In markets cut off from the world you have local tastes that develop. Chilean wine drinkers might develop a taste for oxidized whites and, though acceptable in Santiago, the wines would be rejected in Paris, London or New York. This used to be very evident a half century ago in Chile and in Italy as well. In Italy volatile acidity, acetaldehyde, and other off characters were tolerated in locales, even appreciated. Only when they sought a global market (outside of the enclaves of expatriates who only drank wines from home and too, appreciated the off character) did they have to clean up their act. Should I bring up Greece and retsina? The only thing different about France was that this went on much earlier. So if the world market is criticized for standardizing, it should also be credited with giving us more drinkable wine in certain cases. You can see that this is happening in Greece today.

The counter point to this is that if you look at it on a longer time scale, all of the wines we appreciate today were at one time local and not subjected to a world market. While there were a lot of weird “dogs” in locales all over the continent, there was also Sherry, Port, Burgundy, Bordeaux, Champagne, the Mosel and Rhinegau. These were once local odd products that the villagers appreciated. They could have been awful but they weren’t. And because they weren’t and because they were appreciated and successful in the world market, we have them with us today being imitated in all parts of the world.

So you can look at it from two standpoints. I know some people lament the global sameness of red wine and perhaps the loss of terroir in some of our unique American wines. But this is a game played over centuries and as far as I can tell American wines have not made much in the way of inroads globally. Maybe that is because we offer nothing new. Maybe we will discover (or rediscover) something that we have that is unique which could be the next Bordeaux or Burgundy…but our own. Or maybe it’s a dog. One thing for sure, it will be global acceptance that tells us the answer.

In most cases price differentiation is good for overall welfare. Compared to the case of only one price, it allows for some prices being below this average price and, therefore, includes customers that otherwise would not buy.

Quality differentiation is very similar to price differentiation. You can cater to all kinds of consumers and include more people. In this case, by offering top-quality you include customers that otherwise would not buy.