Vol. 12 No. 2 (2023)
Original Research Article

Distribution velocity in wine retailing

PDF
  • Martin Hirche,
  • Simone Loose,
  • Larry Lockshin,
  • Magda Nenycz-Thiel
Martin Hirche
University of Cologne, Faculty of Management, Economics and Social Sciences, Albertus-Magnus-Platz, 50923 Cologne
Bio
Simone Loose
Geisenheim University, Von-Lade-Straße 1, 65366 Geisenheim, Germany and Ehrenberg Bass Institute, University of South Australia, North Terrace, Adelaide
Larry Lockshin
Ehrenberg Bass Institute, University of South Australia, North Terrace, Adelaide
Magda Nenycz-Thiel
Ehrenberg Bass Institute, University of South Australia, North Terrace, Adelaide
DOI: https://doi.org/10.36253/wep-14190

Published 2023-12-31

Keywords

  • distribution,
  • velocity,
  • wine,
  • retail,
  • channel,
  • strategy
    • ...More
    Less

How to Cite

Hirche, M., Loose, S., Lockshin, L., & Nenycz-Thiel, M. (2023). Distribution velocity in wine retailing. Wine Economics and Policy, 12(2), 31–41. https://doi.org/10.36253/wep-14190

Copyright (c) 2023 Martin Hirche, Simone Loose, Larry Lockshin, Magda Nenycz-Thiel

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

Little is known about the relationship between distribution and market share in the wine category. Understanding the influences of product and distribution characteristics at the SKU-level and incorporating them into marketing strategy and planning has important managerial and academic implications. Sales of 3,524 wine SKUs across 4,218 stores in 4 states in the US over one year of observation are analyzed. We use an established distribution velocity model (Reibstein & Farris 1995) to estimate the relationship between distribution and market share. We then use the market share deviations from the expected values and apply a secondary robust regression to investigate possible relationships between various product- and distribution characteristics and those market share deviations. The results show that the distribution velocity in wine retailing is convex and increasing, in line with previous findings for other consumer-packaged goods in the marketing literature. Beyond distribution breadth, we find that overall parent brand performance (above), unit price (above), packaging type (above), country-of-origin, grape variety, sales consistency (above) and store specialization (below) are associated with above or below expected market share of wine SKUs.

PDF

References

  1. Statista 2022. Revenue of the wine market worldwide by country in 2021. https://www.statista.com/forecasts/758149/revenue-of-the-wine-market-worldwide-by-country/, 2022 (accessed 09 October 2022).
  2. OIV 2021. Leading wine import markets worldwide in 2021. https://www.statista.com/statistics/328253/global-market-leading-wine-importing-countries-based-on-value/, 2021 (accessed 09 October 2022).
  3. Euromonitor 2017. Statistics Alcoholic Drinks US. January 2017 ed.: Euromonitor International.
  4. Euromonitor 2021. Wine in the US – Country Report. May 2021 ed.: Euromonitor International.
  5. Ataman, M. B., Mela, C. F. & van Heerde, H. J. 2008. Building Brands. Marketing Science, 27(6), 1036-1054. https://doi.org/10.1287/mksc.1080.0358
  6. Farris, P. W., Olver, J. & De Kluyver, C. 1989. The Relationship between Distribution and Market Share. Marketing Science, 8(2), 107-128. https://doi.org/10.1287/mksc.8.2.107
  7. Hirche, M., Farris, P. W., Greenacre, L., Quan, Y. & Wei, S. 2021a. Predicting Under- and Overperforming SKUs within the Distribution–Market Share Relationship. Journal of Retailing, 97(4), 697-714. https://doi.org/10.1016/j.jretai.2021.04.002
  8. Kruger, M. W. & Harper, B. 2006. Market Share and Product Distribution: Re-tested and Extended. (White Paper). INFORMS Marketing Science Conference. Pittsburgh, USA: Information Resources, Inc.
  9. Reibstein, D. & Farris, P. W. 1995. Market Share and Distribution: a Generalization, a Speculation, and some Implications. Marketing Science, 14(3), G190-G202. https://doi.org/10.1287/mksc.14.3.G190
  10. Verbeke, W., Clement, F. & Farris, P. W. 1994. Product availability and market share in an oligopolistic market: the Dutch detergent market. The International Review of Retail, Distribution and Consumer Research, 4(3), 277-296. https://doi.org/10.1080/09593969400000021
  11. Wilbur, K. C. & Farris, P. W. 2014. Distribution and Market Share. Journal of Retailing, 90(2), 154-167. https://doi.org/10.1016/j.jretai.2013.08.003
  12. Ailawadi, K. & Farris, P. W. 2017. Managing Multi- and Omni-Channel Distribution: Metrics and Research Directions. Journal of Retailing, 93(1), 120-135. https://doi.org/10.1016/j.jretai.2016.12.003
  13. Farris, P. W. 2004. Using Steiner s dual-stage model to develop better measures of retail distribution. Antitrust Bulletin, 49(4), 941-954. https://doi.org/10.1177/0003603X0404900406
  14. Hirche, M., Greenacre, L., Nenycz-Thiel, M., Loose, S. & Lockshin, L. 2021b. SKU performance and distribution: A large-scale analysis of the role of product characteristics with store scanner data. Journal of Retailing and Consumer Services, 61, 102533. https://doi.org/10.1016/j.jretconser.2021.102533
  15. Mueller, S., Osidacz, P., Francis, I. L. & Lockshin, L. 2010. Combining discrete choice and informed sensory testing in a two-stage process: Can it predict wine market share? Food Quality and Preference, 21(7), 741-754. https://doi.org/10.1016/j.foodqual.2010.06.008
  16. Joshi, R. & Yadav, R. 2018. Exploring the Mediating Effect of Parent Brand Reputation on Brand Equity. Paradigm, 22(2), 125-142. https://journals.sagepub.com/doi/abs/10.1177/0971890718787903
  17. Kahn, B. E. 1998. Dynamic relationships with customers: High-variety strategies. Journal of the Academy of Marketing Science, 26(1), 45-53. https://doi.org/10.1177/0092070398261005
  18. Balestrini, P. & Gamble, P. 2006. Country-of-origin effects on Chinese wine consumers. British Food Journal, 108(5), 396-412. https://doi.org/10.1108/00070700610661367
  19. Hirche, M. & Bruwer, J. 2014. Buying a Product for an Anticipated Consumption Situation - Observation of High and Low Involved Wine Buyers in a Retail Store. International Journal of Wine Business Research, 26(4), 295-318. https://doi.org/10.1108/IJWBR-01-2014-0007
  20. Jarvis, W., Rungie, C. & Lockshin, L. 2007. Revealed preference analysis of red wine attributes using polarisation. International Journal of Wine Business Research, 19(2), 127-138. https://doi.org/10.1108/17511060710758687
  21. Wiedmann, K.-P., Hennigs, N., Henrik Behrens, S. & Klarmann, C. 2014. Tasting green: an experimental design for investigating consumer perception of organic wine. British Food Journal, 116(2), 197-211. https://doi.org/10.1108/BFJ-04-2012-0090
  22. Steenkamp, J.-B. E. M. & Geyskens, I. 2014. Manufacturer and Retailer Strategies to Impact Store Brand Share: Global Integration, Local Adaptation, and Worldwide Learning. Marketing Science, 33(1), 6-26. https://doi.org/10.1287/mksc.2013.0801
  23. Cleeren, K., Verboven, F., Dekimpe, M. G. & Gielens, K. 2010. Intra- and Interformat Competition Among Discounters and Supermarkets. Marketing Science, 29(3), 456-473. https://doi.org/10.1287/mksc.1090.0529
  24. Shah, D., Kumar, V. & Yl, Z. 2015. Diagnosing Brand Performance: Accounting for the Dynamic Impact of Product Availability with Aggregate Data. Journal of Marketing Research, 52(2), 147-165. https://doi.org/10.1509/jmr.13.0530
  25. Corsten, D. & Gruen, T. 2003. Desperataly seeking shelf availability: An examination of the extent, the causes, and the efforts to address retail out-of-stocks. International Journal of Retail & Distribution Management, 31(12), 605-617. https://doi.org/10.1108/09590550310507731
  26. Chernev, A. & Hamilton, R. 2009. Assortment Size and Option Attractiveness in Consumer Choice Among Retailers. Journal of Marketing Research, 46(3), 410-420. https://doi.org/10.1509/jmkr.46.3.410
  27. Oppewal, H. & Koelemeijer, K. 2005. More choice is better: Effects of assortment size and composition on assortment evaluation. International Journal of Research in Marketing, 22(1), 45-60. https://doi.org/10.1016/j.ijresmar.2004.03.002
  28. Tan, L. P. & Cadeaux, J. 2011. Brand and stock-keeping-unit (SKU) assortments, assortment changes and category sales. The International Review of Retail, Distribution and Consumer Research, 21(2), 161-185. https://doi.org/10.1080/09593969.2011.562682
  29. Rousseeuw, P. J. & Leroy, A. M. 2005. Robust Regression and Outlier Detection, New York, John Wiley & Sons, Inc.
  30. Friberg, R. & Sanctuary, M. 2017. The effect of retail distribution on sales of alcoholic beverages. Marketing Science, 36(4), 626-641. https://doi.org/10.1287/mksc.2017.1038
  31. Verhoef, P. C., Kannan, P. K. & Inman, J. J. 2015. From Multi-Channel Retailing to Omni-Channel Retailing: Introduction to the Special Issue on Multi-Channel Retailing. Journal of Retailing, 91(2), 174-181. https://doi.org/10.1016/j.jretai.2015.02.005
  32. Hirche, M., Haensch, J. & Lockshin, L. 2021. Comparing the day temperature and holiday effects on retail sales of alcoholic beverages – a time-series analysis. International Journal of Wine Business Research, 33(3), 432-455. http://www.emeraldinsight.com/doi/10.1108/IJWBR-07-2020-0035