The country brand trap

Abstract

Data on 14,284 bottles of wine from six regions or countries, used to estimate a hedonic price model that causally relates wine prices to individual quality and country brands.A positive and statistically significant relationship between price and individual quality is confirmed, and it is found that the premium or penalty attaching to wines because of their associated country brand has held steady over time, as has price-quality elasticity.Individual quality being equal, Chilean and Argentine wines continue to suffer a penalty of over 50% relative to Californian wines. Another finding is that the country brand problem will not be solved until countries that are newcomers to the industry, such as Chile and Argentina, succeed in producing a critical mass of wines of outstanding quality, for this is the factor that will ultimately determine whether their producers benefit from a good collective image or reputation.

Rhode Island and Connecticut wineries business strategy, performance, and management capabilities: a survey of managerial practices

“…Besides the importance of the management capabilities in the explanation of performance of these wineries, the fact that the differentiation strategy is also linked to a better performance has already been highlighted by D'Aveni et al ( 2010) and Brenes et al (2014); the authors defend the existence of a single business success strategy in sectors with high competitiveness, such as the wine sector. In the specific case of the wine industry and particularly in the New World, the differentiation strategy, based on the presentation of a product that increases consumer satisfaction, has also and already been pointed out as an explanatory factor of performance by various authors (Remaud and Couderc, 2006;Taplin, 2006;Cox and Bridwell, 2007;Berríos and Saens, 2012).…”

“…In the wine sector, these strategies have been effective in different competitive environments. The differentiation strategy has been linked to better business performance in the cases, among others, of French Bordeaux wines or California wines (Taplin, 2006;Cox and Bridwell, 2007;Berríos and Saens, 2012). The segment differentiation strategy has also been highlighted in the strategic behaviors of small wineries, they can compete whenever they focus their efforts in a market niche (Remaud and Couderc, 2006).…”

Unrecognized interdependencies in mental models—The case for taking feedback loops into account

“…The data used here comes from a recent study in the Chilean wine industry, where many vineyard executives feel challenged: The country's wine industry has displayed a rapid surge starting in the mid‐1990s, when labour and energy costs were low. However, two decades later, the steady rise of costs combined with a market category as “best price” has put growing pressure on margins (Berríos & Saenz, ). According to data gathered by Vinos de Chile (), the target prices aimed at by Wines of Chile for 2020 (Wines of Chile, ) appear to be impossible to reach.…”

The hedonic price model for the wine market: A systematic and comparative review of the literature

“…The significance of geographical indications is also notable in the case of New World wines (Berrios & Saens, 2012, 2015; Defrancesco et al., 2012). Some studies have delved into the interaction between individual and collective reputation, revealing various relationships: substitutive (Cacchiarelli et al., 2014; Cardebat & Figuet, 2009; Ling & Lockshin, 2003; Schamel, 2003), complementary or non‐rival (Cardebat & Figuet, 2004; Schamel, 2000), or with collective reputation being more significant for lower‐quality wines and individual reputation being more relevant for higher‐quality wines (Caracciolo et al., 2016; Costanigro et al., 2010; Rabkin & Beatly, 2007; Schamel, 2006, 2009).…”