Conjoint & Wine

Before the GSB I worked for two year in economic consulting, and about 80% of my time was doing conjoint analysis. Conjoint analysis is a really common tool in surveying and marketing to determine how much a consumer is willing to pay for a feature of a product. For example, are you willing to pay more for a jacket that is red or blue? Wool or polyester? And how much? The way that it is (generally) done is by showing consumers a few different options of a product, and seeing which one they select. So the study might show you three items:

(1)  A red jacket, made of wool, produced in America, priced at $100

(2)  A blue jacket, made of wool, produced in Bangladesh, priced at $120

(3)  A red jacket, made of polyester, produced in America, priced at $80

After showing a variety of different selections to thousands of people, researchers can parse out your willingness to pay for each attribute of the item (e.g., I am willing to pay $10 more for a red jacket than a blue one).

In academia, some very classical studies have been done on wine. There are multiple articles written by two professors in Spain (Mercedes Sánchez and José Maria Gil) that evaluate consumers’ preferences on wine from two different Spanish regions – Aragon and Navarre. One that I find particularly interesting evaluates the difference in consumer preferences by the outlet where they purchase (wine shops, supermarkets and directly from the producer). Here, instead of evaluating exactly willingness to pay, they used a slightly different model and evaluate the attribute that has the biggest impact on a consumer’s decision. They find that price is the most important aspect for wine shop consumers, origin is the most important attribute for supermarket buyers and vintage is the most important for those who buy wine directly from the produce.

What do you think are some potential reasons for this?

Put a Cork in It?

A couple nights ago, after a couple glasses of wine, I was opening a wine and the cork broke because we had a cheap wine opener. Some of the cork got into the wine and as I was straining out the cork so I could drink the wine (waste not, want not), I was wondering, why do they put a cork in it? Why not a screw cap? So, I researched a little bit about the screw vs. cork debate. Apparently, the use of corks has been supported because they allow wines a little bit of oxygen to age while screw caps historically did not. Screw caps had initially only been used on cheap wines but as caps became more acceptable, decent whites that are meant to be drank young started to use screw caps. Fast forward to today, screw cap technology has improved and can allow bottles to breathe. In fact, unlike corks which are all unique and thus allow different levels of breathing, screw caps can be constructed to allow the specific amount of oxygen you want. So, to me, it seems that screw caps are a no brainer. I personally hope to see more screw caps on wine going forward. I’d be interested to hear any reasons corks should create better quality wine that I might have missed. However, my lazy side hopes that my belief in screw caps being just as good as cork, if not better, isn’t dispelled.