Original Research Article
Price Determinants of Sparkling Wine in Poland: Does Reputation Really Matter?
Samuele Trestini- Alice Stiletto
- Stefanella Stranieri
Published 2020-05-14
Keywords
- Poland,
- sparkling wine,
- premium price,
- hedonic price model
How to Cite
Trestini, S., Stiletto, A., & Stranieri, S. (2020). Price Determinants of Sparkling Wine in Poland: Does Reputation Really Matter?. Wine Economics and Policy, 9(1), 73–84. https://doi.org/10.36253/web-8018
Abstract
Due to the important worldwide growth of the sparkling wine sector in the last years, this research aims to explore the Polish sparkling wine retail market by applying a hedonic price model. Poland is the most important market in Eastern Europe, with a noticeable increase in wine consumption in recent years. Few researches have investigated the price premium of wine attributes in this area, while none of these concentrated their analysis on sparkling wines. The aim of this research is to apply a hedonic price model to estimate the effects of credence attributes and quality signals on sparkling wines sold in the Polish capital. Data were collected from 35 retail stores in Warsaw. Findings suggest that collective reputation linked to designation of origin is the variable that most affects the price, followed by brand reputation and characteristics of the point of sale. The type of retailer has a significant effect on price: discounts and supermarkets imply a price decrease with respect to hypermarkets, whereas specialised shops charge a premium. Moreover, we explore the presence of wine with Italian sounding names: this positively affects wine price, confirming the role of imitations stressed in the recent literature.
References
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[24] G. Schamel, K. Anderson, Wine Quality and Regional Reputation: Hedonic Prices for Australia and New Zealand, Econ. Soc. Aust. 412 (2003) 2016–25780.
[25] G. Schamel, Geography versus brands in a global wine market, Agribusiness 22 (2006) 363–374. https://doi.org/10.1002/agr.20091.
[26] M. Costanigro, J.J. Mccluskey, The Economics of Nested Names : Name Specifity , Reputation and price premia, Am. J. Agric. Econ. 92 (2010) 1339–1350.
[27] H. Lee, D.A. Sumner, The Economic Value of Wine Names That Reference Place in the US Market: Analysis of “Champagne” and Sparkling Wine, (2013) In: Wine Economics pp. 73–87 Palgrave Macmillan, London.
[28] G. V. Jones, K.H. Storchmann, Wine market prices and investment under uncertainty: an econometric model for Bordeaux Crus Classes, Agric. Econ. 26 (2001) 115–133. https://doi.org/10.1111/j.1574-0862.2001.tb00058.x.
[29] L. Benfratello, M. Piacenza, S. Sacchetto, Taste or reputation: what drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wines. Appl. Econ. 41(2009) 2197–2209. https://doi.org/10.1080/00036840701222439.
[30] S. Lecocq, M. Visser, What determines wine prices: Objective vs. sensory characteristics, J. Wine Econ. 1(2006) 42–56. https://doi.org/10.1142/9789813232747_0023.
[31] K.J. Lancaster, A New Approach to Consumer Theory, J. Political Econ 74 (1966) 132–157.
[32] S. Rosen, Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition, J. Political Econ. 82 (1974) 34-55.
[33] M. Boland, T. Schroeder, Marginal Value of Quality Attributes for Natural and Organic Beef, J. Agric. Appl. Econ. 34 (2016) 39–49. https://doi.org/10.1017/s1074070800002133
[34] K.B. Maguire, N. Owens, N.B. Simon, The price premium for organic babyfood: A hedonic analysis, J. Agric. Resour. Econ. 29 (2004) 132–149.
[35] A. Bonanno, A Hedonic Valuation of Health and Nonhealth Attributes in the U.S. Yogurt Market, Sci. Agribus. 32 (2016) 299–313. https://doi.org/10.1002/agr.
[36] S.M. León, Determinación de precios inmobiliarios en caba y efectos de política de transporte: modelos espaciales y evaluación de impacto, (2016) (Doctoral dissertation, Universidad del CEMA (UCEMA)).
[37] G.E.P. Box, D.R. Cox, An Analysis of Transformations, Journal of the Royal Statistical Society: Series B (Methodological), 26 (1964) 211-243.
[38] G. Ferro, I. Benito Amaro, What factors explain the price of top quality wines?, Int. J. Wine Bus. Res. 30 (2018) 117–134. https://doi.org/10.1108/IJWBR-05-2017-0036-.
[39] L. Rossetto, L. Galletto, Retail strategies for rosé wines in Italy: a hedonic price analysis. Int. J. Wine Bus. Res. 31 (2019) (3), 282-302. IJWBR-03-2018-0013. https://doi.org/10.1108/IJWBR-03-2018-0013.
[40] H.H. Ali, C. Nauges, The Pricing of Experience Goods : The Example of en primeur Wine, Am J Agr Econ, 89 (2016) 91-103. https://doi.org/10.1111/j.1467-8276.2007.00965.x.
[41] B.E. Steiner, Australian wines in the British wine market: A hedonic price analysis, Agribusiness 20 (2004) 287–307. https://doi.org/10.1002/agr.20012.
[42] L. Cembalo, C. Gianni, D.G. Teresa, S. Riccardo, C. Tagliafierro, Beyond Agropiracy: The Case of Italian Pasta in the United States Retail Market, Agribusiness 24 (2008) 403–413. https://doi.org/10.1002/agr.
[43] L. Martínez-Carrasco Martínez, M. Brugarolas MolláBauzá, F.J. Del Campo Gomis, A. Martínez Poveda, Influence of purchase place and consumption frequency over quality wine preferences, Food Qual. Prefer. 17 (2006) 315–327. https://doi.org/10.1016/j.foodqual.2005.02.002.
[44] S. Szathvary, S. Trestini, A Hedonic Analysis of Nutrition and Health Claims on Fruit Beverage Products, J. Agric. Econ. 65 (2014) 505–517. https://doi.org/10.1111/1477-9552.12056.
[45] R. Cooper, T.W. Ross, Prices, Product Qualities and Asymmetric Information: The Competitive Case, Rev. Econ. Stud. 51(2006) 197-207. https://doi.org/10.2307/2297687.
[46] L. Cembalo, F. Caracciolo, E. Pomarici, Drinking cheaply: The demand for basic wine in Italy, Aust. J. Agric. Resour. Econ. 58 (2014) 374–391. https://doi.org/10.1111/1467-8489.12059.
[2] OIV (2019b), 2019 Statistical Report on World Vitiviniculture, available at:
http://www.oiv.int/public/medias/6782/oiv-2019-statistical-report-on-world-vitiviniculture.pdf.
[3] OIV (2018), 2018 World Vitiviniculture Situation. OIV Statistical Report on World Vitiviniculture, available at: http://www.oiv.int/public/medias/6371/oiv-statistical-report-on-world-vitiviniculture-2018.pdf.
[4] A. Chlebicka, J. Fałkowski, J. Lichota, From macro to micro: The change of trendsetters in the polish beer market, in Economic Perspectives on Craft Beer (2018) (pp. 295-319). Palgrave Macmillan, Cham.
[5] V. Boatto, E. Defrancesco, S. Trestini, The price premium for wine quality signals: Does retailers’ information provision matter?, Br. Food J. 113 (2011) 669–679. https://doi.org/10.1108/00070701111131764.
[6] F. Caracciolo, L. Cembalo, E. Pomarici, The hedonic price for an Italian grape variety, Ital. J. Food Sci. 25 (2013), 289.
[7] P. Combris, S. Lecocq, M. Visser, Estimation of a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?, Econ. J. 107 (1997) 390–402. https://doi.org/10.1111/j.0013-0133.1997.165.
[8] A. María Angulo, J. María Gil, A. Gracia, M. Sánchez, Hedonic prices for Spanish red quality wine, Br. Food J. 102 (2000) 481–493. https://doi.org/10.1108/00070700010336445.
[9] M. Nerlove, Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers, Eur. Econ. Rev. 39 (1995)1697–1716. https://doi.org/10.1016/0014-2921(95)00013-5.
[10] S. Trestini, E. Giampietri, S. Szathvary, A.D. Bianco, Insights on the Alleged Imitation of Prosecco Wine Name : The Case of the German Market, Int. J. Food Syst. Dyn. 9 (2018) 331–341.
[11] O. J. Parcero, E. Villanueva, World Wine Exports: What Determined the Success of the “New World” Wine Producers? American Association of Wine Economists, Working Paper N° 87. 26 p. (2011).
[12] L. Lockshin, A.M. Corsi, Consumer behaviour for wine 2.0: A review since 2003 and future directions, Wine Econ. Policy 1 (2012) 2–23. https://doi.org/10.1016/j.wep.2012.11.003.
[13] J. Rebelo, L.S. de M. Lourenço-Gomes, T. Gonçalves, J. Caldas, A hedonic price analysis for the portuguese wine market: Does the distribution channel matter?, J. Appl. Econ, 22 (2019) 40–59. https://doi.org/10.1080/15140326.2018.1550596.
[14] R. Carew, W.J. Florkowski, The Importance of Geographic Wine Appellations: Hedonic Pricing of Burgundy Wines in the British Columbia Wine Market, Can. J. Agric. Econ. Can. d’agroeconomie 58 (2010) 93–108. https://doi.org/10.1111/j.1744-7976.2009.01160.x.
[15] E. Pomarici, M. Lerro, P. Chrysochou, R. Vecchio, A. Krystallis, One size does (obviously not) fit all: Using product attributes for wine market segmentation, Wine Econ. Policy 6 (2017), 98–106. https://doi.org/10.1016/J.WEP.2017.09.001.
[16] A. Golan, H. Shalit, Wine quality differentials in hedonic grape pricing, J. Agric. Econ. 44 (1993) 311–321. https://doi.org/10.1111/j.1477-9552.1993.tb00274.x.
[17] E. Oczkowski, A hedonic price function for Australian premium table wine, Aust. J. Agric. Econ. 38 (1994) 93–110. https://doi.org/10.1111/j.1467-8489.1994.tb00721.x.
[18] M. Costanigro, J. Mccluskey, R. Mittelhammer, Identifying Submarkets in the Wine Industry: a Multivariate Approach to Hedonic Regression, in: American Agricultural Economics Association Annual Meeting. Long beach California, (2006) p. 23.
[19] Orrego, M.J.E., Defrancesco, E., Gennari, A., 2012. The wine hedonic price models in the “Old and New World”: state of the art. Rev. la Fac. Ciencias Agrar. 44(1), 205–220.
[20] P. Mora, Wine Positioning, Management for Professionals, Springer International Publishing, Cham. (2016) https://doi.org/10.1007/978-3-319-24481-5.
[21] P. Nelson, Advertising as Information, J. Polit. Econ. 82(1974) 729–754. https://doi.org/10.1086/260231.
[22] S. Landon, C.E. Smith, Quality Expectations, Reputation, and Price, South. Econ. J. 64 (1998) 628–647. https://doi.org/10.2307/1060783.
[23] G.J. Stigler, The economics of information, J. Political Econ. 69, (1961) 213–225.
[24] G. Schamel, K. Anderson, Wine Quality and Regional Reputation: Hedonic Prices for Australia and New Zealand, Econ. Soc. Aust. 412 (2003) 2016–25780.
[25] G. Schamel, Geography versus brands in a global wine market, Agribusiness 22 (2006) 363–374. https://doi.org/10.1002/agr.20091.
[26] M. Costanigro, J.J. Mccluskey, The Economics of Nested Names : Name Specifity , Reputation and price premia, Am. J. Agric. Econ. 92 (2010) 1339–1350.
[27] H. Lee, D.A. Sumner, The Economic Value of Wine Names That Reference Place in the US Market: Analysis of “Champagne” and Sparkling Wine, (2013) In: Wine Economics pp. 73–87 Palgrave Macmillan, London.
[28] G. V. Jones, K.H. Storchmann, Wine market prices and investment under uncertainty: an econometric model for Bordeaux Crus Classes, Agric. Econ. 26 (2001) 115–133. https://doi.org/10.1111/j.1574-0862.2001.tb00058.x.
[29] L. Benfratello, M. Piacenza, S. Sacchetto, Taste or reputation: what drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wines. Appl. Econ. 41(2009) 2197–2209. https://doi.org/10.1080/00036840701222439.
[30] S. Lecocq, M. Visser, What determines wine prices: Objective vs. sensory characteristics, J. Wine Econ. 1(2006) 42–56. https://doi.org/10.1142/9789813232747_0023.
[31] K.J. Lancaster, A New Approach to Consumer Theory, J. Political Econ 74 (1966) 132–157.
[32] S. Rosen, Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition, J. Political Econ. 82 (1974) 34-55.
[33] M. Boland, T. Schroeder, Marginal Value of Quality Attributes for Natural and Organic Beef, J. Agric. Appl. Econ. 34 (2016) 39–49. https://doi.org/10.1017/s1074070800002133
[34] K.B. Maguire, N. Owens, N.B. Simon, The price premium for organic babyfood: A hedonic analysis, J. Agric. Resour. Econ. 29 (2004) 132–149.
[35] A. Bonanno, A Hedonic Valuation of Health and Nonhealth Attributes in the U.S. Yogurt Market, Sci. Agribus. 32 (2016) 299–313. https://doi.org/10.1002/agr.
[36] S.M. León, Determinación de precios inmobiliarios en caba y efectos de política de transporte: modelos espaciales y evaluación de impacto, (2016) (Doctoral dissertation, Universidad del CEMA (UCEMA)).
[37] G.E.P. Box, D.R. Cox, An Analysis of Transformations, Journal of the Royal Statistical Society: Series B (Methodological), 26 (1964) 211-243.
[38] G. Ferro, I. Benito Amaro, What factors explain the price of top quality wines?, Int. J. Wine Bus. Res. 30 (2018) 117–134. https://doi.org/10.1108/IJWBR-05-2017-0036-.
[39] L. Rossetto, L. Galletto, Retail strategies for rosé wines in Italy: a hedonic price analysis. Int. J. Wine Bus. Res. 31 (2019) (3), 282-302. IJWBR-03-2018-0013. https://doi.org/10.1108/IJWBR-03-2018-0013.
[40] H.H. Ali, C. Nauges, The Pricing of Experience Goods : The Example of en primeur Wine, Am J Agr Econ, 89 (2016) 91-103. https://doi.org/10.1111/j.1467-8276.2007.00965.x.
[41] B.E. Steiner, Australian wines in the British wine market: A hedonic price analysis, Agribusiness 20 (2004) 287–307. https://doi.org/10.1002/agr.20012.
[42] L. Cembalo, C. Gianni, D.G. Teresa, S. Riccardo, C. Tagliafierro, Beyond Agropiracy: The Case of Italian Pasta in the United States Retail Market, Agribusiness 24 (2008) 403–413. https://doi.org/10.1002/agr.
[43] L. Martínez-Carrasco Martínez, M. Brugarolas MolláBauzá, F.J. Del Campo Gomis, A. Martínez Poveda, Influence of purchase place and consumption frequency over quality wine preferences, Food Qual. Prefer. 17 (2006) 315–327. https://doi.org/10.1016/j.foodqual.2005.02.002.
[44] S. Szathvary, S. Trestini, A Hedonic Analysis of Nutrition and Health Claims on Fruit Beverage Products, J. Agric. Econ. 65 (2014) 505–517. https://doi.org/10.1111/1477-9552.12056.
[45] R. Cooper, T.W. Ross, Prices, Product Qualities and Asymmetric Information: The Competitive Case, Rev. Econ. Stud. 51(2006) 197-207. https://doi.org/10.2307/2297687.
[46] L. Cembalo, F. Caracciolo, E. Pomarici, Drinking cheaply: The demand for basic wine in Italy, Aust. J. Agric. Resour. Econ. 58 (2014) 374–391. https://doi.org/10.1111/1467-8489.12059.