By testing.

What is testing?

By testing wines.

What testing do you mean?

By tasting.

taste

 (tāst)v. tast·ed, tast·ing, tastes

v.tr.1. To distinguish the flavor of by taking into the mouth.

2. To eat or drink a small quantity of.

3. To partake of, especially for the first time; experience: prisoners finally tasting freedom.

4. Archaic To appreciate or enjoy.

Thanks Radojko.

Each person has his own taste preferences. So how do you measure the true wine value?

So tasting and testing?

and testing...

Concerning the question  "why wine is cheap in supermarkets" I see at least those answers:

1- The supermarket may have bought the entire future productions when grapes where still on the trees;

2- The supermarket may buy all the production of a winery

3- The supermarket may buy  all the existing stocks (before a huge cost : ex: alcool taxation...)

Concerning the value of the wine; for most wines traditional approach of valuation under uncertainty  of the quality seems to be interesting. In fact, it is often impossible to taste wine before buying it; so it may be interesting to get inspiration from the experiences of used cars or books... when we know the real value of something only after its consumption.

I do not think that one can assess the "true" intrinsic quality of a wine. Perceived quality is culture-dependent. Moreover in particular for wine extrinsic variables have a huge impact on perceived quality.

To better explore this issues I'd propose Experts and novices blind tasting with preference or quality ratings and in parallel to better understand the perceived value, some Vickrey auction-based method without and with information of the label, price, etc...The whole thing carried out in the different targeted cultures.

So, yes, quite complex matter. 

Dear Jean-François,

Why do you talk only about the taste of wine? Do people buy wine only because of the pleasant taste?

I think the wine value is a more complex concept and should consist of several components.

Dear Anatoly,

Ok, let us forgotten the the question of the test for a while. We will just speak about utility. I think everybody will agree with the fact that the value of something is linked with its (economic) utility. One may accept to give money only if what it obtain in the exchange has a greatest utility for him; whatever this utility may me. 

then come the question : what is the utility of wine? In fact you are right, there may be a lot of answers to this questions. Let us examine most of them.

1- I am thirsty: I may drink wine, but everybody knows that in this case, it is not the optimal choise...

2- I want to show of my wealth: in fact, a couple of time, in great restaurants, I saw people order "the more expensive wine of the grave". Whatever the wine served, is not the problem then, the only utility is to show that I may spend huge amount of money.

3- I want to present myself as an expert (a sub kind , more subtitle of show of): The importance is there to show that I know wines; how to mix them with food and so one. In this sub category, I even saw some people put "just over the average" wines in "great bottles" and after the tasting confess or not their infamy. It may be a funny game, with great utility!

4- I want to enjoy a taste, because i have the culture of whine, or simply because I appreciate some taste; not even the one of the finest or more expensive wines. Then the utility is the test, whatever  it is, the only important think is that I enjoy it.

To my mind, even if one can not exclude answers 1-3 or others; the answer 4 sims the most probable one, in terms of utility

Dear Jean-François,

Your options are interesting, and can be considered as one of the reasons for consuming wine. But they are not exhaustive. And the question of measuring the wine value remains unanswered as well.

Not all the wines in a supermarket are usually so cheap. If you are referring to a specific product you should mind the price gap of the same bottle (or at least of the same kind) in a wineshop.

Could you report one or two reference case?

Dear Stefano,

I need to know how to measure wine value. Price gap of the bottle in supermarkets is not interested for me.

Dear Anatoly,

What value do you mean - 1.  from grapes and all production processes to made wine? Or 2. from wine to its labeling, bottling and transportation to supermarkets? And 3 its 1+2.

1. Assuming that the raw material (grape) per 1 kg. Has a certain calculated price for example is 80-90 eurocents / 1.kg, incl. the transport to the cellar, it should be taken into account the yield that will be obtained from the particular grape variety to make wine. 2.It is necessary to include all manufacturing technological processes (for white, or for rosé; or red wine) until full fermentation and bottling readiness.3. It is important also its bottling - price of barik, cork, bottle, label, box, storage in the warehouse. 4. So far, depending on the materials used, the price of a bottle of wine can be, for example, from 1 euro to 5-6 euros and up. All this is exemplary. Then is transportation, wholesale price and discounts. Here is the price of wine as a pure food product. From the production price to the realization price we have a price that we can call reputation.This reputation makes the wine an interesting, attractive, mysterious and very difficult market. But it has become more and more successful. Here is my favorite phrase about wine. Baroness Philippine de Rothschild likes to tell visitors to her château near Bordeaux : “WINE making is really quite a simple business. Only the first 200 years are difficult.” (see: http://www.economist.com/node/268095).  And right here is the reputation value. The grape variety, the terroir, the renown of the cellar, the region's reputation, the tasting, the number of prizes won. This price is difficult to measure. It is more conecting with fashion, image, culture, prestige, and so on. Above all, is a subjective price. Therefore, I believe that all opinions expressed before me are correct. For this reason, wine will always be a different market from other food products.

Dear Vladimir,

Thanks for extended response.

I agree we can calculate the cost of wine production from growing till selling.

But I'd like to know the value of wine for consumer. Does market price reflect this value?

And how to measure it?

Dear Anatoliy,

In order to get an idea of the value of a wine for a consumer, I strongly recommend you to use the "willingness to pay" approach which was previously used in several works :

https://link.springer.com/chapter/10.1057/9781137289520_8

http://www.sciencedirect.com/science/article/pii/S2212977413000379

http://www.sciencedirect.com/science/article/pii/S0950329309000676

Thanks Olivier,

WTP is interesting approach concerning the wine value.

Article Wine Value Chains: Challenges and Prospects