Product characteristics and reputation effects in the wine market

This dissertation analyzes the relationships between wine attributes and prices, with a focus on reputation effects. Contributions are made in the fields of industrial organization and econometrics, developing a model of firm behavior in the presence of collective and individual reputation incentives, and a technique broadly applicable to the task of estimating class-specific parametric models in the presence of class uncertainty. Data from California and Washington wines are analyzed. In a dynamic optimization framework, a theoretical model analyzes the firm's choice in maximizing the present value of its profits in a market in which the return of investing in quality is two-fold: collective (associated with the region of production) and firm reputation (associated with the brand or label). The results indicate that markets with fewer firms with both collective and firm reputation are conducive to the highest levels of quality.; The empirical part of the dissertation analyzes the effect of wine attributes on prices using hedonic models, while taking account of extreme product heterogeneity. It is hypothesized that multiple product classes exist. To identify and estimate class-specific hedonic models, two approaches are taken. The first approach uses price to segment the wine market, while the second uses all information to segment the market. In the price segmented model, accounting for multiple wine classes results in a greater ability to explain the variability in the data and produces more accurate and interpretable results regarding the implicit prices of the attributes. For the latter application, an innovative econometric technique is developed. First, a hedonic model for wine is estimated nonparametrically via local polynomial regression. Differences in the hedonic function across neighborhoods of data reflect changes in the underlying supply and demand functions. Data are then aggregated into groups of observations that share functionally similar estimates of the (local) hedonic functions. In this way, wine segments are endogenously determined on the basis of similarities in market equilibria. Using this methodology, four differentiated wine markets are identified: commercial, semi-premium, premium, and ultra-premium. Finally, parametric hedonic functions specific to each wine class are estimated, revealing significant differences in implicit prices of the attributes across classes

Obtaining and managing reputation price premia in markets for experience goods: evidence from academic research on the wine market

September 2009

Do Taste Buds Trump Labels and Information? A Sensory Test and Economic Experiment on Organic and Local Apples

Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Local and Organic: Substitutes or Complements? An In-Store Evaluation of Labels for Apples

Over the past two decades, consumer demand for niche products has grown substantially. The primary objective of this paper is to disentangle the value consumers place on two prominent food claims, organic and local (defined as Colorado Proud in this study) as they relate to fresh produce. Using primary data from a choice experiment conducted in a grocery store that has conducted co-promotional efforts with the Colorado Proud program, we found the value of the “local” claims trumps that of “organic” in apples. However, the difference in results between the experiments that offered participants either one- or two-pounds is far more pronounced, illustrating how scaling may influence estimates in such market-based research.choice experiment, local foods, organic, apple consumer demand, Agricultural and Food Policy, Consumer/Household Economics, Marketing, D12, Q11, Q18,

Role of consumers, wineries, and tourism

November 2013Professor Dawn Thilmany Ph.D., from CSU's Department of Agricultural and Resource Economics (DARE) oversaw the study with support from Associate Professor Marco Costanigro, Ph.D., and others.The Colorado Wine Industry Development Board commissioned a research project in 2012–2013 to assess the economic contributions the Colorado wine industry makes to the state. Conducted by Colorado State University, the research builds upon a similar 2005 study to better measure the wine industry's growth in Colorado over the past several years

Effects of alcohol liberalization on liquor stores and rural and urban shopping patterns, The

Includes bibliographical references

What Determines the Success of a Geographical Indication? A Price-based Meta-Analysis for GIs In Food Products

Food Consumption/Nutrition/Food Safety,

Creating loyal customers through social responsibility: how do dairy consumers value issue-based initiatives?

Includes bibliographical references (page 11).Businesses commonly seek ways to increase their competitive advantage in the marketplace, and marketing strategies often include differentiation through brands, promotions, label information or placement in popular marketplaces. An increasing number of food companies are creating loyal customers through connecting to concerns buyers may have about the environment, food safety, community issues and other social issues. This fact sheet explores how the dairy industry could frame their company actions to best match the interests, perceptions and values of dairy consumers.This project was funded by a grant from Aurora Organic Cairy, Platteville, Colorado

Food beliefs

November 2013.Includes bibliographical references (page 3).Product attributes (such as whether the product is organic) have been used to analyze consumer choices in market data. However, rather than generating utility directly, these attributes may instead be valued as a signal of a product outcome (such as nutritional benefits). For example, organic products may be valued because they are perceived as healthier, or they may be perceived as having a reduced environmental impact; "no sodium added" may communicate healthiness and improved flavor; and "cage free" may suggest improved animal welfare. In this paper, we examine how attribute information on food packaging influences outcome expectations. We show that when attributes are labeled but outcomes are unknown, the utility derived from the product attributes depends on the tradeoffs between alternative outcomes (preferences) and the perception of how those attributes determine outcomes (beliefs). In the second part of the research, we study consumer beliefs: specifically, how food labels and other package information influence expectations about nutritional and environmental outcomes for fluid milk products. Here we provide evidence that some attribute labels can bias consumers' expectations and are therefore potentially misleading