The country of origin effect: a hedonic price analysis of the Chinese wine market
ISSN: 0007-070X
Article publication date: 15 June 2018
Issue publication date: 4 July 2018
Abstract
Purpose
The purpose of this paper is to analyse the country of origin (COO) effect on wine purchase in China by considering a sample from an e-commerce website. The paper contribute to the literature on hedonic pricing by applying this model to the Chinese market and including COO as product attribute.
Design/methodology/approach
A hedonic price model is adopted to measure the effect of search attributes on wine sales in China. A reduced form of the classical hedonic analysis is used as in Nerlove (1995), given the assumption that prices and attributes are taken as exogenous to consumers.
Findings
Results show that the COO represents the attribute that most influences wine sales in China. Protected indicators of origin, which denote wine with recognised certificates, are also significant, reinforcing the importance of the production area. Vintage attribute does not impact sales, suggesting a low level of consumer experience with wine.
Research limitations/implications
The study suffers from the limitations of results’ generalisability, given the size and characteristics of the sample. In the future research, the model should be tested on a larger sample. Moreover, it can be applied on other products, in which COO represents an information and quality cue.
Practical implications
Firms operating in sectors where COO implies specific characteristics of quality should enhance this attribute in their marketing strategies to increase their competitive advantage. Also policy implications with respect to the governmental actions to support wine producers are discussed.
Originality/value
Hedonic price analysis represents a well-established model; however, to the best of the authors’ knowledge it has never been used in China before. This study also highlights the primary role of COO as search attribute in wine purchase.
Keywords
Citation
Hu, L. and Baldin, A. (2018), "The country of origin effect: a hedonic price analysis of the Chinese wine market", British Food Journal, Vol. 120 No. 6, pp. 1264-1279. https://doi.org/10.1108/BFJ-02-2017-0121
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited