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Article
Publication date: 8 June 2010

Steven S. Cuellar, Tim Colgan, Heather Hunnicutt and Gabriel Ransom

The purpose of this paper is to investigate the demand for wine and provide insight into the behavior of USA wine consumers.

1490

Abstract

Purpose

The purpose of this paper is to investigate the demand for wine and provide insight into the behavior of USA wine consumers.

Design/methodology/approach

This paper uses a fixed effect, instrumental variable approach to estimate the demand for wine in the USA, correcting for endogeneity inherent in demand estimation by using grape prices as the instrument.

Findings

Demand for the six top selling red wines and six top selling white wines was estimated. While the law of demand is confirmed, differences were found in the price elasticity of demand by varietal and price point. Also, these wines are found to be normal good as defined by economic theory and the results generally hold across color, varietal and price segment. There was a greater willingness of red wine drinkers to switch to white wines than white wine drinkers to switch to red wines.

Practical implications

No statistically significant cross price effects were found.

Originality/value

This paper provides an important contribution to the current literature by disaggregating the demand for wine by color, major varietal and price segment to analyze cross price effects.

Details

International Journal of Wine Business Research, vol. 22 no. 2
Type: Research Article
ISSN: 1751-1062

Keywords

Article
Publication date: 1 August 2000

Ana María Angulo, José María Gil, Azucena Gracia and Mercedes Sánchez

In this paper, market values for most of wine attributes are measured through the estimation of a hedonic price function, which relates the price of a wine to its various…

1994

Abstract

In this paper, market values for most of wine attributes are measured through the estimation of a hedonic price function, which relates the price of a wine to its various attributes. As more expensive wines are also associated with higher recognition of wine attributes, results also reflect consumers’ valuation of wine attributes. Data used in this paper comes from a wine catalogue in which only price categories are available. As independent variables, the following wine attributes have been considered: region of production, the year vintage, grape variety, alcoholic content and expert quality ratings. Due to the nature of available data, the hedonic price function has been estimated in the form of a Multinomial Logit model. Results indicate that the two first variables (region of production and the year vintage) are the main market price determinants while grape variety and the alcoholic contents are not significantly correlated with red wine prices.

Details

British Food Journal, vol. 102 no. 7
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 17 May 2011

Vasco Boatto, Edi Defrancesco and Samuele Trestini

This research aims to explore whether quality signals, such as grape variety names explicitly used by “quality wines produced in specified regions”, affect wine retail prices in…

1848

Abstract

Purpose

This research aims to explore whether quality signals, such as grape variety names explicitly used by “quality wines produced in specified regions”, affect wine retail prices in different ways in large‐scale retail and specialised shops.

Design/methodology/approach

Tocai wine, which is produced in Northeastern Italian regions and is involved in a dispute with the Hungarian geographical indication Tokaj, is taken as a case study. A hedonic price model has been estimated based on retail prices observed in local markets.

Findings

The research shows that consumers buying at large‐scale retailers are willing to pay a higher price premium for quality signals than those buying in specialised shops, ceteris paribus. For the latter, willingness to pay for quality signals is reduced by the information provided by the specialised shop retailer, which decreases the customer's uncertainty about wine quality; quality signals appearing on wine labels generally have a more relevant positive effect on wine price than brand reputation, confirming the findings available in the current literature.

Originality/value

This paper contributes to the literature by proving, in a real market situation, that consumers are willing to pay a higher price premium for quality signals when information is supplied only by wine labels, as in a large‐scale retail environment, than when it is provided by the assistance of a knowledgeable seller, as in specialised shops. The paper confirms that the information transmitted to the consumer during purchase affects price in a way similar to that reported in the literature for simulated markets in the case of expert consumers.

Details

British Food Journal, vol. 113 no. 5
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 19 April 2024

Olivier Gergaud and Florine Livat

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…

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.

Details

International Journal of Contemporary Hospitality Management, vol. 36 no. 8
Type: Research Article
ISSN: 0959-6119

Keywords

Article
Publication date: 1 February 2003

Robert Eyler

Direct shipping laws restrict the amount of wine traded between states in the United States as well as international trade in the wine industry. The effects of these laws are…

Abstract

Direct shipping laws restrict the amount of wine traded between states in the United States as well as international trade in the wine industry. The effects of these laws are twofold. First, they restrict consumer choice, through higher prices and fewer goods available. This is the classic way in which barriers to trade reduce consumer and societal welfare. For the international wine company, marketing and distribution costs rise due to the fact that certain markets are not directly available. For all potential exporters to the US. these direct shipping laws add to difficulty in competing and reduce availability. The data show that the elimination of the laws would reduce prices, increase quantities sold, and increase competition in wine, especially through direct shipping. These laws affect firm choice on product delivery and market penetration.

Details

International Journal of Wine Marketing, vol. 15 no. 2
Type: Research Article
ISSN: 0954-7541

Keywords

Article
Publication date: 4 December 2020

Matthew Barber, Billy Sung, Sean Lee and Isaac Cheah

The consumption of wine is influenced by seemingly contradictory antecedents such as perceived authenticity and novelty. This paper aims to explore the influence novelty and…

Abstract

Purpose

The consumption of wine is influenced by seemingly contradictory antecedents such as perceived authenticity and novelty. This paper aims to explore the influence novelty and authenticity have on wine consumption, in the context of the moderating variables of regionality (i.e. single and multi-region wines) and price (low and high). The research attempts to further understand wine consumption by establishing a conceptual model built on existing wine literature.

Design/methodology/approach

To address the hypotheses and research questions, a panel of 658 consumers who regularly purchased wines produced by the Australian wine industry were recruited. These participants completed a self-administered questionnaire containing stimuli to measure perceived authenticity, perceived novelty, perceived quality, attitudes and purchase intent towards a wine manipulated to have a low vs high price level, as well as single vs multi-regional label. To examine these variables, the study conducted a confirmatory factor analysis (CFA) to confirm the dimensionality of the constructs and structural equation modeling with both path and multi-group analyses to investigate the hypothesised relationships.

Findings

The findings revealed that both authenticity and novelty simultaneously influence perceived quality. Additionally, it was acknowledged that there is no significant difference in wine consumption between single and multi-regional wines; reinforcing current trends of collaboration within the wine industry. Finally, the results also showed that price does moderate wine consumption; revealing ideal prices for wine with particular regional branding strategies.

Originality/value

The current research is the first to show that authenticity and novelty simultaneously and positively influence consumer’s perceived quality of Australian wine. The findings are also the first to show that consumer evaluation of single and multi-origin wines was positive and yielded no significant difference, suggesting that branding wines with multi-origins or multi-region do not change consumers’ perception.

Details

International Journal of Wine Business Research, vol. 33 no. 2
Type: Research Article
ISSN: 1751-1062

Keywords

Article
Publication date: 1 September 2006

D.A. Priilaid and P. van Rensburg

Proceeding from the van Rensburg and Priilaid (“An econometric model for identifying value in South African red wine”, International Journal of Wine Marketing, Vol. 16 No. 1…

Abstract

Purpose

Proceeding from the van Rensburg and Priilaid (“An econometric model for identifying value in South African red wine”, International Journal of Wine Marketing, Vol. 16 No. 1, 2004, pp. 37‐53) econometric valuation methodology mapping out the relationship between wine price and value, this paper seeks to explore the relationship between wine value and value‐for‐money.

Design/methodology/approach

A series of regression models are developed from a database of some 537 South African red wines available during the 2004 period. Five cultivars are included here: cabernet, merlot pinotage, pinot noir, and shiraz.

Findings

This research finds that successive increments in wine quality ratings are not equally priced. As a result, the relationship between value and price can be better modelled when increments in wine quality (as measured in stars) are proxied by dummy variables.

Originality/value

Allowing for the possibility of the non‐linear hedonic pricing of wine avoids the bias of value‐for‐money misleadingly being identified excessively at the bottom end of the quality spectrum and neglected at the top end.

Details

International Journal of Wine Marketing, vol. 18 no. 3
Type: Research Article
ISSN: 0954-7541

Keywords

Article
Publication date: 27 October 2020

Claudio Aqueveque and Pablo Rodrigo

The purpose is to evaluate the effect of positive and negative traditional word-of-mouth (PWOM and NWOM) on price-based quality perceptions of middle-range wine (price comprised…

Abstract

Purpose

The purpose is to evaluate the effect of positive and negative traditional word-of-mouth (PWOM and NWOM) on price-based quality perceptions of middle-range wine (price comprised between US$4 and US$12), considering the moderator role of type of relationship between source and receiver –in terms of the strength-of-tie – and the wine expertise of the source.

Design/methodology/approach

A between-subjects experimental design was employed to test the hypotheses. The dependent variable, perceived quality, was analysed using analysis of variance (ANOVA) and independent samples t-tests.

Findings

(1) WOM significantly affects price-based wine quality perceptions only when the source is perceived as expert, and independently on the type of relationship between source and receiver. (2) WOM has no “additive effect” on price-based quality perceptions for all but one condition (PWOM about high-priced wine from a close and expert source). (3) WOM results more useful than price to assess quality mainly in “contradictory” situations.

Research limitations/implications

The main limitation is related to the fact that is an experiment, specifically the manipulation of strength-of-tie and source expertise. Although manipulation checks show good results for the procedure, future research should try to design better ways to manipulate these variables, or different procedures to capture similar data.

Practical implications

Managerial efforts aimed to the encouragement of PWOM will be more efficient in markets with a high proportion of experts. Also, the marketing strategy of stimulating PWOM would be more effective for wines in the low-price category.

Originality/value

This study contributes to understand the impact of WOM on wine quality perceptions by examining if WOM affects priors price-based quality perceptions. In particular, we determine if price-based quality perceptions are able to be modified by PWOM and NWOM, a “competing” approach that is novel within the wine literature in which price is usually the most used cue to elaborate quality perceptions.

Details

British Food Journal, vol. 123 no. 3
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 13 September 2022

Juan M.C. Larrosa, Emiliano M. Gutiérrez, Gonzalo R. Ramírez Muñoz de Toro and Juan I. Uriarte

The purpose of the study is to investigate micro determinants for dynamic wine pricing in Argentina. We test whether attributes and time affect the price rate of change. The rate…

Abstract

Purpose

The purpose of the study is to investigate micro determinants for dynamic wine pricing in Argentina. We test whether attributes and time affect the price rate of change. The rate of change is selected given the inflationary context of the country. The analysis provides valuable information for wine marketing decisions.

Design/methodology/approach

The modeling approach relies on panel data analysis for exploiting the data cross-section and time dimension. The contribution explores a massive price dataset at a weekly frequency. The dependent variable is the weekly price variation rate for product/wine and covariates are attributes, time and nominal variables. Given that endogeneity issues arose, the estimations rely on a two-stage least squares and instrumental variables with cluster-robust errors.

Findings

Estimations show that attributes, time and cost variables are statistically significant, with clear seasonal patterns and quality segmentation affecting pricing: wines made out of specific grapes such as Chenin, Merlot and Seedling or composing a broad category such as red wine, exhibit price undershooting (price rate of change below average). On the other hand, wines out of grapes such as Bonarda, Margaux, Mistela, Moscatel, Oporto, Tannat and Sauvignon Blanc show price overshooting (rate of change above average). In summary, wine made from determined grapes and specific wineries show divergent pricing.

Research limitations/implications

Covariates such as alcohol content, label descriptor information, winery history, substitute competition and vintage, among others, have not been considered given that the research analyzes more than 750 wine products. Another limitation is that the work does not explore many time-series covariates, such as promotions and idiosyncratic shocks.

Practical implications

The contribution presents new information on wine pricing patterns affected by weeks, months and years, including the effect of the prolonged 2020 Argentine lockdown. It also analyzes estimations on pricing at the level of grape/blend and wineries previously unknown in this market. The information can influence inventory decisions on the side of the sellers and purchase decisions on the side of consumers.

Social implications

The analysis includes fine but also low-cost wines that form part of the diet of low-income families in the country. The work detects a divergent pattern in pricing divided by the quality/price of the wine. It also presents information on price timing that may help consumers in the best moment to buy.

Originality/value

The contribution analyzes unprecedented information on weekly wine prices and presents evidence of pricing tactics from a point-of-sale perspective: It identifies different adjustment speeds related to product features and time effects.

Details

International Journal of Wine Business Research, vol. 35 no. 2
Type: Research Article
ISSN: 1751-1062

Keywords

Article
Publication date: 27 August 2019

Jeremiás Máté Balogh

In recent decades, New World winemakers have increased their wine export to European markets and became considerable market players in the EU. Therefore, this paper aims to…

Abstract

Purpose

In recent decades, New World winemakers have increased their wine export to European markets and became considerable market players in the EU. Therefore, this paper aims to explore whether the major New World wine producers are able to exploit its market power at European destination markets.

Design/methodology/approach

The paper applies the pricing-to-market (PTM) model of trade in respect of asymmetric effect of exchange rate changes by using monthly bilateral wine data between January 2000 and December 2016.

Findings

First, there is evidence of PTM in three New World wine exporters, namely, Chile, South Africa and the USA. Chile was able to apply price discrimination across Danish, German, Dutch and the British wine markets. Second, South Africa set their prices in Belgian, Dutch and Swedish markets, while the USA discriminated their wine prices in Denmark and Sweden. In contrast, this advantage was not observable in the case of Argentina and Australia. Third, the local-currency price stability was explored in Chilean wine import prices (exported to Belgium, the Czech Republic), South African wine prices (exported to France, Denmark, Germany), in US wine prices (sold in Germany and the UK). Furthermore, the analysis of the asymmetric effects of exchange rate changes suggests that depreciation of the exporter’s currency relative to the Euro had not a significant impact on EU wine import prices. On the whole, the estimated pricing to market model indicates that a non-competitive pricing behaviour of New World exporters was limited and was rather due to the market-specific characteristics.

Research limitations/implications

The research provides multiple advice for New World wine producers. First, in general, European consumers do not pay an extra price for the New World bottled wines. Second, only Chilean, South African and North American wine exporters can expect higher prices for its wines from European buyers only. Moreover, European wine markets are fairly competitive where New World wine exporters do not have significant market dominance. Therefore, New World wine exporters should strengthen its wine marketing and branding strategy to gain higher market share in Europe and to attract attention to its wines. Finally, exchange rates relative to Euro should be continuously monitored by the New World wine exporters because it might deviate the wine export prices significantly.

Originality/value

The study applies the pricing-to-market model to major New World wine exporters on the European Union’s destination market. The paper also makes valuable contributions to the wine literature by testing the asymmetric effects of exchange rate changes on wine import prices. It analyses the nature of price discrimination, whether it is market-specific or exchange rate influenced, or both.

Details

International Journal of Wine Business Research, vol. 31 no. 4
Type: Research Article
ISSN: 1751-1062

Keywords

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