Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-22T00:07:05.849Z Has data issue: false hasContentIssue false
  • English
  • Français

Dynamic Analysis of Brand and Regional Reputation: The Case of Wine*

Published online by Cambridge University Press:  08 June 2012

Günter Schamel
Günter Schamel
Affiliation:
Free University of Bozen-Bolzano, School of Economics and Management, Via Sernesi 1, 1–39100, Bozen-Bolzano,Italy, email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Globalization has created an international wine market and global brands. However, consumers continue to regard regional origin as a dominant criterion in their wine buying decisions. Indicators of collective regional reputation as well as individual producer (or brand) reputation guide consumers in their buying decisions. We measure regional and brand reputation indicators for 27 growing regions around the world. Regional reputation is based on a region's overall quality performance through time. Positive and negative brand reputation based on relative regional peer performance is a distinct feature of this empirical application. Noting competing as well as common interest among regional producers, we hypothesize that wines from producers with a high quality reputation rely more on their own strengths and will depend less on their region's reputation and vice versa. We also test whether this assertion is valid over time covering six recent vintages. We apply a hedonic model to measure the significance of these regional and brand reputation indicators in determining wine prices. Our model largely confirms our hypothesis, but it also suggests that for some regions (Germany and New Zealand), high quality brands rely heavily on overall regional reputation. In other regions (including Napa and Sonoma Valley), high reputation brands seem to lose their strength and start to rely on regional reputation. Regions holding on to their strong individual brand reputations include the Rhone Valley, Spain, and Bordeaux. The analysis sheds light on how regional and producer brands are performing as wine markets mature in terms of global branding and consumers becoming more knowledgeable about wine regions, quality, and reputation. (JEL Classification: D4, L1, Q13)

Type
Articles
Information
Journal of Wine Economics , Volume 4 , Issue 1 , Spring 2009 , pp. 62 - 80
Copyright
Copyright © American Association of Wine Economists 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, K. and Wood, D. (2006). What determines the future value of an icon wine? New evidence from Australia. Journal of Wine Economics, 1(2), 141–161.Google Scholar
Arguea, N. and Hsiao, C. (1993). Econometric issues of estimating hedonic price functions. Journal of Econometrics, 56, 243–267.CrossRefGoogle Scholar
Arrow, K. (1974). The Limits of Organization. New York: Norton.Google Scholar
Brooks, E. (2001). Countries as brands: international trade in wine. Working Paper, Harvard University. Presented at Oenometrics VDQS XIII in Napa Valley, CA.Google Scholar
Combris, P., Lecocq, S. and Visser, M. (1997). Estimation of a hedonic price equation for Bordeaux wine: does quality matter? The Economic Journal, 107, 390–402.CrossRefGoogle Scholar
Diamond, D. (1989). Reputation acquisition in debt markets. Journal of Political Economy, 97 (4), 828–862.CrossRefGoogle Scholar
Gokcekus, O. and Fargnoli, A. (2007). Is globalization good for wine drinkers in the United States? Journal of Wine Economics, 2(2), 187–195.CrossRefGoogle Scholar
Haeger, J. and Storchmann, K. (2006). Prices of American Pinot Noir wines: climate, craftsmanship, critics. Agricultural Economics, 35, 67–78.CrossRefGoogle Scholar
Holmström, B. (1982). Managerial incentive problems: a dynamic perspective. Republished in Review of Economic Studies, 66 (1999), 169–182.CrossRefGoogle Scholar
Jones, G. and Storchmann, K. (2001). Wine market prices and investment under uncertainty: an econometric model for Bordeaux Crus Classés. Agricultural Economics, 26, 115–133.CrossRefGoogle Scholar
Klein, B. and Leffler, K. (1981). The role of market forces in assuring contractual performance. Journal of Political Economy, 89(4), 615–641.CrossRefGoogle Scholar
Landon, S. and Smith, C.E. (1998). Quality expectations, reputation and price. Southern Economic Journal, 64(3), 628–647.Google Scholar
Oczkowski, E. (2001). Hedonic wine price functions and measurement error. The Economic Record, 77(239), 374–382.CrossRefGoogle Scholar
Ramirez, C. (2008). Wine quality, wine prices, and the weather: is Napa “different”? Journal of Wine Economics, 3(2), 114–131.CrossRefGoogle Scholar
Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy, 82, 34–55.CrossRefGoogle Scholar
Schamel, G. (2000). Individual and collective reputation indicators of wine quality. CIES Discussion Paper 0009. Centre for International Economic Studies, Adelaide University.Google Scholar
Schamel, G. (2006). Geography versus brands in a global wine market. Agribusiness: An International Journal, 22(3), 363–374.CrossRefGoogle Scholar
Schamel, G. and Anderson, K. (2003). Wine quality and varietal, regional and winery reputations: hedonic prices for Australia and New Zealand. The Economic Record, 79(246), 357–369.CrossRefGoogle Scholar
Shapiro, C. (1983). Premiums for high quality products as returns to reputations. Quarterly Journal of Economics, 98, 659–679.CrossRefGoogle Scholar
Simon, H.A. (1997). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations, 4th Edition. New York: Free Press.Google Scholar
Tirole, J. (1996). A theory of collective reputations (with applications to the persistence of corruption and to firm quality). Review of Economic Studies, 63, 1–22.CrossRefGoogle Scholar
Wine Spectator. (2005). New York: Wine Spectator Press, (http://www.wine-spectator.com)Google Scholar
Winfree, J. and McCluskey, J. (2005). Collective reputation and quality. American Journal of Agricultural Economics, 87(1), 206–213.CrossRefGoogle Scholar