Escobar González, Cristina

Gil Roig, José María

Kallas, Zein

English

UPCommons

Are preferences for red wine in special occasion heterogeneous?: forced versus non forced approach

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Parc Mediterrani de la TecnologiaEdifici ESABCarrer Esteve Terradas, 808860 Castelldefels, BarcelonaKALLAS, Z.; ESCOBAR, C. &  GIL, J.M.Center for Agro-food Economy and Development(CREDA-UPC-IRTA)Barcelona, SpainARE PREFERENCES FOR RED WINE IN SPECIAL OCCASION HETEROGENEOUS?: FORCED VERSUS NON FORCED APPROACHVIII Congreso Nacional de Economía Agraria, 14-16 septiembre de 2011, Madrid, España.VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.1. INTRODUCTION2. OBJECTIVE4. METHODOLOGY5. EMPIRICAL APPLICATION7. CONCLUSIONS6. RESULTSOutline3. CASE STUDYVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.2. OBJECTIVES The objective of this research is twofold: To use the Dual Response choice design as an alternative to thetraditional CE design usually used to compare both approaches. To assess consumer preferences and willingness to pay of redwine consumed in a special occasion in Catalonia obtained fromforced and non-forced choice.VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.3. CASE STUDY The wine sector in Catalonia, as in overall Spain, represents animportant fraction of its agriculture and food industry. In Catalonia there are 12 Designations of Origin (DO), including theDO Cava. They represent more than 90% of the grape growing surface inCatalonia  wine production is specialised in quality wine (DO)VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.3. CASE STUDY Wine household consumption in Catalonia has diminished from 21.1litres per capita in 1999 to 13.2 in 2009. Nevertheless, for the same period, quality wine consumption has risen14.2%. Consumers are experiencing a change of habits, diminishing wineconsumption frequencies, but demanding higher quality winesVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.3. CASE STUDY The market share of Catalan DO wines in retailer channels and in theHORECA sector in Catalonia is low, concentrating all together the27.1% in the rolling year ended in September 2007. Under this environment, it is of our interest to determine consumers’wine preferences in Catalonia.VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. The traditional and common approach is to analyze forced versusnon-forced choices is to realize two studies simultaneously4. METHODOLOGY:4.1. The Experimental DesignVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. The alternative approach is the Dual Response Choice Experimentdesign that we propose in our work.4. METHODOLOGY:4.1. The Experimental DesignVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. Independent of the decision to include or exclude an “opt-outoption”, the usually applied model fall within the standardMultinomial Logit. The main assumption that underlie theformulation of this model is the IIA (Independence of IrrelevantAlternatives) constraint. Several models are defined to overcome this limitations  The HEVmodel relaxes the restrictive IIA property of the MNL model byallowing different scale parameters across alternatives4. METHODOLOGY:4.2. The Econometric modelingVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. Probability that an individual will choose alternative i from the set C4. METHODOLOGY:4.2. The Econometric modeling,  1  Pr ( )   Pr ( )   iii j i ii i j j i j i ij C j i j i iV VP U U V V d                           The above probability expression collapses to the MNL IiiVVininineeP1Are differentin the HEVin no choice k k ikV ASC X  The Utility function:VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.4. METHODOLOGY:4.2. The Econometric modeling The Utility function to analyze consumers’ heterogeneity:The relationship between the valuations of attributes and respondents particular characteristics (social, demographic and behavioral variables) are included. 0 ( )in k ki k p k i pnk k pV ASC X X S     VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.5. EMPIRICAL APPLICATION:5.1. Attributes and levels Wine is a difficult and confusing product for consumers to choose(Lockshin et al., 2006)  immense number of cuesTYPERed WhiteRoséSparklingLiquoredOthers...COO ROODOBRANDPRICEPACKAGINGAWARDSTASTE VINTAGEGRAPESALCOHOL CONTENTVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.PRICE When consumers do not have information about theproduct, it generally performs as a proxy to infer thequality of the product when:1.The product cannot be evaluated2.The risk of making a wrong choice is highIt will depend on the consumption occasion Christmas5. EMPIRICAL APPLICATION:5.1. Attributes and levelsVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.COUNTRY OF ORIGIN Plays a key role in the consumers’ decisionmaking process In Spain, DO have been claimed as main determinantof wine prices and significant for consumerschoices. Nevertheless, studies in Catalonia had not been yetperformed5. EMPIRICAL APPLICATION:5.1. Attributes and levelsVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.BRAND  For some authors is the key unit of decision In our super communicated societies consumers’ minds reject tostore some information  the amount of information thatconsumers use to make a decision is smallOr GENERIC TYPESGRAPE VARIETYROODO In Spain mixed results have been foundIn our experiment we added two French varieties, and a typical traditional Spanish variety. We aim to determine if the preference is for French varieties in general.5. EMPIRICAL APPLICATION:5.1. Attributes and levelsVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.KWOLEDGE OF THE WINE 1. Previous knowledge of the wine2. Recommended wine and,3. Prestigious wine.Prior tasting experience and recommendations have beendetermined as consumers’ main selection cues when buying winein retail stores.By the third level we try to ascertain the effect of a knownbrand name in front of the other two alternatives.5. EMPIRICAL APPLICATION:5.1. Attributes and levelsVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.Attributes symbols LevelsOrigin A1 Catalonia (regional), Spain (national), Imported (international)Knowledge A2 Own Experience, Recommendation, PrestigeVariety A3 Cabernet Sauvignon, Grenache, Merlot Price A4 €6 , €10, €14 A full orthogonal factorial design 81 hypothetical products can begenerated from 34x34 (6,561) possible combinations. Orthogonal fractional factorial design  9 choice sets5. EMPIRICAL APPLICATION:5.2. Experimental designVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.5. EMPIRICAL APPLICATION:5.2. Experimental designVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. Included variables to analyze consumers’ heterogeneity:Social and economic variables: Gender Age  Household social class  Place of birthBehavioral variables related to wine involvement:  Wine purchase frequency  Reading the information about wine published on the press Variables related to attitude towards Catalan wines: Catalan wines have good flavor, texture and palate  Catalan wines possess well known brands and have public prestige and, Catalan wines are reasonably priced5. EMPIRICAL APPLICATION:5.3. Heterogeneity analysisVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. As an example, the utility function for the gender variable:1 21 21 21 21 21 2Price1 21 21 21 21  jn OPT OUT ORIG ORIGj jKNOW KNOWj jVAR VARj jjORIG GEN ORIG GENKNOW GEN KNOW GENVARV ASC ORIG ORIGKNOW KNOWVAR VARPRICEORIG GEN ORIG GENKNOW GEN KNOW GEN                             1 221GEN VAR GENPRICE GENVAR GEN VAR GENPRICE GEN       5. EMPIRICAL APPLICATION:5.3. Heterogeneity analysisVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. Data used in this analysis was obtained from a face-to-facequestionnaire with 400 consumers that were qualified by havingpurchased a bottle of wine in the last 3 months.5. EMPIRICAL APPLICATION5.4. SamplingPopulation Consumers over 20 years who purchase regularly food and are residents in the metropolitan area of Barcelona.Sample Design Stratified sample by age and postal districts using proportional affixation to the number of persons by stratum.Field Metropolitan area of BarcelonaSample Size 400Confidence interval  4.9Confidence level 95.5% (k=2)Control measure Pilot survey (25 questionnaires)VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.6. RESULTS6.3. Heterogeneity of consumers’ preferencesAll obtained models are significant and show a good fit with highlysignificant likelihood ratios. Consumers’ red wine preferences for a special occasion in Cataloniaare highly heterogeneous. Nevertheless, a general TREND might beelicited from all estimated models.• CATALAN origin and the CABERNET SAUVIGNON variety are the mostpreferred attribute levels.• PREVIOUSLY EXPERIENCED wines are preferred over recommended orprestigious wines in most cases.VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.6. RESULTS6.3. Heterogeneity of consumers’ preferences. The Implicit Price-IPAttribute: Origin The willingness to pay for the overall preferred ORIGIN (Catalonia) is higherwhen the opt-out option is included. The exceptions are the OLDEST SEGMENT of consumers (from 60 to 70years old) and FOREIGN consumers. For a SPANISH origin, IPs are lower when the opt-out option is taken intoconsideration, although they REMAINED POSITIVE in all cases. The exceptions are the YOUNGEST SEGMENT of consumers (from 20 to 34years old), the Spanish consumers that were BORN OUT OF CATALONIAand the UPPER SOCIAL CLASSES. A FOREIGN wine origin DIMINISHES the willingness to pay when the opt-outoption was included, thus heightening its negative utility.VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.Attribute: Grape variety The willingness to pay for the preferred GRAPE VARIETY (CabernetSauvignon) is higher when the opt-out option is included. The exceptions are HIGH FREQUENCY wine buyers and those AGREEINGwith the aspects related to CATALAN WINES (good taste, known andprestigious brands and reasonable prices). For GRENACHE, there is not such a defined trend in the willingness to paywhen comparing forced and non-forced choices. For MERLOT, the willingness to pay generally DIMINISHES when the opt-outoption was included, except for those agreeing with CATALAN WINEShaving known and PRESTIGIOUS BRANDS.6. RESULTS6.3. Heterogeneity of consumers’ preferences. The Implicit Price-IPVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.Attribute: Wine Knowledge 6. RESULTS6.3. Heterogeneity of consumers’ preferences. The Implicit Price-IP For the generally preferred level (a PREVIOUSLY TASTED WINE) thewillingness to pay tends to be higher when the opt-out option is included. The exceptions are MEN, the MIDDLE SOCIAL CLASS and thoseDISAGREEING with the aspects related to CATALAN WINES (good taste,known and prestigious brands, and reasonable prices). For RECOMMENDED wines, the willingness to pay generally decreases,although a great variability is also found. PRESTIGIOUS wines also DECREASE the willingness to pay when the opt-out option is included The exceptions are the YOUNGEST segment of consumers (from 20 to 34years old), consumers that seek wine INFORMATION on the press andthose AGREEING with Catalan wines having GOOD TASTE andREASONABLE PRICES.VIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. The DRCE design has showed its capacity to analyze in oneexperiment forced and non forced choice. Non-forced choices heighten preferred levels by increasing theirwelfare estimates (and vice versa). This tendency is more clearly shown in the most valued attribute(origin). The HEV model is shown to be a good alternative to the standardMNL by relaxing the IIA restriction. More empirical studies need to be done comparing the DRCEdesign with the traditional CE design.7. CONCLUSIONS7.1. Methodological resultsVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España. Consumers have a high preference for the local (CATALAN) origin ofthe wine. The second highest preference refers to the “Cabernet Sauvignon”Variety. Wines that have been previously tasted by the consumer seem to bepreferred over recommended or prestigious wines.7. CONCLUSIONS7.2. Empirical resultsVIII Congreso Nacional de Economía Agraria,14-16 septiembre de 2011, Madrid, España.¡MUCHAS GRACIAS POR SU ATENCIÓN!

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Are preferences for red wine in special occasion heterogeneous?: forced versus non forced approach

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