What Determines Wine Prices: Objective vs. Sensory Characteristics

Lecocq, Sébastien; Visser, Michael

doi:10.1017/s1931436100000080

Cited by 162 publications

(94 citation statements)

References 14 publications

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“…It also provides empirical support to the statement that the labeling system in European wine markets "has proven successful in guaranteeing a good reputation for many European wines and relatively high profits for the producers" Our study also contributes to the literature on wine markets. Existing studies are mostly concerned with hedonic analyses on bottled wine (for a review, see Lecocq and Visser 2006). The main findings of these previous studies are qualitatively very similar to the results obtained here.…”

supporting

confidence: 85%

The Pricing of Experience Goods: The Example ofen primeurWine

Ali

Nauges²

2007

American J Agri Economics

111

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The market for "primeur" wine in the Bordeaux region allows producers to sell wine that is still in barrels. As with all experience goods, producers send quality signals to uninformed buyers. Using original data on Bordeaux wines, we show that the pricing behaviour of producers depends to a large extent on their reputation, and much less on short-term changes in quality (as measured by experts' grades). We also find that the primeur price has an informative role, since a 10 percent increase in primeur price leads to a 3 percent increase in prices on the market for bottled wine.Keywords: Bordeaux wine, experience good, panel data, quality signal, reputation. Suggested running head:The pricing of en primeur wine While writing this article, Héla Hadj Ali was working as a research fellow at INRA (National Institute for Research in Agriculture), Toulouse (France). Céline Nauges is a senior research fellow at INRA, Toulouse (France).The authors wish to thank Pierre Dubois, Valérie Meunier, Katrin Millock, Michel Simioni, Alban Thomas, Ian M. Sheldon (the editor), Michael Visser, and two anonymous reviewers for their useful comments and suggestions that materially improved the article. The usual caveats apply.-1 -Most food products can be classified as experience goods (Nelson 1970;1974) because their quality can rarely be ascertained before actual consumption.1 A substantial part of the theoretical literature dealing with experience goods has focused on sellers' activity to inform consumers in their purchases, particularly the role of signaling and reputation. Prices, advertising expenditure (Milgrom and Roberts 1986) and warranties (Grossman 1981) are textbook illustrations of how a monopolist can signal the high quality of his product in a game with asymmetric information. Shapiro (1983) emphasized the role of reputation in a perfectly competitive environment by describing how consumers form rational expectations on the quality of experience goods based on the quality of goods produced in the past.In the particular case of food products, producers often choose labeling as a signal of quality. Bureau and Valceschini (2003) showed that labeling helps promote differentiated products and allows small producers to benefit from a well-established collective reputation.More generally, the use of food labels is said to create the potential for price premia (Henneberry and Armbruster 2003).Quantitative measures of these "price premia" are quite rare, as well as, more generally, analyses of the pricing strategy and signaling activity of producers in markets for food products. This is especially the case when compared with hedonic studies that measure the consumers' assessment of food product attributes (see McCluskey and Loureiro 2003, for a review). This article contributes to the empirical literature on experience goods by analysing the pricing behaviour of wine producers from the well-known Bordeaux region in France.Original data on two markets (for "primeur" wine and for bottled wine) provide a unique opportunity to obt...

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supporting

confidence: 85%

The Pricing of Experience Goods: The Example ofen primeurWine

Ali

Nauges²

2007

American J Agri Economics

111

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“…Theoretical and empirical evidence suggest that the price of a bottled wine primarily depends on production costs, quality, reputation and objective, easily observable product characteristics (Lockshin et al, 2006;Lecocq and Visser, 2006;Edwards and Spawton, 1990). According to a study conducted by Keown and Casey (1995), price was a very important wine choice criterion for all respondents.…”

Section: Development Of Hypothesesmentioning

confidence: 99%

Customer value perception: cross-generational preferences for wine

Wiedmann

Behrens

Klarmann

et al. 2014

British Food Journal

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. Purpose -A deeper understanding of the key drivers of consumer wine perception is a major challenge in the domain of wine marketing. The purpose of this paper is to examine the various dimensions of customer-perceived value that lead the customers -in general and divided into different age groups -to choose and consume a certain wine. Design/methodology/approach -In the exploratory study context of examining value-related consumer attitudes and behavioural effects, the drivers and outcomes of wine consumption based on a cross-generation sample, PLS path modelling was considered for the empirical tests of our hypotheses. Findings -Though there exist differences between Generation X and Generation Y consumers, the empirical results are supportive of the hypothesized positive relations between financial, functional, individual and social perceptions that influence the desire for and the consumption of wine.Research limitations/implications -For future research, the findings presented in the paper support the importance of enlarging the size of the sample and collecting data in different countries to compare the results on an international level. Practical implications -Successful wine marketing strategies should focus on the customer's subjective expectations and individual value perceptions by addressing the specific value aspects that are highly relevant for consumer loyalty. Originality/value -The study results are valuable for researchers, managers and marketers because they address the question of how to measure and forecast the perceived value with the greatest influence on consumers' wine choices.

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“…Since the problem involves a large number of independent variables, a closer-fitting function was constructed by using Stata software to estimate a forward stepwise regression, with a threshold of 10% significance level for a variable's inclusion in the model (Lecocq & Visser, 2006;Brentari et al, 2015).…”

Section: Methodsmentioning

confidence: 99%

“…This explains the widespread use of hedonic price models to determine the relative importance of the intrinsic characteristics of wine 1 . Some studies are focused on traditional markets, such as France (Landon & Smith, 1997;Lecocq & Visser, 2006;Ali & Nauges, 2007;Cardebat & Figuet, 2009;Carew & Florkowski, 2010), Italy (Brentari et al, 2011 and2015;Caracciolo et al, 2013;Roma et al, 2013;Levaggi & Brentari, 2014;Cacchiarelli et al, 2014) or Germany (Schamel, 2003), as well as new producers, such as Australia (Oczkowski, 1994(Oczkowski, , 2015Steiner, 2004;Davis & Ahmadi-Esfahani, 2005), New Zealand (Bicknell et al, 2005;Bicknell & MacDonald, 2012), US (Yang et al, 2012;Cuellar & Claps, 2013;Delmas & Grant, 2014), Chile (Melo et al, 2005;Troncoso & Aguirre, 2006;Ortuzar & Alfranca, 2010) or Argentina (San Martin et al, 2008;Estrella, 2014).…”

Section: Introductionmentioning

confidence: 99%

“…Aging is included in many studies with significant results (Morilla & Martínez, 2002;Melo et al, 2005;Lecocq & Visser, 2006;Troncoso & Aguirre, 2006;San Martín et al, 2008;Rodríguez & Castillo, 2009;Perza, 2010;Kwong et al, 2011Kwong et al, , 2017. Spanish regulations establish only four wine classifications based on aging: joven, crianza, reserva and gran reserva 5 .…”

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confidence: 99%

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Spanish wines in the US market: What attributes do US consumers look for in Spanish wines?

Areta¹,

Azcaráte

Apezteguía

2018

Span. j. agric. res.

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This paper analysed the impact of different attributes in Spanish quality wines on United States (US) demand behaviour. A hedonic price model was estimated in order to assess the values that US consumers give Spanish wines. The main results showed that the most influential factor on sale price was aging, which had a positive impact. US consumers valued the quality ratings provided by experts, especially in the upper price categories. The year of vintage and size of the winery were considered medium importance factors in decision-making, with the latest vintages and the smallest wineries receiving the highest ratings. Geographical origin (appellation) helped to explain consumer preferences. Although colour was the least important attribute in consumers' purchase decisions, red wines were the most highly rated in this attribute.

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What Determines Wine Prices: Objective vs. Sensory Characteristics

Cited by 162 publications

References 14 publications

The Pricing of Experience Goods: The Example ofen primeurWine

The Pricing of Experience Goods: The Example ofen primeurWine

Customer value perception: cross-generational preferences for wine

Spanish wines in the US market: What attributes do US consumers look for in Spanish wines?

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