ANALYTICS REPORT

TO: E. AND J. GALLO WINERY.

FROM: VICTORIA BENNEN

SUBJECT: ENTER THE CASE ASSIGNMENT TITLE

DATE: 12-04-2022

Introduction

I was tasked with analyzing the relationship between price and rating across 4 wine types. I was
provided with data on the winery, rating, number of ratings, year, type, and price of red, white,
rose, and sparkling wines. From this data, I was able to create correlations and scatter plots that
made the effects of each wine type’s rating on its price clearer as well as conducted simple
regressions that were used to predict price from rating. From my findings, I was able to
determine that red, white, and rose wines had similar correlation strength while sparking was
stronger and rating had the largest impact on the price wine.

Data Analysis
Correlations and Scatterplots

Between rating and price for red wine, there is a moderate positive correlation. Between rating
and price for white wine, there is a moderate positive correlation. Between rating and price for
rose, there is a moderate positive correlation. Between rating and price for sparkling wine, there
is a strong positive correlation.

Based on the scatterplots, there does appear to be a relationship between price and rating. It does
not appear that a linear relationship would fit the data best. A curve would probably be a better
fit.

Overall Regression Model

Regression Equation

^
Price=11139.97+ 88.51(Rating)−0.0023(NumberOfRatings)−5.70(Year)

R2 Interpretation

26% of variation in price is accounted for by variation in rating, number of ratings, and year.

Rating
H0: Wine rating does not significantly impacts the price of the wine
HA: Wine rating significantly impacts the price of the wine
Because the p-value = 0 is less than our significance level of 0.05, we can reject the null
hypothesis and can conclude that wine rating significantly impacts the price of the wine.

As rating increases by 1 star, price of the wine increases by $88.51, on average and all else
constant.

Number of Ratings
H0: Number of wine ratings does not significantly impact the price of the wine
HA: Number of wine ratings significantly impact the price of the wine

Because the p-value = 0.0026 is less than our significance level of 0.05, we can reject the null
hypothesis and can conclude that the number of wine ratings significantly impacts the price of
wine.

As number of ratings increases by 100 ratings, price of the wine decreases by $0.23, on average
and all else constant.

Year Produced
H0: The year the wine was produced does not significantly impact the price of the wine
HA: The year the wine was produced significantly impacts the price of the wine.

Because the p-value = 1.29 is larger than our significance level of 0.05, we accept the null
hypothesis that the year the wine was produced does not significantly impact the price of the
wine.

As year increases by 1 year, price of wine decreases by $5.68, on average and all else constant.

This model could be improved if a nonlinear regression was run. The variable of where the age
of the wine could also be helpful.

Effect of Rating on Price by Wine Type

Red Wine: As rating increases by 1 star, price of wine increases by $124.31, on average and all
else constant.

White Wine: As rating increases by 1 star, price of wine increases by $54.40, on average and all
else constant.

Rose Wine: As rating increases by 1 star, price of wine increases by $25.50, on average and all
else constant.

Sparkling Wine: As rating increases by 1 star, price of wine increases by $190.19, on average
and all else constant.

Analysis Takeaways and Recommendations

Red wine correlation strength was 0.45 and had a coefficient of 124.31. White wine correlation
strength was 0.47 and had a coefficient 54.40. Rose wine correlation strength was 0.43 and had a
coefficient 25.50. Sparkling wine correlation strength was 0.73 and had a coefficient 190.19.
Red, white, and rose wines had similar correlation strength while sparking was stronger. Rating
had the largest impact on the price of red wine. Correlation does not provide information on
magnitude of the impact rating has on price, therefore there is not a strong relationship between
correlation and impact.

Gallo could use this model to predict price because it allows the company to see how important
the rating of a wine is to its price.

To have a set of diversely priced wines, Gallo should strive to have highly rated wines as well as
lower rated wines because highly rated wines are more expensive than lower rated wines. Having
both would ensure that inexpensive, lower priced wines and expensive, higher priced wines are
available for purchase. Gallo could also hold off on selling their more expensive wines for a
longer period of time so that the price of that wine decreases by the time they sell it.

Discussion of Tableau

Click here to see a dashboard of how rating affects price across the wine types.

This visualization includes a scatterplot of rating vs price and an overlapping bar graph of rating
and price for each wine type.

Sparkling wine displayed the steepest line of best fit on the scatter plot which indicates that the
rating and price of sparkling wine has the best correlation. This can also be observed on the bar
graph due to the fact that the overlapping bars are very similar in height.

Conclusion

From my findings, I am able to conclude that red, white, and rose wines had similar correlation
strength while sparking was stronger and rating had the largest impact on the price wine. My
recommendation to E. and J. Gallo Winery so that a diversely priced selection of wines can be
achieved is that they strive to have highly rated wines as well as lower rated wines to ensure that
inexpensive, lower priced wines and expensive, higher priced wines are available for purchase.
Thank you for considering me to report on this data, I sincerely appreciate your time. My contact
information is vibennen@arizona.edu for any further questions and/or recommendations.
Appendix

Overall Regression Output

Red Wine Regression

White Wine Regression

Rose Regression

Sparkling Regression