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Food Quality and Preference 19 (2008) 360371 www.elsevier.com/locate/foodqual

Is there a market for functional wines? Consumer preferences and willingness to pay for resveratrol-enriched red wine
J. Barreiro-Hurle a,*, S. Colombo a, E. Cantos-Villar b
Agricultural Economics Area (AESA), Andalusian Agricultural Research Institute (IFAPA), Center Camino de Purchil, Junta de Andaluca, P.O. BOX 2027, 18.080 Granada, Spain b Postharvest Technology and Agro-food Industry Area, Andalusian Agricultural Research Institute (IFAPA), Center Rancho de la Merced, Junta de Andaluca Ctra. de Trebujena Km 3.2, 11.471 Jerez de la Frontera, Spain Received 10 July 2007; received in revised form 12 November 2007; accepted 13 November 2007 Available online 22 November 2007
a

Abstract The European Union is witnessing a rising level of concern regarding the relationship between diet and health. In response to this demand the food industry has developed so-called functional foods. Demand for these products is increasing in both volume and expenditure and the food industry is witnessing developments trying to expand the functional attribute to new groups of products. In this context we carried out an exploratory valuation exercise regarding the potential market for functional wine, a wine produced from grapes, in which the resveratrol content has been enhanced. A choice experiment approach has been used to assess the impact of the functional attribute on the probability of choosing a given wine among consumers of red wine in Granada, Spain, and their willingness to pay for dierent wine attributes. Results suggest that the functional attribute positively and signicantly aects the probability of selecting a red wine and that the willingness to pay for this attribute is as important as for ageing in wine. 2007 Elsevier Ltd. All rights reserved.
Keywords: Functional foods; Demand; Choice experiments; Red wine; Resveratrol; Andalusia; Spain

1. Introduction 1.1. Wine in the context of developing functional foods markets Consumers are assigning growing importance to nutrition and health issues when they make food-purchase decisions (Chern & Rickertsen, 2003). In response to these concerns, and driven by technology developments, functional foods have been developed by the food industry. Functional foods can be dened as those that can satisfactorily demonstrate to aect benecially one or more target functions in the body, beyond adequate nutritional eects, in a way that is relevant to either improved stage of health
Corresponding author. Tel.: +34 958 89 52 60; fax: +34 958 89 52 03. E-mail address: jesus.barreiro.ext@juntadeandalucia.es (J. Barreiro Hurle). 0950-3293/$ - see front matter 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.foodqual.2007.11.004
*

and well-being and/or reduction of risk of disease (Diplock et al., 1999). Nevertheless, the term functional foods is currently applied to a wide range of products, many of which do not respond exactly to this denition, and that can be better described as products promoted using health claims. Following the implementation by the European Union of Regulation 1927/2006 (OJEU, 2006), the divergence between both denitions is bound to be reduced. Under this new legislative framework, for a product to be allowed to carry a health-claim, sucient scientic evidence of the products benecial eect must be provided to the food authority (European Food Safety Authority), which will allow them on a case-by-case basis. It can be expected that not all current products marketed as functional foods will be allowed to use these type of claims and those allowed, will adhere to the Diplock et al. (1999) denition. No reliable data exists with regards to the size or growth of functional foods markets considering only products that

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comply with denition put forward by Diplock et al. (1999). Widening the denition to comprise all products bearing a health claim, this group of products has arisen as the fastest-growing sector of the food market, with the latest estimates forecasting an expected annual growth rate of 10% for functional foods as compared to an average 23% rate for the food industry as a whole (Verbeke, 2005, p. 45). In Spain, around 200 dierent products which claim to be functional foods can be found and the latest available gures show a market value of 4285 million Euro in 2003, with over 40% of all households consuming this food category (AC Nielsen, 2003). Other sources (Sanchez & Barrena, 2004) raise this gure to 75% of consumers who claim to have purchased functional foods at least occasionally. Although it cannot be said what portion of this functional market will be deemed functional using the Diplock et al. (1999) denition, its market growth will probably remain above the food industrys average. Wine has traditionally been identied as a healthpromoting product, due to its eects on coronary heart disease, after the so-called French paradox (Renaud & De Lorgeril, 1992), concerning the delay of tumour onset (Cliord et al., 1996; Delmas, Lancon, Colin, Jannin, & Latrue, 2006) and its high antioxidant activity (Kirimlioglu et al., 2006; Paganga, Miller, & Rice-Evans, 1999). These benets have been ascribed to the phenolic compounds that are abundant in red wine (Burns et al., 2000). Of the phenolics, the stilbenes group is one of the most important, with resveratrol (3,5,40 -trihydroxystilbene) being one of the main stilbenes found in wine. Wine with a higher content of resveratrol might therefore be regarded as a functional wine, according to the denition of Diplock et al. (1999), due to resveratrols positive eects on health.1 The Andalusian Agricultural Research Institute (IFAPA) is currently developing the technology to produce wine with enriched resveratrol content. This development is based on the experience of Threfall, Morris, and Mauro moustakos (1999) and Cantos, Espn, Fernandez, Oliva, and Tomas-Barberan (2003), who report the impact of using resveratrol-enhanced grapes on resveratrol concentration. The latter research shows that the concentration of resveratrol in wine can be doubled without aecting standard enological parameters (colour, acidity and specially taste).2

1.2. Functional foods and wine demand: literature review Since the functional food used in this study has not yet been marketed, approaches to studying its demand on the basis of actual purchases cannot be employed. Stated preferences (SP) techniques therefore have to be used. SP can be analysed in terms of purchase intention or monetary valuation. The potential of functional markets3 has been widely studied using consumption intention models. In these studies, consumption intention has been dened in two dierent ways: acceptance of functional foods (Verbeke, 2005) and willingness/likelihood/intention to purchase functional foods (e.g. Barrena & Sanchez, 2004; Cox & Bastiaans, 2007; Huotilainen, Pirttila-Back man, & Tuorila, 2006; Lyly, Roininen, Honkapaa, Pouta nen, & Lahteenmaki, 2007; Oconnor et al., 2005; Urala & Lahteenmaki, 2007). As an alternative to consumption intention models, choice experiments (CE) is a valuation technique that allows us to translate preferences into monetary terms. Applications of CE to evaluations of functional foods are scarce and limited to the US and Canadian markets (Asselin, 2005; Laure, West, Gendron, & Lambert, 2004; Teratanavat & Hooker, 2006; West, Gendron, Larue, & Lambert, 2002). Results from these studies show a general tendency to positive valuation for functionality (10 out of 11 products are positively valued) with the sole exception of omega 3 in eggs, which was negatively valued (Asselin, 2005). Premiums for functionality range from a maximum of 92.5% over the retail price for tomato sauce fortied with vitamins (Laure et al., 2004) to a minimum of negative willingness to pay for omega 3-enriched eggs. To date, no study has evaluated the potential for developing functional foods from wine, although research has addressed the issues of wine and functional food demand separately. Previous research on wine demand4 identied consumers choice as being more complex than their choices of many other products (Lockshin, 2004). Wine choice combines both intrinsic and extrinsic cues. In their review of six conjoint analysis of preference evaluation for wine, Martnez-Carrasco, Brugarolas, Del Campo, and Martnez (2006) identify origin, price and vintage year as the core attributes to be used when describing wine in order to identify preferences. Other factors that have been used to present wine choice sets include grape variety, brand and whether wine has received an award in a wine exhibition or not. In Spain, we found ve studies that analyse the prefer ence structure for wine (Bernabeu, Olmeda, & Daz,

Among these we can highlight antioxidant, cardioprotective and cancer chemopreventive eects. Soleas, Grass, Josephy, Goldberg, and Diamandis (2002) report over 200 scientic publications regarding the eects of resveratrol on health and Goldberg, Yan, and Soleas (2003) have undertaken in vivo testing, highlighting its high absorption capacity by humans. Doses considered in these studies could be obtained from moderate consumption (2 glasses a day) of the wine being developed at IFAPA. 2 Additional support for the lack of impact of resveratrol enrichment on taste can be found in products derived from resveratrol-enriched grapes (juices) which maintain their nutritional equivalence and taste compared with regular products (Cantos, Espn, Fernandez, Oliva, & Tomas Barberan, 2001).

Unlike market data for functional foods, SP studies have used products that do comply with Diplock et al., 1999 denition. From here onwards all references to functional foods should be understood under this denition. 4 A more comprehensive reviews of wine demand analysis can be found in Lockshin, Jarvis, dHauteville, and Perrouty (2006) and Martnez Carrasco, Brugarolas, Del Campo, and Martnez (2006).

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2005; Brugarolas, Martnez-Carrasco, Martnez Poveda, & Rico, 2005; Gil & Sanchez, 1997; Martnez-Carrasco et al., 2006; Mtimet & Albisu, 2006). Although attributes used varied among studies, a common pattern can be identied, in which price, origin, quality certication (understood as production under a designation of origin (DO)) and type of wine are core attributes aecting wine choice. Monetary estimates based on SP are provided by the two of these studies. Brugarolas et al. (2005) apply contingent valuation to value the organic production attribute in wine, and choice experiments have been used to value origin, grape variety and ageing by Mtimet and Albisu (2006). As far as functional food demand is concerned, consumption intention has been identied as being related both to individual sociodemographics and to attitudes and beliefs (Verbeke, 2005) and taste (Lyly et al., 2007; Verbeke, 2006). Preferences are very heterogeneous, being related to both consumer and product characteristics. In Spain, we have found only two studies concerning functional foods, neither of which employed monetary valua tion techniques (Barrena & Sanchez, 2004; Sanchez & Barrena, 2004). These studies identied consumer groups that were more likely to buy functional foods and the role that the perceived relationship between health and nutrition plays in the choice of functional foods. Results indicate the most preferred functional foods for Spanish consumers are those that prevent coronary and cancerrelated diseases; the main reason for consuming these prod ucts is their potential benecial eect on health (Sanchez & Barrena, 2004). This is interesting for the purposes of this study, since resveratrol-enhanced products would fall into this category. Label information seems to play a determining role for some consumers, while the belief in health benets is the most important factor aecting purchase decisions, a nding consistent with research reported in international studies such as those of Verbeke (2005), Urala and Lahteenmaki (2004), and Cox and Bastiaans (2007). 1.3. Objectives and justication The objective of this paper is twofold: rst, to estimate willingness to pay for functionality in wine, and secondly, to examine heterogeneity in consumer valuation of functionality in wine and to determine the eect of individual characteristics on consumers choice decisions. This paper contributes to the improvement and broadening of current knowledge about functional food and wine demand in several ways. With regards to functional foods we evaluate a new product category (wine) and a new component with functional properties (resveratrol); demand is focused on a market that has not been widely considered (Mediterranean countries, Spain in particular) and monetary estimates for functional value are obtained. Previous research on attitudes to functional foods (e.g. Poulsen, 1999; Urala & Lahteenmaki, 2004) has highlighted the importance of product-specic attitudes and consumer

segmentation on the acceptance of functional foods. Therefore, it can be argued that product development and marketing strategies for functional wine could be dierent from those for other functional products. As far as wine is concerned, functional attributes are assessed for the rst time; a specic group of wines (red wines) is considered and a choice experiment approach is used to obtain information on attribute values and willingness to pay (WTP) for hypothetical and real wines. 2. Material and methods 2.1. Method and model Several methods have been developed to value goods which lack markets. Based on stated preferences, choice experiments (CE) are an application of Lancasters characteristic theory of value (Lancaster, 1966) combined with random utility theory (Manski, 1977) which is now a fully edged method in economics.5 Dierent goods, characterised by dierent levels of several attributes (one of them being price), are presented pair-wise to individuals, who have to choose which one they would buy, or whether they would not buy either of them. Inclusion of this optout clause is signicant in product evaluation as in real purchase decisions consumers can defer purchases or purchase elsewhere (Enneking, 2004; Hu, Hunnemeyer, Veeman, Adamowicz, & Srivastava, 2004) and is regarded as the reference level for economic valuation of composite goods (see below). According to random utility theory, individual ns utility function for alternative i (Uin) is treated as the sum of two components: a deterministic and observable part (Vin), which contains the factors considered by the analyst, and a stochastic part (ein), which comprises the non-observable preference components, measurement errors and unobserved attributes. Typically, the deterministic part of utility is assumed to be linear in the parameters, Vin = bXin, where Xin is a vector of observed variables (wine characteristics in this study) and b is a vector representing the population mean preferences for each characteristic. U in b X in in 1

In Eq. (1), respondents are assumed to have homogeneous preferences, with the estimated coecients (b) being the average of these preferences (note that there is no n subscript). This assumption is unlikely to hold in the case of wine preferences, which are known to be heterogeneous. The random parameter logit (RPL) model approach (Train, 1998) allows respondents preference deviations relative to the average respondents preferences to be taken into account by adding a term to the utility function, gn.
5 In this section we merely present the basics of the choice experiment valuation technique, but a comprehensive review of the method and its ` applications can be found in Bennett and Blamey (2001), Louviere, Hensher, and Swait (2000).

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With this approach, the utility function of respondent n and alternative i is U in b X in gn X in in 2

Table 1 Sample socio-demographic prole Variable (units) Gender Age Female (%) Mean Max. Min. Std. deviation Mean (/month) Max. Min. Std. deviation Primary (%) Secondary (%) University (%) Sample 51.7 46.5 78 21 12.7 689.1 4500 150 561.4 40.3 32.7 27.0 Population 53.4 45.9 34.9 36.7 28.3

where Xin is a vector of observed variables, b is a vector representing the population mean preferences, gn is a vector of deviation parameters that describes the dierence between respondents n preferences and the population mean preferences (bn = b + gn), and ein are independent and identically distributed random terms. The RPL model thus estimates two kinds of parameters: a mean value (b), reecting the average preference of respondents for the attribute; and a standard deviation value (g), reecting the magnitude of dierences in respondents preferences for the attribute. Based on the characteristics approach of choice experiment, and given the attribute coecients, it is possible to estimate the marginal WTP (or implicit price) for increasing the quality or quantity of any attribute; Implicit price for attribute a ba =bprice 3

Per capita income

Educational level

Source: questionnaire and INE (2004).

where b are model coecients. Since the implicit prices are expressed for all attributes in monetary terms, the relative importance that respondents place on attributes can be determined, providing information for potential marketing strategies. The economic value of alternative goods which change the levels of some or all attributes simultaneously can also be estimated. The utility of any good is calculated by subtracting it from the utility of a reference good (the no-buy option in this study); the result is then divided by the negative of the cost coecient to convert from utility units to money-equivalent units of measurement (Bennett & Blamey, 2001). WTP 1=bm V 0 V 1 : 4

from Granada (Andalusia, Spain) were interviewed in February and March 2006. The sample prole and reference population gures (where available) are given in Table 1. 2.3. Attributes and scenarios The key attribute to be included in the choice experiment (CE) design for this papers objective is whether the wine is functional or not. This attribute has two levels described as wine produced from resveratrol-enhanced grapes and wine produced from non-enhanced grapes. Four additional attributes, identied in previous studies as aecting signicantly consumer wine choice, are included in the CE exercise: price, origin, type of wine according to ageing, and type of production. Qualitative attributes are coded using dummy codes. Table 2 reects the attributes and levels used.

where bm is the estimated coecient for the monetary attribute from the choice model, Vo is the value of the indirect utility associated with the reference option and V1 is the value of the indirect utility associated with any other option. In this context the WTP for dierent wines can be obtained. 2.2. Consumers As motives for wine purchase dier according to occa sion (Martnez-Carrasco et al., 2006) our research focused on consumption by households which, according to 2004 data provided by the Ministry of Agriculture, accounts for 35.4% of total quality red wine consumption (MAPA, 2004). A stratied sample based on the place where quality wine purchases takes place was used with posterior random sampling. Sample size per type of establishment (hypermarkets, supermarkets and traditional shops) was therefore xed according to real purchase data provided by Mercasa (2005). Consumers were thereafter selected at random, with every fth person who purchased wine in a given establishment being interviewed. Three hundred wine consumers

Table 2 Attributes and levels used in the choice experiments Attribute Origin Levels considered Andalusia La Mancha Rioja Rest of Spaina Conventional Organic Young wine Crianza wineb Regular Resveratrol content enhanced 3a 7 10 14

Production Method Type of wine Type of grapes used for production Price ( per bottle)

Reference level for multilevel attributes. Oak aged for more than six months but less than twelve + at least six months in bottle.
b

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Rioja and La Mancha are used as levels for the origin attribute due to their relevance in quality wine production in Spain. Andalusia is the region where our survey took place and where the functional wine is being developed; therefore, we are interested in determining how wine consumers value local products when compared to other reference regions in Spain. Four price levels between 3 and 14 per bottle were chosen to reect current prices for quality red wine after testing dierent options in the pilot survey (see below). Although taste is often perceived as being the most important attribute that consumers consider when making choice decisions, we deliberately excluded it from our design as taste is not aected by the inclusion of the functional attribute. Research shows that taste is not aected by the use of resveratrol-enhanced grapes (Cantos et al., 2003), so consumer choice should not be aected by the inclusion of the functional ingredient. Moreover, the inclusion of taste in non-consumptive hypothetical choice sets is very dicult (Teratanavat & Hooker, 2006) as verbal descriptions of taste could lead to subjective interpretations not related to taste itself,6 which does not play a major role when evaluating new products (although it is vital for continued consumption). An additional limitation on the inclusion of taste arises from the fact that surveys were carried out in the place of purchase, where actual tasting was not possible due to time constraints. Therefore, taste is assumed to be captured in other wine attributes (origin, production method, type of wine) and to be constant between products that dier only in the functional attribute. A full set of combinations of the attributes at their various levels would create a total of 128 possible combinations. In order to narrow this down into a reasonable number of combinations which could be tested, a fractional factorial design, orthogonal and balanced for main eects, ` was used (Louviere, Hensher, & Swait, 2000). The resulting design contained 16 wines (combinations of attributes). Choices included in the questionnaire were constructed using two fractional factorial designs which were randomly paired without replacement, resulting in 16 choices. During the questionnaire testing we observed that let respondents choosing among the 16 wines induced fatigue eect so we presented only eight choice cards to each respondent, splitting the 16 choice cards into two halves. 2.4. Questionnaires and procedures An initial version of the questionnaire was designed by the research team, focusing on wine consumption, functional foods and attitudes towards health, nutrition and food technology. This initial version was discussed in a
6 As mentioned by a reviewer, taste is a subjective concept itself, but introducing taste without consumption experience by using verbal descriptions would lead to subjectivity alien to taste and not controlled by the researcher.

focus group of ten wine consumers and tested on a pilot sample of 30 individuals. Some questions had to be reworded and additional information provided regarding functional foods, as many respondents knew what a functional food was but could not dene it. Therefore a short denition of functional foods was included in the nal version of the questionnaire.7 This pilot survey was also used to dene the four price levels included in the choice sets. The nal version of the questionnaire consisted of four different sections comprising 54 questions, and the average time required to answer it was 20 min. Interviews were carried out by a single professional interviewer trained specically for this survey, who approached consumers while they were purchasing wine. Interviewees were told that the questionnaire was part of a research programme undertaken by the Andalusian Agricultural Research Institute regarding wine and functional food consumption. The structure of the questionnaire was as follows: the rst section was devoted to wine consumption and motives inuencing wine purchase. After this section, knowledge and consumption of functional foods were addressed as well as nutritional knowledge using three questions similar to those proposed by Drichoutis, Lazaridis, and Nayga (2005). The questionnaire subsequently focused on the relationship between wine consumption and health before introducing the choice experiment. As resveratrol is an unknown substance for consumers (only 1% of our sample claimed to know what this compound is), a brief description of its properties and the process that leads to its enhanced presence in wine was presented to all interviewees. This is common practice in other functional valuation studies (see Section 1) where functionality has been described using combinations of nutritional and health claims.8 The description tried to be as neutral as possible as well as resembling the real characteristics of the wine currently being developed. Nevertheless, we could consider this description as a health claim for the product considered. The exact wording included in the questionnaire was the following. Resveratrol is a compound found naturally in grapes. Under normal circumstances it is found in very low concentrations or may even not be found in wine, and its concentration is higher in red wines.

7 The denition of functional food included in the questionnaire was developed following Diplock et al. (1999) and read: functional foods are those which have been modied as to provide a benecial health eect beyond their usual nutritional content. 8 Studies reported in the introduction section included descriptions such as: heart-healthy due to less saturated fat (for chicken breasts and potato chips), anti-cancer due to fortication with vitamins (for tomato sauce), enriched with omega-3 fatty acids and vitamin E (for eggs) and reduced risk of prostate cancer and heart disease due to increased presence of lycopene (for tomato sauce).

 J. Barreiro-Hurle et al. / Food Quality and Preference 19 (2008) 360371 Table 3 Example of a pair of wines presented in the choice experiment Wine A Origin Ageing Type of production Type of grape Price ( / bottle) Andaluca Young Conventional Non enhanced 3 Wine B Rioja Young Organic Enhanced 10

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I would choose wine A h. I would choose wine B h. I would choose neither h.

Several scientic studies (more than 200 in the past two years) have detected a positive relationship between resveratrol and the reduction in the risk of certain illnesses such as arteriosclerosis, cancer, brain ischaemias and inammatory diseases in general. Nowadays it is possible to increase the resveratrol content of grapes (and therefore in products derived from them, such as wine) using postharvest physical treatments. Thus, wine produced from grapes that have undergone this treatment can contain up to ve times as much resveratrol as wine produced from regular grapes. It has been shown that the increase in resveratrol content does not aect the wines organoleptic characteristics (taste, colour, aroma, etc.). After this information was delivered consumers were presented with the choice experiment. Choice cards (see Table 3) oered the consumer three options; two variable options which described hypothetical bottles of wine and one xed option oering consumers the possibility of not buying any bottle. Interviewees were asked to assume that they found the two wines presented in the card in their regular wine purchasing establishment, and to declare whether they would buy one of them, or whether they would not buy either, thus explicitly mentioning the no-buy option. The questionnaire nished with a set of questions designed to obtain individual data regarding socio-economic characteristics, attitudes and beliefs regarding nutrition, health and food consumption. 3. Results 3.1. Wine and functional foods consumption patterns and knowledge Average household monthly wine consumption is 3.8 bottles (2.9 l), equivalent to 34.2 l per year, so that with an average household size of 3.4 individuals, annual per capita consumption for our sample is 10.2 l. The maximum price that consumers pay for red wine under normal circumstances is 10.1 per bottle, with only 29.7% of the sample paying 12 or more for a bottle of wine. When asked whether wine is a healthy product or not, nearly all consumers identify wine as a healthy product (99.7%). Nevertheless, when consumers were asked to state

why they consider wine to be a healthy product, only 17% of the total sample could mention some reason, and a mere 34% of these (6% of total sample) provided an expected answer (presence of antioxidants or polyphenols). From this information we can conclude that there is a lack of knowledge regarding the healthy proprieties of wine, but this does not prevent consumers from thinking that wine is a healthy product. Regarding functional foods, 91.3% of the total sample claimed to have knowledge of this type of product, and 91.7% of the sample consumed them. The most commonly consumed functional food is a dairy product (76% of all consumed functional foods).9 The most important reasons behind functional food purchase and consumption would be their healthy proprieties and the ease of obtaining specic nutrients (both reasons scoring over 4.6 on a 5-pointscale of importance), while consumers strongly believe that functional foods are good for their health and can prevent specic illnesses (both statements scoring over 4.5 on a 5point agreement scale). When purchase intention is evaluated using a ten-point increasing scale, mean agreement level is 6.95 (S.D. 1.64), with 35.7% of the sample stating an agreement of 8 or more.

3.2. Consumer health and nutrition related attitudes and behaviour The questionnaire gathered data on agreement or disagreement with 10 statements regarding consumer attitudes and opinions regarding nutrition, health and food consumption, as well as on the importance of ve factors that aect wine purchase. In order to reduce the number of variables to be included in the model, a principal component analysis was carried out to summarise consumer characteristics. Table 4 shows the variables included in the factor analysis and the weight of these variables in the principal component space. From the principal component analysis we retained four components which explain 66% of the total variance. The rst component has been labelled information and trust and describes use of nutritional information on food labels, condence in food quality controls made by the authorities and private companies, believe in the potential of food technology and likelihood to try new products. The second component reects wine choice patterns, and captures the inuence of recommendations, presentation, publicity and previous knowledge when making wine choices. Note that these are characteristics not included in the attributes used in the choice cards. The third component, named health & diet concerns, jointly reects knowledge regarding the relationship between food and health and diet selection, avoiding fat and high salt levels in food. The last compo9 The most frequently consumed functional food would be fermented milk with added bacteria such as L. casei or plant compounds.

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Table 4 Principal Component Analysis of consumer attitudes relating to food, health and wine purchase Original variables I like to try new products on the marketa I believe technology improves food qualitya Food quality controls are reliablea I read the food labelsa Information from food companies is trustworthy a Wine buy: importance of recommendationsb Wine buy: importance of previous knowledgeb Wine buy: importance of brandb Wine buy: importance of presentationb Wine buy: importance of advertisingb I avoid fat in fooda I restrict my salt consumptiona I know the eects of food I consume on my healtha Frequency of sporting activities Frequency of vitamin intake
a b

Factor 1: Information and trust .779 .782 .837 .805 .884 .143 .007 .037 .150 .031 .236 .149 .574 .254 .027

Factor 2: Wine choice patterns .101 .127 .088 .042 .064 .736 .775 .819 .684 .744 .148 .010 .074 .099 .063

Factor 3: Health & diet concerns .144 .234 .141 .028 .010 .026 .083 .076 .055 .012 .829 .852 .404 .030 .083

Factor 4: Sports .015 .139 .118 .057 .092 .019 .147 .041 .017 .082 .092 .017 .098 .799 .876

Agreement with the statement on a 5-point Likert scale. Importance of factor when purchasing wine on a 5-point Likert scale.

nent (sports) is related to frequent performance of sports activities and consumption of vitamin supplements. Nutritional knowledge was measured using three questions regarding fat content, cholesterol content and daily caloric recommendations, and 45% of the sample provided correct answers to these three questions. Other relevant sample data include that 50.0% of the sample smoke, 66.6% drink alcohol several times per week, 14.7% follow some type of diet, while 46% has had cases of cancer in their family and 43.7% coronary diseases, with 73.7% of households declaring that at least one of those illnesses had been detected in their family. 3.3. Choice results Random parameter logit models consider respondents preference heterogeneity for wine attributes. Another potential source of heterogeneity arises from respondents socio-economic characteristics, attitudes and beliefs towards nutrition, health and food consumption. In order to include this information we added to the model specication, respondents socio-economic variables and a set of variables which describe respondents attitudes and beliefs. In order to include these variables, they were all interacted with the constant. They cannot enter the model on their own since, being invariant over choice occasions, Hessian singularity arises in model estimation. By interacting the socio-economic and attitude variables with the constant, the resulting model coecients need to be interpreted as the eect these variables have on the probability of buying a specic bottle of wine.

Of the three hundred respondents who were interviewed, one refused to perform the choice experiment exercise and only three did not provide all the information on the selected independent variables, which gave us 2368 (8 296) valid observations with which to estimate the model. Options A or B (buy options) were chosen 1813 times while the no-buy option was selected 555 times. The results of the random parameter logit model are presented in Table 5, where all available variables were included. Overall, the model is highly signicant (LRTest = 2028 signicant at the 0.000 level) and shows a good data t when the log likelihood value at zero and at convergence are compared (pseudo-R2 of 0.39).10 All wine attribute coecients are highly signicant, with the exception of the level Rioja for the origin attribute, which is only signicant at the 90% condence level, suggesting that the selected characteristics do indeed aect wine choices. Coefcients of the wine attributes were calculated from dummy variables. Their interpretation is as follows, the positive and signicant value of the Origin1: Rioja coecient means that wines produced in the Rioja region are preferred to wines produced in the rest of Spain. This is also true for wines produced in La Mancha region while Andalusian wines oer, on average, lower utility to consumers. At any rate, the signicant standard deviations of these coecients indicate that consumers preferences
The random parameter model is a non-linear regression model. To compare the model tting with the linear case, Domenich and McFadden (1975) showed that values of pseudo rho square between 0.20.4 correspond to values between 0.70.9 of the R2 in the case of the ordinary linear regression.
10

 J. Barreiro-Hurle et al. / Food Quality and Preference 19 (2008) 360371 Table 5 Eect of dierent attributes on the Random parameter logit model Attribute Mean values Constant Origin1: Rioja Origin2: La Mancha Origin3: Andalusia Ageing (Crianza) Type of production (1=organic) Type of grape (1=resveratrol enhanced) Price Gender (1=female) Respondents age Educationa Per capita income Functional wine purchase intentionb Knowledgec Cancer or heart attack in familyd Wine consumptione Innovative consumer (PCA score)f Wine choice (PCA Score)f Health and diet concerns (PCA score)f Sports (PCA score)f Standard deviations Origin1: Rioja Origin2: La Mancha Origin3: Andalusia Ageing Type of production Type of grape Number of observations Log likelihood at constant Log likelihood at convergence Pseudo R2
a b

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Coecient 0.41 0.28 0.50 0.26 2.22 0.63 2.42 0.41 0.07 0.00 0.16 0.00 0.29 0.01 0.05 0.09 0.13 0.24 0.14 0.02 0.0002 0.0006 0.0005 0.0004 0.0004 0.0004

Standard error 0.49 0.15 0.15 0.10 0.09 0.10 0.12 0.02 0.13 0.01 0.09 0.08 0.05 0.13 0.08 0.03 0.07 0.07 0.06 0.06 0.0003 0.0003 0.0002 0.0002 0.0002 0.0002

t 0.85 1.89 3.38 2.56 24.03 6.36 20.06 22.22 0.55 0.45 1.77 0.01 6.46 0.11 0.64 2.84 1.88 3.63 2.33 0.28 0.527 1.683 2.513 2.507 1.754 1.853 2368 2601.27 1587.27 0.39

P-value 0.398 0.059 0.001 0.010 0.000 0.000 0.000 0.000 0.585 0.651 0.076 0.992 0.000 0.915 0.522 0.005 0.060 0.000 0.020 0.782 0.598 0.093 0.012 0.012 0.080 0.064

Education. Respondent education (ascending 3-level scale). Measured using an increasing 10 point scale. c Knowledge. Dummy variable = 1 if respondent answered correctly the following three items: 1. Between butter and margarine, which has higher cholesterol content? 2. Between fried chicken and boiled chicken which has higher cholesterol content? 3. What is the recommends daily calorie intake? d Cancer or heart attack in family. Dummy variable which takes value 1 if interviewee declares events of cancer or cardiovascular diseases in his family. e Wine consumption. Continuous variable reecting average monthly household wine consumption. f Score obtained for the each of the factors presented in Table 4.

do vary across individuals, except for Rioja wines where the sample populations preferences are homogeneous. The rest of coecients show that ageing and organic wines are preferred to young and traditionally produced wines. A wine produced with resveratrol-enriched grapes also has a higher probability of being chosen than a regular wine. Turning to the interpretation of the socio-economic variables, model coecients show that only education signicantly aects choices, with the likelihood of choosing a buy option increasing with educational level, although the level of signicance is rather low (p=0.076). Concerning the attitude and belief variables, the functional wine purchase intention is highly signicant, indicating that people who stated they would be more willing to purchase functional wines are also more likely to select either option A or B than the no-buy option. This is to be expected, since in the choice cards 50% of the wines described in alterna-

tives A or B represented a functional wine. However, respondents might have chosen the 50% of wines which were not functional. In order to test whether respondents who show a higher purchase intention regarding functional wines indeed chose functional wines, we performed an analysis of variance, in which the dependent variable was the intention to purchase functional wines and the independent variable the type of wine chosen by the individual in the choice experiment. The values of the dependent variable ranged from 110, while the independent variable is a dummy, taking a value of 1 if the wine chosen had the functional attribute (produced from resveratrol-enhanced grapes). The results of this analysis showed signicant dierences between groups (p<0.01), with consumers which choose more frequently functional wines associated with a higher purchase intention for this type of wine.

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J. Barreiro-Hurle et al. / Food Quality and Preference 19 (2008) 360371 Table 6 Mean implicit prices (IP) and 95% condence intervals (CI) Attributes Mean IP () 95% C.I. Lower bound Origin1: Rioja Origin2: La Mancha Origin3: Andalusia Ageing (Crianza) Organic Production Resveratrol-enhanced grapes 0.67 1.22 0.64 5.41 1.53 5.89 0.02 0.55 1.14 4.94 1.09 5.49 Upper bound 1.41 1.88 0.20 5.88 1.98 6.34

The scores of the rst three principal components also aect choices. The positive coecients indicate that consumers who trust the capacity of technology, agribusiness and public administration to deliver safe and innovative products are more likely to buy a bottle of wine (that might be enriched with resveratrol). Along the same lines, people whose wine choices are aected by wine presentation, publicity, recommendations, etc., are more likely to select either option A or B. Finally, people who care about health and know something of the relationship between health and diet are more likely buy wines with the characteristics we oered. This was expected, given the rmly established idea that moderate wine consumption has a benecial eect on health. Here again, we tested the relationship between the principal component score and the observed choice of functional wine by performing an analysis of variance. In this case the dependent variables were the scores of the rst three components identied in Table 4. Results show that consumers with higher scores in the information and trust and wine choice pattern factors; i.e. consumers who trust the innovation process undertaken by agribusiness and the foods safety control framework and are more aected by wine presentation, publicity and recommendations when purchasing wine, more frequently chose functional wines. Unexpectedly, we did not detect any dierences in the choice of functional wine for people who care more about health and diet. 3.4. Implicit prices Implicit prices and 95% condence intervals, estimated using the Krinsky and Robb (1986) procedure, for the selected attributes are shown in Table 6. Respondents are willing to pay a marginal price of 0.67 to buy a Rioja wine than a rest of Spain wine. The latter is preferred to an Andalusian wines, with respondents being willing to pay 0.64 more for a wine produced in the rest of Spain than from one produced in Andalusia. The additional WTP for organically produced wines is 1.53 . This value is around 15% of the maximum price respondents declared they usually pay for a bottle of wine (10.11 ), while the implicit price of the crianza attribute is quite high, 5.41 , reecting consumers strong preferences for aged wines. Similar WTP values are estimated for the
Table 7 Consumers willingness to pay for selected red wines Wine A B C D E F G H Origin Andaluca Andaluca Andaluca Andaluca Rioja Rioja Rioja Rioja Type of production Conventional Conventional Conventional Conventional Conventional Conventional Conventional Conventional

resveratrol enrichment attribute; on average, respondents are willing to pay 5.89 more for wines made from resveratrol-enriched grapes. To obtain the WTP for bottles of wine with various attributes varying simultaneously, we need to dene a combination of wine characteristics and apply Eq. (4), where the utility of the no-buy option is set at zero. Considering the purposes of this study, we evaluated eight types of red wines, being primarily interested in the comparison between the Rioja and Andalusia origins (a well-established red wine-producing area and the region in which our research is taking place), young and crianza wines (as ageing has been detected to be one the most important attributes) and the functional characteristic (our market objective). Table 7 presents consumers WTP and 95% condence intervals for these wines. Note that wines A, C, E and G are marketed wines so the resulting WTP can be compared with market prices. The results should be considered as follows: consumers are willing to pay an average of 3.11 for wine A and 9.01 for a wine that is identical except that it has been produced with resveratrol-enhanced grapes (wine B). Note that in this case the two wines only dier in this attribute and the dierence in WTP corresponds to the implicit price of the functional attribute. Similar wines produced in the Rioja region are preferred and consumers are willing to pay 4.43 and 10.32 for wines E and F, respectively. The addition of the organically produced label to any of the wines presented here would increase the WTP by 1.53 , the implicit price of the method of production.

Resveratrol content Regular Enhanced Regular Enhanced Regular Enhanced Regular Enhanced

Ageing Young Young Crianza Crianza Young Young Crianza Crianza

Max. WTP /bottle (95% C.I.) 3.11 9.01 8.53 14.42 4.43 10.32 9.84 15.73 (1.664.47) (7.659.94) (7.109.94) (12.9415.84) (2.935.87) (8.9111.77) (8.3511.38) (14.267.19)

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4. Discussion and conclusions Our results suggest that there is a market potential for functional wines and that the premium that consumers are willing to pay for this functional attribute is estimated at 5.89 per bottle. This WTP implies a 55% premium for enrichment compared to the maximum prices consumers declare that they usually pay for wine, a gure which may strike us as signicant but is in line with reported estimates above and lower than actual prices paid for functionality in dairy products.11 Interestingly enough, the presence of the functional attribute is found to impact, on average, respondents utility much more than the production technology involved. This result, bearing in mind the small sample size and that preferences for these attributes are heterogeneous, is a clear counsel regarding sales potential; functional wines may well have higher likelihood of being bought than organic wines. This high value is encouraging for the production of functional wine from a cost/benet perspective, as high investment costs will be incurred before the product can reach the market but promising returns on investment seem possible. Before a denitive conclusion regarding whether resveratrol-enhanced wine could be a viable product can be reached, further research must be targeted on estimating the production costs associated with the process on an industrial scale (Maynard & Franklin, 2003). Consumer choices and valuation of functional wine are aected by consumer characteristics. Consumers who trust the technological developments in agribusiness and the control systems currently in place and those showing more concern for the relationship between diet and health tend to choose functional wines more often. This fact is consistent with previous research on functional foods (see Section 1), as this component involves information both on label use and knowledge of the eects of diet on health. A key strategy for this products success will be the promotion of functional wine so that respondents link the benets derived from resveratrol content with the general agreement on the association of wine as a healthy product. Wine consumers whose purchase decisions are aected more by marketing-related attributes display similar behaviour. This is an interesting nding, as this segment of consumers could be easily targeted through direct marketing channels such as wine clubs and is among the most dynamic market segments. On the other hand, as wine consumption increases, the probability of choosing any given wine on oer decreases, a possible explanation for this being that frequent wine consumers have well dened preferences for the wines they consume, and the likelihood that they will be willing to change them

for a new wine is lower than for occasional wine consumers. A primary concern regarding our results is that of reliability. Reported estimates could suer from the presence of hypothetical bias. Hypothetical bias puts forward the fact that responses with no real money involved signicantly dier from real purchases mainly due to the lack of economic commitment and budgetary restriction violation (Mitchell & Carson, 1989). The most straightforward method to test for the presence of this bias is to compare estimates from stated preference methods with real market data. In our case the product we are considered has not yet been marketed and therefore we cannot make such comparisons. Nevertheless, estimates presented in Table 7 allow WTP estimates for currently marketed wines to be compared with real prices. In Andalusia, over 70 brands of red wine, of which at least 30 are young, can be found on the market (Pen in, Casado, & Corsn, 2006). Our WTP estimates would allow purchases of ten of those wines (33% of the sample). In the case of Rioja, the range of prices is enormous, but for the estimated WTP one can easily nd a young red wine in a supermarket. We can also check whether incremental prices (marginal WTP) are consistent with current prices. Since red wine production is a fairly recent development and is not yet widespread in Andalusia there are no comparable data, as crianza wines include other quality attributes apart from ageing (other grape varieties, etc.). In the case of Rioja, we were able to nd 15 wines that are equivalent in terms of grape variety, vineyard and brand but dier in the ageing attribute (Penin et al., 2006). The average price premium for the crianza attribute is 110% of the price of the corresponding young wine. In our results the premium between wines E and G is 122%, which is not very dierent from the real market data. These results give us good cues that our estimates are free of hypothetical bias, which has been reported as a potential handicap for non-market valuation, specially in non-marketed environmental goods (Harrison, 2006). Secondly, marginal WTP for resveratrol-enriched Rioja wine could be dierent for the marginal WTP for the same wine when produced in a dierent region (the same holds true with regards to type of production or ageing). This is particularly relevant and the product considered has the least preferred origin (Andalusia).12 This study cannot test for these dierences, since an alternative specic design would be required to perform such a test. This should be considered in future studies, through the development of alternative choice set designs if the analyst is interested in testing the specic eect of the functional attributes in wines of dierent origin or ageing.

11 Currently one can nd regular natural yoghurt priced at 1.73 for a 125 g 8-pack, while enriched with bidus, this same product is priced at 3.05 , a premium of over 76% (prices were obtained from an Spanish online supermarket (www.eroski.com) on 22/05/2006).

12 Red wine in Andalusia is marginal in production (less than 10% of total wine production for 2002) and its white and noble wines are much better known (e.g. sherry), so it is not surprising that this category is the least preferred when geographical origin is considered.

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Another issue worth mentioning is that of the contingency of high prices for resveratrol-enhanced wines with our health claim. The description of the benecial properties of resveratrol-enriched wines may have been perceived as a form of publicity or recommendations for wines of this type, and may thus have increased the likelihood of buying. Functionality in this study was marketed with a health claim, similar to those currently used for other functional products (i.e. mentioning scientic evidence of the health properties). This hypothesis is supported by the eect of the variable information and trust on product choice, which reects the situation that those consumers who read nutritional information on food products labels are more likely to select functional wine. Therefore, if the results reported are to be extrapolated to real markets, health claims need to be made. Current EU legislation (see Section 1) explicitly excludes health and nutritional claims in any product containing more than 1.2% by volume of alcohol except for those related to reduction in alcohol or energy content (article 4, Section 3) and it is not foreseen that an exception will be made for wine in the near future (Andreu Palou,13 personal communication). Requesting an exception for wine would be a good strategy, as it would capture a potential market niche insofar as it implied a consumption shift from regular to functional wines rather than an increase in wine consumption. This exemption might be granted, as wine is treated separately from most alcoholic beverages due to its health-promoting properties when consumed in moderation. Generic advertising of resveratrol properties could be an alternative approach in the meantime. There are other limitations of this study that need to be highlighted, most of them related to its exploratory nature. First of all, our sample, although it is representative of wine consumers in the city of Granada, cannot be extrapolated to the average Spanish consumer. Granada is one of the poorest provinces of Spain (78.8% of national mean per capita income in 2003)14 and income eects have been shown to be relevant in wine and functional food purchase behaviour. Secondly, the choice model presented here does not take into account interactions between individual wine attributes which may aect values; this issue may be particularly relevant with respect to functionality and type of production, which have been identied as being highly correlated (Laure et al., 2004; West et al., 2002). Future research should be also devoted to a more detailed identication of motives and socio-economic characteristics underlying resveratrol-enhanced wine choice (including market segmentation), in order to permit the development of marketing and promotion strategies to increase the probability of success for such products.
Second Vice-President of the European Commissions Scientic Committee on Food. 14 Although no equivalent data can be found for per capita income as gathered in our survey, available data shows that our data are not very dierent from income levels in Granada.
13

Acknowledgements The authors thank four anonymous reviewers and the journals editor for comments which have substantially improved the nal version of this paper. The usual disclaimers apply. Financial support from the National Institute for Agricultural Research and Technology (INIA) through projects RTA2005-00020 (DISOPTIPOL) and RTA200500039-C03-00 is gratefully acknowledged. References
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