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01.07.2007

The Value of The Label

You can file this under the heading "Yeah, well we all knew that anyway," but I find it fascinating to get a bunch of economists confirming our suspicions. Not only have these folks figured out that THE most important thing in determining the value of a wine at auction is its label (i.e. the name, brand, reputation, region and vintage) but they've done one better. They've actually proven that when people tasted the wine before they bid on it, no matter what the label said, they paid less for it! Let me repeat that for full effect. The power of the label is so strong we actually pay more for wines that we know only by reputation, rather than having tasted the wine to know whether it's any good.

Apparently they did this study on a bunch of Champagne auctions where they had some people taste wines blind, some people taste the wines and see the label after, some people tasted the wines while looking at the label, and some didn't taste at all. Those who didn't taste at all paid the highest prices, those who tasted while seeing the label paid the next highest, and those who tasted blind paid the least for the wine.

It's so very hard to escape our psychology, isn't it? So don't be too hard on yourself for occasionally grabbing that attractive bottle, or ordering a recognizable name off the list instead of something you've never heard of. We just can't help it.

Read the full story.

Comments (14)

jade wrote:
01.07.07 at 11:22 PM

It's so true. In fact, I just attended a Champagne tasting where we blind tasted small grower, single-vineyard versus corporate, house-style Champagne, and the results were staggering. The unknown, small producer stuff was so far superior to the "big-name" Champagnes that it was silly.

And if you really want to talk about label influence, I consistently have customers that tell me that Cakebread is the very best chard, and Silver Oak is the very best cabernet, and they almost refuse to consider the possibility that anything else could be on par.

It's completely insane what people are willing to pay for a product simply because of the label on the package, whether it's wine, cars, clothing, food, or any other product.

brett wrote:
01.08.07 at 7:23 AM

I love Aussie wines despite their growing unpopularity according to the Parker BB. Every time I buy a high-end Torbreck wine, though, I ask myself: am I buying this bottle because I will love it, or because other people (think they) love it? More stress than should be appropriate in this fine hobby. Such studies as you cite are great intellectually but terrible for daily life.

BrooklynGuy wrote:
01.08.07 at 8:30 AM

This is true in many markets, I think. Blue jeans - some one did some study where they took 10 pair of identical jeans and put different labels on them. Of course people were willing to pay much higher for certain pair. In the end, I feel like I benefit from this attitude, as I can get certain wines that I love at reasonable prices, just because the Loire, for example, is not a superstar region.

Arthur wrote:
01.08.07 at 8:57 AM

People want bottom-line, to-the-point rules they can apply to a large selection of a product to avoid problems and disappointment. People also want to buy 'the right' product (clothing, whisky, wine, music, etc) because they may not know on their own (or be able to discern on their own) which is better. Further, they may be less interested in being able to make the distinction or making the effort to learn the differences and more interested in the satisfaction of having made the 'right choice' or being seen/perceived as possessing 'the best' anything. I know it makes me sound jaded. I get the 'what is the best____' question a lot and I really don't like having to answer it (just Friday I got an email from Europe asking what wine, winemaker, winery is "most important and finest" in California...). But then I remember that as much as it drives prices and income for winemakers, people's need to 'know' what is "the best ___" is the footing upon which the wine writer and wine critic stand upon.

Dr. Debs wrote:
01.08.07 at 9:44 AM

Great story, Alder. I actually found this post comforting, since I can never afford trophy wines anyway. Nice to know that they aren't ALWAYS everything they are cracked up to be. And, as recent experiences at wine tastings confirm, just because you never heard of a wine doesn't mean it isn't any good. I had a $13 bottle of Sandoval cabernet sauvignon yesterday that was stupendously good. People thought the pourer was dishing out the wrong wine. One actually said "this can't be from Napa. Not at that price."

Lisa Roskam wrote:
01.08.07 at 1:42 PM

This explains why winery sales and marketing staff have higher salaries than the winemaking staff! ;)

Wines seem doubly doomed to be judged by their appearance/label... they are usually considered to be a luxury item (the impression factor) and most people are completely overwhelmed and confused by the quantity and diversity of brands on the market.

01.08.07 at 5:00 PM

I think you (and the study) are probably right. But here is another explanation for those of us who don't want to admit how shallow we are.

When you buy a bottle of wine, especially a really expensive one, isn't the first taste really the most important? "I just want to TRY that wine."

Perhaps the difference in price is due to the fact that the highest cost sip (the one with the most demand) is given away for free.

In San Francisco, I was able to try get 1oz of Opus One from a machine at a great wine bar: Vino Venue. It cost me $15 for the taste. It's good wine, but I am much less likely to pay a high price for a bottle now that I've satisfied my curiosity with that first taste.

Alder wrote:
01.08.07 at 5:10 PM

Jason,

You have an excellent point, (not in the auction world) but certainly in the retail world there are plenty of people who are "my first time trying it" sort of buyers. Places like VinoVenue (or any good wine bar that actually serves wines that cost more than $20 per bottle retail) are good places to try wines that might ordinarily be splurges at best.

I wish everyone was like you and would trust what is in their mouth instead of what they think they should be enjoying.

Brian Miller wrote:
01.08.07 at 5:30 PM

I think there may be another factor at play for some of us:

I am very guilty of being a "collector," and I buy wines I cannot really afford. Probably for bad reasons, but also the sheer joy of collecting. I like looking at those pretty, pretty labels, and reading about the wines and wineries and the winemaking families. The whole silly panoply of the (out-of-control)collector.

The other reason I do it is to share with friends. I love hosting tasting parties. is this "showing off"? Not really, in the sense that most of my friends are in similar (or higher) income brackets and professional status. There is a little bit of pride in developing knowledge, when people ask me my opinions on things, but that's not really the big part of it.

Lee D wrote:
01.09.07 at 6:56 AM

I'm a wine lover, but not a wine fetishist.

The glimpse this gives us into the power of brand is revealing.

Stephan wrote:
01.09.07 at 4:00 PM

Brian, your honest introspection is very refreshing.

I think when faced with the right name and label we are all victims of their seductive power.

Gene wrote:
01.09.07 at 10:09 PM

Alder, interesting post! It reminds me of a bottle of Santa Clara Chardonnay made by a winemaker in Amador county. Since he couldn't get the labels (for whatever reason), he was selling the unlabelled bottles for $5 per botlle. If the wine had a label, it would have sold for more than $20, so, in this instance, the label was worth three times the wine. I use this bottle to illustrate the importance of labels when I offer wine tasting classes. Labels are signifiers that may barely refer to the wine in the bottle. Instead they signify status, sophistication, cleverness, knowledgeability, power, prestige, etc. Sometimes they are used to impress others, but more often to impress oneself. I suppose this applies equally to cars and jeans, too.

Brian Miller wrote:
01.10.07 at 12:43 PM

To complement Gene's last paragraph-I would throw in that good graphic design/label design can simply be beautiful in and of itself-and another impetus to the collector. There is a magnificant bottle of rather odd Chilean Cab that I picked up this fall that has an amazing label with a native Maipu warrior inscribed in a clever fashion on the label. It's frankly beautiful in the same way as the classic French poster advertisements from the 1920s, to me at least :)

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