from which bottle, they had a 33,3% chance of being right. People barely beat chance by only 8.2%.

On a second, larger experiment, involving 855 pairs of wines and 395 participants, Weil got almost the same results. Out of 855 pairs of wines, people identified correctly 346 of them, which is about 40.5%. When he asked those people which wine they liked better, almost half of them chose the average wine, and the rest of them the reserved wine.

Not good results, again, considering that there is a 50% chance to be right if you try to guess.

Okay, to be frank with you, these participants weren’t experts. It takes years of practice and training to be able to tell if a wine is more expensive or not. Or is it all in vain? Let’s take a look.

When wine professionals are wrong too

I’ll break it down already because I can’t hold it in any longer. No, professionals don’t know better than any drunk out there with a torn beret who tries to dance with his umbrella. 

And to prove my point, let’s take a look at, yet another experiment. 

Now, I have to warn you, this experiment included one blind test and people who taste wine for a living. 

Back in 2005, the Fair of the State of California organized a wine competition. This competition included the cream of wine experts from wine buyers, winemakers, wine critics, and even professors of viticulture and enology. 

This study was conducted by a statistics professor by the name of Robert T. Hodgson, and the 35 years old Fieldbrook Winery owner. 

For your information, judges at the fair have to taste four to six flights of wine each day with each flight containing 30 wines. Man oh man do they get drunk. One minute of silence for their livers. 

Anyway, professor Hodgson decided to play a trick with them. He served them a different flight of wines that contained the same wines that they had already tasted. So the judges had no idea that they were judging the same wine twice. 

The results? Inconsistent as (pardon my French).

Only eighteen percent of the judges were right during their rating of the same kind of wine. The rest of them just went south with it. One way we can see these results is that the rest of the 82% of the so-called experts who weren’t consistent are not real experts.

However, professor Hodgson has a plan. He tested the same experiment for three years straight, from 2005 until 2008. What he found out next was appalling. The 18% of those that had been consistent in their rating had been so by simple luck. One year later they were the ones to be included in the naughty inconsistent list. And vice versa for the ones that were shamed the first time.

And just to prove here that you cannot decide whether wine tastes better only based on the price we have, a couple of last experiments for you. 

People appeal to price as an indicator of quality

I have a rich cousin who always follows one rule while shopping: “Always get the most expensive thing because it’s better.”

Yet, that’s one of the most untrue statements I have ever heard. 

To go back to our wine competitions, the California Grapevine, has conducted a study according to which: There are 13 major wine competitions in the U.S. and the chance of becoming the winner of a golden medal is only at 10%. And this is all by chance. Once a wine wins a golden medal, it then faces an 84% chance of not winning a medal in other competitions. 

Why would a wine win a gold medal at some competition but no medals at all at the other? Again, it’s all up to chance. 

Expensive wine doesn’t taste better. It just appears to taste better based on the price that people see on the bottle. Price is the main signal for quality. A typical consumer tends to understand the quality of a product or service, exclusively after they have tried it. The only one who can tell if a product or service is made of high quality or not is the creator itself. Thus, the consumer has no choice but to buy, and then try the goods before coming to a quality verdict.

With wine, we already saw that people cannot tell the quality even after tasting it. So in this case, the quality is unknown before and after consumption.  

Since there is no way for producers to give out free samples, they rely on giving the consumers external factors, like branding, reputation authority, advertising, public rating, guarantees, and so on. 

Such factors do nothing but create a fabricated image of the quality of the good. People tend to rely on these external factors more than on any other real indicator of quality. 

In another survey, of participants who were buyers of Italian wine, they were asked to compile a list of the most important factors that they consider before buying the wine. Out of 127 participants, 92% of them listed price as the most important buying factor for them. Then we have the production region at 76% (made in…) and in the third place, the production year (relevant to aging goods like wine) with 55% of the factor relevancy rating. 

Expectations shift perceptions

You know, the price of a good, doesn’t only signal quality, but it creates the image of quality. Again, remember the Wall Street businessmen drinking an $18 wine and thinking they were sippin’ on that $2000 heaven juice. It’s all a matter of perception. 

A few practical examples:

  • People like Coca-Cola better if they drink it from a can with its brand on it, even though it has the same taste as the coke poured into a normal plastic cup.
  • Researchers have convinced people that a mug of coffee is not bitter, just by creating an expectation for them. The real cup of coffee tasted horrible, but that’s not what the participants tasted from their shifted perception.
  • Leonard Lee, at the research of the Massachusetts Institute of Technology MIT, did a beer experiment. He mixed balsamic vinegar with beer and had people taste it without their knowledge. More than 59% of the participants unknowingly rated the mix of balsamic vinegar and beer better than Budweiser. When they did the same experiment with another group and told them beforehand what the drinks were made of, only 30% of them liked the balsamic vinegar/beer better. That’s nearly half a dropdown in percentage.

We are programmed to like something better if we see a higher price tag on it. It’s a matter of higher status. Price sets an expectation to our brain about how a wine is going to taste. No matter the taste, we tend to convince ourselves that the wine we are drinking tastes good. “After all, we bought this bottle for 600 euros in Italy,” we say to ourselves and each other.

But the truth of the matter is, it’s all marketing. Ohoh… how will you ever enjoy another glass of wine knowing what you know now?

3 key takeaways to enjoy your wine

First of all, don’t focus so much on the taste. As we have already seen, not even experts can tell which wine is which. Allow your taste buds to relax and taste no matter what you are drinking. 

Plus, most wines are of average or low quality. You won’t be able to tell which is which anyway.

Second of all, add more fun to the experience. Food tastes better when you’re eating with family. Same for wine. Try drinking one glass of your favorite wine alone. Then try the same glass of wine in the company of someone you love. You’ll notice how setting expectations will most likely increase your likeness for that wine.

At last, try expensive wine. No matter all of the above, we cannot say that some expensive wines aren’t of high quality. Well, even if they are not, the fact that you think they are by just looking at their prices, will probably trick your brain into liking their tastes better. 

Which of these techniques are you going to use?

Kim Hvidkjaer

Kim Hvidkjaer

I’m a father, author, speaker as well as multi-disciplinary serial entrepreneur and investor. I started my first company at age 19, and have built and invested in companies in innumerable industries.

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