Do geographical appellations provide useful quality signals? The case of Scotch single malt whiskies

Collective reputation signals, such as geographical appellations or similar labels, aim to provide information concerning the quality of goods supplied by a group of producers and enable differentiation between groups. Several studies have shown that reputation can be disconnected from quality, raising doubts concerning the informational content of specific collective labels. Our study examines Scotch whisky geographical appellations as an unexplored case with collective label requirements that do not permit vertical differentiation. We use a dataset covering 83,494 sales records over nine years in the Scotch whisky second-hand market and run hedonic price analyses, finding evidence of a collective reputation effect, even after controlling for distillery individual reputation and bottle characteristics. These findings suggest that appellations can benefit from a reputation premium, despite low informational content. As a corollary, an appellation system can be profitable for certain producers without providing any helpful quality signals for consumers.

Automated summary

This study examines the Scotch whisky geographical appellations and finds evidence of a collective reputation effect, even after controlling for individual reputation and bottle characteristics. The findings suggest that appellations can benefit from a reputation premium, without providing helpful quality signals for consumers.