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Geography versus brands in a global wine market

  • Günter Schamel

    (Humboldt University Berlin, Institute of Agricultural Economics and, Social Sciences, Luisenstrasse 56, D-10099 Berlin, Germany)

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    Producer brands increasingly dominate global wine markets, while generic advertising promotes regionality and exports (e.g., Australia, Spain). We analyze U.S. price data and quality indicators for 24 wine regions within 11 countries using a hedonic model. We assess the value of producer brands vs. geographical indicators, defining an indicator for high, average, and low quality producers (brands) within a region based on relative peer performance, i.e., whether they consistently produce qualities above or below their regional average. In contrast to high quality producers from France and Italy, their counterparts from the New World never exceed prices for high quality Napa Valley brands. Thus, New World wine still has to catch up with the Old World in terms of regional reputation, but leading brands are able to pick up much of the price differential. Generic promotions, export quality controls, and regional quality leaders emphasizing origin in their own marketing may level the playing field for laggard regions. [EconLit citations: D400, Q130, L140]. © 2006 Wiley Periodicals, Inc. Agribusiness 22: 363-374, 2006.

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    File URL: http://hdl.handle.net/10.1002/agr.20091
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    Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

    Volume (Year): 22 (2006)
    Issue (Month): 3 ()
    Pages: 363-374

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    Handle: RePEc:wly:agribz:v:22:y:2006:i:3:p:363-374
    Contact details of provider: Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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    1. Oczkowski, Edward, 2001. "Hedonic Wine Price Functions and Measurement Error," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 374-82, December.
    2. Landon, Stuart & Smith, Constance, 1997. "The Use of Quality and Reputation Indicators by Consumers: The Case of Bordeaux Wine," MPRA Paper 9283, University Library of Munich, Germany.
    3. 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..
    4. Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
    5. G¸nter Schamel & Kym Anderson, 2003. "Wine Quality and Varietal, Regional and Winery Reputations: Hedonic Prices for Australia and New Zealand," The Economic Record, The Economic Society of Australia, vol. 79(246), pages 357-369, 09.
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