Turning wine into gold: How premium winemakers overcome the quality-price paradox

Sammanfattning: Some wine drinkers spend a small fortune on a single bottle of wine. What appears to be justified by the product quality is called into question by academic research ascertaining that price and wine quality appear to be of rather loose connection. Hence, the research question arises how premium winemakers can sell their wines at a price premium and thereby sustain their business success. Neo-classical price formation has established that a wine maker's reputation is the key driver of wine prices. However, neo-classical price formation theory does not further expand on this phenomenon. Hence, this study will utilize complementary socio-economic approaches to price formation to resolve the question on how winemakers construct their reputation. The abductive nature of this study will leverage semi-structured interviews with 20 renowned premium winemakers. This study reveals that reputation is indeed a key driver of a winemaker's ability to charge premium prices. A winemaker's reputation appears to be based on the quality of the wines. Winemakers also influence so-called reputation moderators to build up their reputation which influence the link of the quality of their wines and their reputation. This study shows that especially economic and social capital are key resources in these reputation-building activities.