IDEAS home Printed from https://ideas.repec.org/a/eee/jfpoli/v69y2017icp154-165.html
   My bibliography  Save this article

Organic price premium or penalty? A comparative market analysis of organic wines from Tuscany

Author

Listed:
  • Abraben, Lane A.
  • Grogan, Kelly A.
  • Gao, Zhifeng

Abstract

Previous literature suggests that the price of wine is a function of its intrinsic and extrinsic attributes. Studies have examined the price of wines from various wine producing regions using the hedonic price model to determine the correlation between wine attributes and price. However few studies have examined the relationship between organic production or certification and price. This study uses a hedonic pricing model to examine the price premiums associated with organic production and organic certification for Tuscan red wines produced between 2000 and 2008 in both the Italian and American wine markets. Controlling for a variety of wine attributes, the analysis finds that wines produced with organic practices, but not certified as organic and wines certified, but not labeled as organic receive a higher price compared to conventional wine, for wines with low quality ratings. However, as the wine’s quality rating increases, the positive effects of organic practices and certification on price decrease, and for wine with higher quality ratings, organic practices and certification is associated with lower prices relative to otherwise comparable conventional wines.

Suggested Citation

  • Abraben, Lane A. & Grogan, Kelly A. & Gao, Zhifeng, 2017. "Organic price premium or penalty? A comparative market analysis of organic wines from Tuscany," Food Policy, Elsevier, vol. 69(C), pages 154-165.
    • Handle: RePEc:eee:jfpoli:v:69:y:2017:i:c:p:154-165
    DOI: 10.1016/j.foodpol.2017.04.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306919217302737
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.foodpol.2017.04.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Loureiro, Maria L., 2003. "Rethinking new wines: implications of local and environmentally friendly labels," Food Policy, Elsevier, vol. 28(5-6), pages 547-560.
    2. Batte, Marvin T. & Hooker, Neal H. & Haab, Timothy C. & Beaverson, Jeremy, 2007. "Putting their money where their mouths are: Consumer willingness to pay for multi-ingredient, processed organic food products," Food Policy, Elsevier, vol. 32(2), pages 145-159, April.
    3. ., 2013. "Seld-organization and complexity," Chapters, in: The Rediscovery of Classical Economics, chapter 5, Edward Elgar Publishing.
    4. Smith, Travis A. & Lin, Biing-Hwan & Huang, Chung L., 2008. "Organic Premiums of U.S. Fresh Produce," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37626, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    5. ., 2013. "Causes of organizational failure," Chapters, in: Free to Fail, chapter 6, pages 49-60, Edward Elgar Publishing.
    6. Govindasamy, Ramu & Italia, John, 1999. "Predicting Willingness-To-Pay A Premium For Organically Grown Fresh Produce," Journal of Food Distribution Research, Food Distribution Research Society, vol. 30(2), pages 1-10, July.
    7. Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, vol. 107(441), pages 390-402, March.
    8. Li, Jinghan & Zepeda, Lydia & Gould, Brian W., 2007. "The Demand for Organic Food in the U.S.: An Empirical Assessment," Journal of Food Distribution Research, Food Distribution Research Society, vol. 38(3), pages 1-16.
    9. Edward Oczkowski, 1994. "A Hedonic Price Function For Australian Premium Table Wine," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 38(1), pages 93-110, April.
    10. Jing Xie & Zhifeng Gao & Marilyn Swisher & Xin Zhao, 2016. "Consumers’ preferences for fresh broccolis: interactive effects between country of origin and organic labels," Agricultural Economics, International Association of Agricultural Economists, vol. 47(2), pages 181-191, March.
    11. Eugenio Brentari & Rosella Levaggi, 2010. "Hedonic Price for the Italian Red Wine: a Panel Analysis," Working Papers 1001, University of Brescia, Department of Economics.
    12. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    13. Oecd, 2013. "Intergovernmental organisation activities," Nuclear Law Bulletin, OECD Publishing, vol. 2012(2), pages 131-142.
    14. Delmas, Magali A. & Gergaud, Olivier & Lim, Jinghui, 2016. "Does Organic Wine Taste Better? An Analysis of Experts' Ratings," Journal of Wine Economics, Cambridge University Press, vol. 11(3), pages 329-354, December.
    15. Vincenza Odorici & Raffaele Corrado, 2004. "Between Supply and Demand: Intermediaries, Social Networks and the Construction of Quality in the Italian Wine Industry," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 8(2), pages 149-171.
    16. ., 2013. "Why public organizations?," Chapters, in: Free to Fail, chapter 12, pages 139-151, Edward Elgar Publishing.
    17. ., 2013. "Organizational mortality and its fruits," Chapters, in: Free to Fail, chapter 5, pages 37-48, Edward Elgar Publishing.
    18. Petrescu (Neacºu) Claudia-Maria & Vladaia (Vlad) Madalina Lucia & Nistor Ion, 2013. "Reorganization, a Possible Bridge over Bankruptcy," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1432-1435, May.
    19. Ocde, 2013. "Activités des organisations intergouvernementales," Bulletin de droit nucléaire, Éditions OCDE, vol. 2012(2), pages 141-153.
    20. Boccaletti, Stefano & Nardella, Michele, 2000. "Consumer Willingness To Pay For Pesticide-Free Fresh Fruit And Vegetables In Italy," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 3(3), pages 1-14.
    21. Marco Costanigro & Jill J. McCluskey & Ron C. Mittelhammer, 2007. "Segmenting the Wine Market Based on Price: Hedonic Regression when Different Prices mean Different Products," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 454-466, September.
    22. Oecd, 2013. "Intergovernmental organisation activities," Nuclear Law Bulletin, OECD Publishing, vol. 2013(1).
    23. Kolodinsky, Jane, 2008. "Affect or information? Labeling policy and consumer valuation of rBST free and organic characteristics of milk," Food Policy, Elsevier, vol. 33(6), pages 616-623, December.
    24. Luigi Benfratello & Massimiliano Piacenza & Stefano Sacchetto, 2009. "Taste or reputation: what drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wines," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2197-2209.
    25. Kelly Grogan, 2015. "The value of added sulfur dioxide in French organic wine," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-25, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clarissa Laura Maria Spiess Bru, 2023. "Does the Tasting Note Matter? Language Categories and Their Impact on Professional Ratings and Prices," Working Papers Dissertations 105, Paderborn University, Faculty of Business Administration and Economics.
    2. Nematollahi, Mohammadreza & Tajbakhsh, Alireza & Mosadegh Sedghy, Bahareh, 2021. "The reflection of competition and coordination on organic agribusiness supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    3. Matthias Staudigel & Aleksej Trubnikov, 2022. "High price premiums as barriers to organic meat demand? A hedonic analysis considering species, cut and retail outlet," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(2), pages 309-334, April.
    4. Wei-Chun Tseng & Ya-Chu Yang & Yun-Ju Chen & Yung-Chih Chen, 2021. "Estimating the Willingness to Pay for Eco-Labeled Products of Formosan Pangolin ( Manis pentadactyla pentadactyla ) Conservation," Sustainability, MDPI, vol. 13(17), pages 1-18, August.
    5. Yuting Liu & Abdoul G. Sam, 2022. "The organic premium of baby food based on market segments," Agribusiness, John Wiley & Sons, Ltd., vol. 38(3), pages 533-556, July.
    6. Fabio Boncinelli & Andrea Dominici & Francesca Gerini & Enrico Marone, 2021. "Insights into organic wine consumption: behaviour, segmentation and attribute non-attendance," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-16, December.
    7. Trestini, Samuele & Stiletto, Alice, 2020. "Does Italian origin really determine a price premium for fluid milk? Evidences from a hedonic price analysis," Economia agro-alimentare / Food Economy, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA), vol. 22(1), June.
    8. Donato, Carmela & Adıgüzel, Feray, 2022. "Visual complexity of eco-labels and product evaluations in online setting: Is simple always better?," Journal of Retailing and Consumer Services, Elsevier, vol. 67(C).
    9. Naama Teschner & Daniel E. Orenstein, 2022. "A transdisciplinary study of agroecological niches: understanding sustainability transitions in vineyards," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(1), pages 33-45, March.
    10. Delmas, Magali A. & Gergaud, Olivier, 2021. "Sustainable practices and product quality: Is there value in eco-label certification? The case of wine," Ecological Economics, Elsevier, vol. 183(C).
    11. Christine Mauracher & Isabella Procidano & Marco Valentini, 2019. "How Product Attributes and Consumer Characteristics Influence the WTP, Resulting in a Higher Price Premium for Organic Wine," Sustainability, MDPI, vol. 11(5), pages 1-15, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caracciolo, Francesco & D’Amico, Mario & Di Vita, Giuseppe & Pomarici, Eugenio & Dal Bianco, Andrea & Cembalo, Luigi, 2016. "Private vs. Collective Wine Reputation," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(3), pages 1-20, August.
    2. Megan E. Waldrop & Jill J. McCluskey & Ron C. Mittelhammer, 2017. "Products with multiple certifications: insights from the US wine market," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(4), pages 658-682.
    3. Antonis Michis & Anna Markidou, 2013. "Determinants of retail wine prices: evidence from Cyprus," Empirical Economics, Springer, vol. 45(1), pages 267-280, August.
    4. Adam Wagstaff & Daniel Cotlear & Patrick Hoang-Vu Eozenou & Leander R. Buisman, 2016. "Measuring progress towards universal health coverage: with an application to 24 developing countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 32(1), pages 147-189.
    5. Jan Schnellenbach, 2016. "A Constitutional Economics Perspective on Soft Paternalism," Kyklos, Wiley Blackwell, vol. 69(1), pages 135-156, February.
    6. Swinnen, J. & Meloni, G. & Haeck, C., 2018. "What is the Value of Terroir? Historical Evidence from Champagne and Bordeaux," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277221, International Association of Agricultural Economists.
    7. Catherine Haeck & Giulia Meloni & Johan Swinnen, 2019. "The Value of Terroir: A Historical Analysis of the Bordeaux and Champagne Geographical Indications," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(4), pages 598-619, December.
    8. Corsi, Alessandro & Strøm, Steinar, 2013. "The Price Premium for Organic Wines: Estimating a Hedonic Farm-Gate Price Equation," Journal of Wine Economics, Cambridge University Press, vol. 8(1), pages 29-48, May.
    9. Florkowski, Wojciech J. & Carew, Richard & He, Senhui, 2008. "British Columbia Consumers' Preferences for Italian Wines: Reputation and Vintage Effects on Wine Quality and Prices," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44403, European Association of Agricultural Economists.
    10. Waldrop, Megan & McCluskey, Jill, 2016. "Impact of Organic, Sustainable, and Biodynamic Wine Making Practices on Wine Prices," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235217, Agricultural and Applied Economics Association.
    11. Cicia, Gianni & Caracciolo, Francesco & Del Giudice, Teresa & Sannino, G. & Verneau, Fabio, 2013. "The Role of Sensory Profile in the Extra-Virgin Olive Oil Consumers Choice," 2013 International European Forum, February 18-22, 2013, Innsbruck-Igls, Austria 164738, International European Forum on System Dynamics and Innovation in Food Networks.
    12. Dieter Pennerstorfer & Christoph Weiss & Andreas Huber, 2019. "Experts, Reputation and Umbrella Effects: Empirical Evidence from Wine Prices," Economics working papers 2019-08, Department of Economics, Johannes Kepler University Linz, Austria.
    13. Antoine Flahault & Walter Orenstein & Julie Garon & Olen Kew & Joan Bickford & Theodore Tulchinsky, 2015. "Comparing Israeli and Palestinian polio vaccination policies and the challenges of silent entry of wild poliovirus in 2013–14: a ‘natural experiment’," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 60(7), pages 765-766, November.
    14. Costanigro, Marco & McCluskey, Jill J. & Mittelhammer, Ronald C., 2006. "Identifying submarket in the wine industry: a multivariate approach to hedonic regression," 2006 Annual meeting, July 23-26, Long Beach, CA 21370, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Chen, Kuan-Ju & McCluskey, Jill J., 2018. "Impacts of Expert Information on Prices for an Experience Good across Product Segments: Tasting Notes andWine Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(3), September.
    16. Ricardo Sellers†Rubio & Francisco Mas†Ruiz & Franco Sancho†Esper, 2018. "Firm reputation, advertising investment, and price premium: The role of collective brand membership in high†quality wines," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 351-362, March.
    17. Sanja Lutzeyer, 2008. "Estimating Hedonic Prices for Stellenbosch wine," Working Papers 15/2008, Stellenbosch University, Department of Economics.
    18. Delmas, Magali A. & Grant, Laura E., 2008. "Eco-Labeling Strategies: The Eco-Premium Puzzle In The Wine Industry," Working Papers 37325, American Association of Wine Economists.
    19. Anna Carbone, 2021. "From Flasks to Fine Glasses: Recent Trends in Wine Economics," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(2), pages 187-198, July.
    20. Vincent Hoang & Takao Iida & Shigeru Matsumoto & Natsuki Watanabe & Clevo Wilson, 2014. "Market penetration of imported agricultural products: A hedonic analysis of the Japanese table wine market," Working Papers e083, Tokyo Center for Economic Research.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jfpoli:v:69:y:2017:i:c:p:154-165. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/foodpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.