Beyond the Label: Understanding Wine Pricing and Consumer Taste with Tim Hanni

Tim Hanni is a trailblazer in the wine industry, renowned for his groundbreaking work in wine education, sensory sciences, and his mission to demystify wine for all. With the prestigious title of Master of Wine, Hanni holds the distinction of being one of the first Americans to earn this credential, marking a significant milestone in his illustrious career. In this episode, Tim shares how perceptions of wine quality are influenced more by psychological and sensory factors than by price, often making expensive wines indistinguishable from cheaper ones in blind tastings. He introduces the concept of "perceptual individualism," explaining how personal differences in taste perception affect wine preferences. Additionally, he highlights the complexities of wine pricing, contrasting the traditional cost-plus approach with the need to consider market perceptions and branding.   Why you have to check out today’s podcast: Gain insights into wine perception and psychology. Discover the challenges of traditional wine wisdom to understand the wine industry's myths and realities. Learn a comprehensive view on wine pricing contrasting cost-plus pricing with value-based pricing to help you gain insights into the factors that influence wine prices, including production costs, marketing, and consumer perception.   "There are people who buy out on price alone. If it's more expensive, it must be better. But there's an inverse relationship between price and quality." - Tim Hanni   Topics Covered: 02:01 - Discussing the unique nature of wine pricing and how it affects consumer behavior 04:19 - Talking about the impact of wealthy individuals, particularly those from Silicon Valley, entering the wine industry, which he describes as being over-premiumized 06:22 - Discussing the challenges of market segmentation in the wine industry, comparing it to the evolution of the tech industry 10:22 - Critiquing the wine industry's elitism and rigidity, using examples to illustrate how misleading some widely accepted norms are 12:18 - The background and story of 'Two-Buck Chuck' 13:52 - Addressing the often-debated relationship between wine quality and price 16:30 - Introducing the concept of "perceptual individualism"  20:13 - Elaborating on a wine study conducted by Frédéric Brochet at the University of Bordeaux in 2001 24:32 -  How wine pricing is determined, focusing on what he refers to as the "bottom-up approach." 25:48 - Explaining the complexities of wine pricing and how factors beyond production costs influence the final price of a bottle 28:07 - How the complexity of pricing wine remains somewhat elusive   Key Takeaways: “The label's not going to make necessarily all that much of a difference in the margin, but the label plus the provenance." - Tim Hanni “Unequivocally, sweet wine drinkers have the most taste buds. They have the highest perceptual acuity of any consumers at all. And often you are paying an extreme premium for that sweet wine.” - Tim Hanni   People/Resources Mentioned: Julia Child: https://en.wikipedia.org/wiki/Julia_Child Trader Joe's: https://www.traderjoes.com/home Fred Franzia: https://en.wikipedia.org/wiki/Fred_Franzia Charles F. Shaw: https://en.wikipedia.org/wiki/Charles_F._Shaw California State Fair Wine Competition: https://calexpostatefair.com/competitions/california-commercial-wine/ Joel Butler: https://www.linkedin.com/in/joel-butler-mw-1697667/ Frederic Brochet: https://www.researchgate.net/scientific-contributions/Frederic-Brochet-2029425754 California Grape Crush Report: https://www.nass.usda.gov/Statistics_by_State/California/Publications/Specialty_and_Other_Releases/Grapes/Crush/Final/2023/2023_Final_Grape_Crush_Report.pdf Robert Parker: https://www.robertparker.com/about/the-rating-system   Connect with Tim Hanni: LinkedIn: https://www.linkedin.com/in/timhannimw/ Website: https://winebusinesseducation.com/  Website: https://www.myvinotype.com/en/   Connect with Mark Stiving: LinkedIn: https://www.linkedin.com/in/stiving/ Email: [email protected]