Case study on how predictive modeling transformed the wine business.

1. ®
Analytics in Action:
Predicting Wine
Quality
July 9, 2013

2. 2Meet Robert Parker Jr., Wine Guru
Robert Parker is the foremost wine taster worldwide and his subjective 100 point ratings often
drive whether a vineyard is successful and if its wines get invited into the best restaurants.

3. 3Meet Orley Ashenfelter, Princeton Economist
Orley is a respected economist at Princeton who edited the American Economic Review. He
noticed that Bordeaux are best when the grapes are ripe and their juice is concentrated. In years
when the summer is hot, grapes get ripe. And, in years of below-average rainfall, the fruit gets
concentrated. So it's in the hot and dry years that you tend to get the legendary vintages. Orley
believed a predictive model based on weather would help him select the better wines.

4. 4Professor Ashenfelter’s Predictive Model
DIVERGENCE
302724211815129630
High Likelihood of Good Vintage
High Likelihood of Bad Vintage
Overall Wine Score
Wine quality = 12.145 + 0.00117 winter rainfall
+ 0.0614 average growing season temperature
- 0.00386 harvest rainfall.

5. ®
Guru versus Geek
Parker rates 1986 Bordeaux vintage as “very good and sometimes
exceptional.” Ashenfelter disagrees. Ashenfelter is proven right on
1986 and his 1989 and 1990 predictions. Chaos ensues.

6. What Did the Professional Buyers Use? The Formula.
6
Traditional Metric Better Metric
Subjective Wine Tasting by Handful of
“Experts”
Weather-Based Predictive Model
Question: Are we are measuring the right things in marketing?

7. Two Big Questions on Measurement 7
Are we spending our money on
the right people?
Are we spending our money in the
right places?