How do wineries price their wine experiences?
International Journal of Contemporary Hospitality Management
ISSN: 0959-6119
Article publication date: 19 April 2024
Issue publication date: 5 August 2024
Abstract
Purpose
This paper aims to model the price of cellar tours using a hedonic pricing approach. The authors analyze the complex relationship between the price of an add-on (here, cellar tours) and the price of the reference product (here, wine).
Design/methodology/approach
Thanks to a large database containing information on about 1,000 winery experiences, the authors regress the price of cellar tours on wine prices and on a broad set of objective characteristics that are (1) tour specific and (2) common to all tours offered by the winery. These exogenous controls include the type and style of experience offered, amenities and winemaking characteristics.
Findings
The authors show that the price of cellar tours follows the price of the most expensive wine sold by the winery, which is a proxy for reputation. The authors find that one of the main determinants of cellar tour prices is visit length: wineries charge more for longer experiences. The number of wines tasted during the visit also increases the price. Prices are higher in places where there is a high level of wine tourism activity, which might be a sign of authenticity.
Practical implications
Wine producers in different countries need to gain insights on how to price cellar tours, which are composite goods. The results can help practitioners price their winery experience according to common practices in different wine regions. The results may also be of interest to professionals in the tourism sector who are in charge of the pricing of by-products (e.g. tee-shirts, books, etc.), or for luxury fashion labels extending their brand in the catering industry with cafes and restaurants.
Originality/value
To the best of the authors’ knowledge, this paper is the first empirical analysis that examines the complex relationship between the price of an add-on and the price of the reference product in the context of wine tourism.
Keywords
Acknowledgements
The authors are grateful to three anonymous reviewers and the guest editor for their valuable comments and suggestions, which significantly improved the quality of this manuscript. The authors extend their ackowledgement to Anyu Li (HKP U) for his insightful review and to the participants at the 5th Workshop of the Alliance for Research on Wine and Hospitality Management for their constructive feedback. They also benefited from valuable comments provided by seminar participants at Kedge Business School.
Citation
Gergaud, O. and Livat, F. (2024), "How do wineries price their wine experiences?", International Journal of Contemporary Hospitality Management, Vol. 36 No. 8, pp. 2653-2674. https://doi.org/10.1108/IJCHM-07-2023-1076
Publisher
:Emerald Publishing Limited
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