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Abstract
  • Particularly in the wine industry, information asymmetry between consumers and wine producers regarding product characteristics leads prospects to consider available information, such as market prices, professional reviews, and ratings, as reliable indicators for product quality and purchase decisions. Nevertheless, few studies reflect wine reviews' textual dimension and content. This study explores the impact of reviews and defined language inventory like articles, verbs, or adjectives and their effects on wine prices and ratings. Using 83,067 reviews from the professional wine critics magazine "The Wine Enthusiast," a seemingly unrelated regression (SUR) estimation, quantile regression (plots), and review text analysis utilizing the content analysis tool LIWC-22 was conducted to examine the simultaneous impact of linguistic categories on wine prices and ratings. The results indicate that the tasting note's increased word count and positive sentiment are significantly positively associated with a higher wine rating. Further, specific categories have a statistically significant positive impact on ratings but a negligible effect on wine prices. Consequently, a subsequent instrumental variables estimation is conducted to control for endogeneity and test for the effect of reviews on wine prices, revealing a significant positive influence. These findings could have practical strategic implications for wine market communication, marketing, and purchasing decisions, as linguistic indicators in reviews could be associated with wine quality by vintners and prospects.
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