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ABSTRACT. This study investigates the ability of winery tasting rooms to create brand awareness
and build long-term brand loyalty. Specifically, we test the conjecture that if tasting rooms create brand
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awareness and a pleasurable tasting room experience, then those visitors are more likely to recognize
and seek out those brands once they leave the tasting room. To measure these effects, we exploit
differences in tasting room characteristics to conduct a series of natural experiments from which we
analyze differences in off-premise retail sales away from the tasting room. We use scan data on wine
sold off-premise through traditional retail outlets to then test for differences among tasting room
characteristics. Our results indicate that tasting rooms act as a form of experiential marketing for
wineries, creating brand awareness and generating greater growth in off-premise retail sales. Finally,
we address issues of endogeneity and unobserved heterogeneity as potential sources of bias.
KEYWORDS. Pooled cross section time series analysis, quasi-experiments;brand effects, Tasting
rooms
Steven S. Cuellar, Ph.D., Department of Economics, Sonoma State University, Rohnert Park, CAUSA,
Phone (707) 664–2305, Fax (707) 664–4009, Steve. (E-mail: Cuellar@Sonoma.edu).
Robert C. Eyler, Ph.D., Department of Economics, Sonoma State University, Rohnert Park, CAUSA,
(707) 664–4256. (E-mail: Eyler@Sonoma.edu).
Rich Fanti, Sonoma Research Associates, Glen Ellen, CAUSA, Richie. (E-mail: Fanti@gmail.com).
Address correspondence to: Steven S. Cuellar, PhD., at the above address.
534
Cuellar, Eyler, and Fanti 535
tasting room workers’ incentives to sell at the Snyder, 2005) have been widely covered.
winery. As brand ambassadors, tasting room Perhaps the most obvious means of overcoming
workers are tasked with dual roles. On one information asymmetries of experience goods is
hand, they must create a pleasant and informa- through sampling. Sampling not only allows con-
tive wine-tasting experience. On the other hand, sumers to discern quality, it also serves as a means
as sales people often incentivized through com- of increasing brand exposure and awareness
missions, tasting room workers must also sell (Freedman, 1986; Heilman, Lakishyk, & Radas,
wine and increase club memberships. Although 2011; McGuinness, Bernnan, & Gendall, 1995;
a similar conflict exists in many retail outlets, it McGuinness, Gendall, & Mathew, 1992; Meyer,
is especially contentious in winery tasting 1982). While the use of sampling has been exam-
rooms where visits to wineries and wine tour- ined for a variety of products, we are unaware of
ism in general are as much about the “wine any similar studies of winery tasting rooms.
country experience” as about the wine (Beteta, In addition to allowing visitors the opportunity
2011). The wineries’ ability to balance these to sample its wines, tasting rooms provide an
dual roles ultimately determines the success of opportunity for a winery to shape the brands’
tasting rooms and to some extent the brand. image through the tasting room experience.
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While there is no question that tasting rooms While Keller and Lehmann (2006) provide an
provide a high margin, direct-to-consumer sales excellent review of brands and branding, shaping
opportunity, the ability to create brand aware- brand image through the tasting room experience
ness and brand loyalty resulting in long-term, falls under the broader rubric of experiential mar-
repeat customers from tasting room activity has keting (Holbrook & Hirschman, 1982; Schmitt,
not been empirically established. 1999; Senthil, Chandrasekar, & Selvabaskar,
It is here that we turn our attention by 2012; Terblanche & Boshoff, 2006) which has
answering two questions: First, are tasting recently seen a significant increase in use (Clark,
rooms an effective means of increasing on a 2012). Perhaps the highest profile example is that
winery’s long-term off-premise sales away of the Apple store, whose success was soon fol-
from the tasting room? Second, if tasting lowed by other technology firms Microsoft and
rooms are effective in promoting long-term Dell (Duncan, 2012). Best Buy’s decision to
retail sales, what type of tasting rooms are reduce store size and create more of a “show-
most effective? The paper proceeds as follows: room” atmosphere where consumers can come
Section 2 provides a review of the related lit- in and experience products but purchase online,
erature, while Section 3 discusses the data used or elsewhere, is another example (Bustillo, 2012).
as well as our sample areas. Section 4 presents Tourism and experiential marketing are
our empirical analysis, Section 5 summarizes tightly linked. Diesbach (2012) suggests that
our results and Section 6 discusses the short- persuasion and place are linked and that the
comings of the study as well as suggestions of use of icons (brands) and place link that place
future research. to the consumer as a way to cognitively connect
for future trips with the visitor acting as a desti-
nation (brand) ambassador to others. Because
2. LITERATURE REVIEW tasting rooms are destinations and themselves
tourism points of interest, the winery can use
Experience goods constitute a large portion of this mix of experience, geography, and brand
the retail market. As a result, issues that character- icons as ways to market sales in the tasting
ise experience goods such as asymmetric informa- room and later (repeat consumers).
tion (Akerlof, 1970; Nelson, 1970) and how firms Clarkson, Janiszewski, and Cinelli (2013)
resolve this asymmetry through the use of price provide experiments for consumers that are
and advertising (Milgrom & Roberts, 1986; seeking breadth and depth knowledge as con-
Nelson, 1974), warranties (Grossman, 1981) and sumers. The wine industry uses tasting rooms to
expert opinion (Cuellar & Claps, 2013; provide both experiences, and attract consumers
Eliashberg & Shugan, 1997; Reinstein & to reserve tastings as “depth” versus the general
536 JOURNAL OF TRAVEL & TOURISM MARKETING
tasting room which provides more breadth. In referrals, and a more desirable brand
specific, the experience provides a tie to future image for the selling firm.”
consumption. Clarkson et al. (2013) mentions
wine tasting indirectly as a way to consider such Although this quote refers to automobile sales-
experiences. people, we seek to investigate whether tasting
room environment has a similar effect. Namely
“For example, prior experience with a whether customer-oriented tasting rooms result
diversity of food flavors, as opposed to a in greater brand loyalty and long-term repeat
single food flavor, should allow a person sales away from the tasting room than more
to better appreciate the flavors of foods sales oriented tasting rooms? To be sure, however,
that are eaten on future occasions. not everyone is as sanguine about the relationship
Similar claims can be made about the con- between customer-oriented sales strategies and
sumption of any experiential good that is long-term brand loyalty. See Franke and Park
frequent, varied, and subjectively appre- (2006) for an elaboration on this point.
ciated (e.g., wine appreciation, art appre- In the wine industry, there are several
ciation, music appreciation).” studies that examine tasting rooms in particular.
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experience provides an opportunity for wineries drawback of scan data is that it only records
to build brand loyalty, while Dodd (1999) purchases in major US retail chains and does
examines the value of repeat customers to not represent wine sold on premise at wineries,
winery tasting rooms. purchases through wine clubs, or purchases at
The existing research on tasting rooms makes restaurants. Despite these limitations, the point
clear that providing an enjoyable tasting room of sale scan data works well for our analysis.
experience is important in building brand loy-
alty and generating long-term sales. We add to
the literature by testing this hypothesis. While 4. ANALYSIS
virtually all of the studies noted above rely on
survey data of tasting room visitors or profes- Our first question of interest is whether tast-
sionals, our research examines actual purchase ing rooms are effective at creating brand aware-
data to examine differences in tasting room ness and building brand loyalty. If this is true,
atmosphere. then tasting rooms that experience more visitor
traffic should experience greater retail sales
away from the tasting room than those experi-
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captured in the retail scan data set. A list of the of average monthly case volume, and produce
wineries is shown in Appendix Table A1 along more expensive wines than our Highway 12
with a map of the tasting rooms in Figure A1. corridor wineries. The Highway 12 wines are,
We refer to this as the Highway 12 corridor. however, more expensive than the Gallo
Within this sample, each winery sells multiple Sonoma Wines and are more expensive than
products resulting in a total sample of approxi- all wines on average.
mately 200 unique wines sold per month over Figure 1 shows indexed growth rates of off-
our sample time frame of 52 months for a total premise retail sales for the two Sonoma samples
sample of approximately 11,300 observed wine for May 2007 through approximately April
sales. 2011. Throughout most of the period, the
Our control group of low-traffic wineries is growth in retail sales at the high-traffic
taken from the more distant and remote northern Highway 12 wineries is above the growth rate
Sonoma County areas of Dry Creek and in sales of the low-traffic Northern Sonoma
Alexander Valley, located to the west and wineries. This difference is most pronounced
north of Healdsburg (North Sonoma). These during the holiday months, when wineries sell
areas are approximately 80 miles from San a disproportionate share of their annual sales.
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Francisco and 110 miles from Sacramento and While this appears consistent with the idea that
are an additional 30 miles from our high traffic tasting rooms act as an effective means of
Highway 12 corridor. We were able to identify increasing brand awareness and creating brand
10 wineries in this regions, which we desig- loyalty, the greater growth in retail sales of
nated Northern Sonoma, that both have tasting wines from high traffic tasting room wineries
rooms and sell through the major retail outlets. could have been caused by factors independent
Within our North Sonoma region, each winery of tasting room traffic. To investigate this, we
sells multiple products resulting in a total sam- compare the growth rate in sales of Highway 12
ple of approximately 100 wines sold per month wineries to that of all wines and to that of a
over 52 months for a total sample of 5099 large Sonoma County winery that does not
observed wine sales. operate a tasting room.
As a second control, we examine retail sales Figure 2 shows indexed growth rates for the
of a large Sonoma County winery (Gallo high traffic Highway 12 wineries along with
Sonoma) with no tasting room. Gallo Sonoma that of all wines as well as that of Gallo
would appear to be an ideal control given that Sonoma. In the first half of the period exam-
Gallo is one of the largest wineries in the world, ined, the growth rate in sales of the Highway 12
with wide distribution and high brand recogni- sample of wineries outperforms that of all
tion. Finally, as a third control group, we exam- wines. However, in the second half, the growth
ine the overall sales of all wines (both foreign rate in sales of the Highway 12 wines trend
and domestic) sold in the USA through the downward, while sales of all wines trend
retail channel. upward.
From the Table 1 summary statistics, you can As a final control, we include wines sold
see that on average, the wineries in our under the Gallo Sonoma brand. Gallo Sonoma
Northern Sonoma sample are smaller, in terms provides an interesting comparison because it is
Group Mean Mean Obs Under $10 $10 to Under $20 to under $30 to under Over $40
Cases Price $20 $30 $40
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
–0.3
–0.2
–0.1
0.1
0.3
0.5
0.7
–0.9
–0.7
–0.5
–0.3
–0.1
1-May-07 1-May-07
1-Jul-07 1-Jul-07
1-Sep-07 1-Sep-07
1-Nov-07 1-Nov-07
1-Jan-08 1-Jan-08
1-Mar-08 1-Mar-08
1-May-08 1-May-08
1-Jul-08 1-Jul-08
1-Sep-08 1-Sep-08
1-Nov-08 1-Nov-08
1-Jan-09 1-Jan-09
1-Mar-09 1-Mar-09
1-May-09 1-May-09
HWY 12
1-Jul-09 1-Jul-09
Cuellar, Eyler, and Fanti
HWY 12
1-Sep-09
All Wines
North Sonoma
1-Sep-09
1-Nov-09
Gallo Sonoma
1-Nov-09
1-Jan-10 1-Jan-10
1-Mar-10 1-Mar-10
1-May-10 1-May-10
1-Jul-10 1-Jul-10
1-Sep-10 1-Sep-10
1-Nov-10 1-Nov-10
1-Jan-11 1-Jan-11
FIGURE 2. Case Volume for Highway 12 wineries, Gallo Sonoma and All Wines
1-Mar-11 1-Mar-11
FIGURE 1. Indexed Case Volumes of High-Traffic versus Low-Traffic wineries in Sonoma County
539
540 JOURNAL OF TRAVEL & TOURISM MARKETING
a large, well-known winery but does not operate Where Casesit is the indexed, 9L equivalent
a traditional tasting room. Gallo Sonoma did, volume for region “i” in year t. The variable
briefly, operate a small tasting room in the “Time” is a trend in indexed case volume.
downtown plaza of Healdsburg, from 2003– “Region” is a vector of dummies and interaction
2010. As can be seen, Highway 12 wines terms for each region time. “Holiday” is a vec-
grew at greater rate than Gallo Sonoma, whose tor of dummy and interaction variables for the
sales fell throughout the entire period. months October, November and December and
region. The holiday dummy picks up any addi-
tional variation in the data during the retail
Regression Specification chain’s major sales season for wine.
The first column of Table 2 presents the
While the graphical analysis is consistent
regression results for the data represented in
with the hypothesis that tasting rooms act as a
Figures 1 & 2. In particular, Table 2 shows
brand ambassador, we measure the ability of
that sales of the Highway 12 wines fell slightly
tasting rooms to create brand awareness and
more than sales of the North Sonoma and all
build brand loyalty by estimating the following
wines. However, if we examine early period of
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regression:
the data, the Highway 12 wines grew at a
X greater rate than the North Sonoma wines. In
Casesit ¼ β0 þ β1 Timeit þ θ Region addition, the Highway 12 wines experienced a
X
þ γ Holiday þ uit (1) statistically significant greater increase in sales
All Under $10 $10 to Under $20 $20 to under $30 $30 to under $40 Over $40
Cases Cases Cases Cases Cases Cases
during the important holiday months than the wine club memberships rather than creating a
North Sonoma and all wines. Finally, Highway relaxed wine country experience. We treat these
12 wines also grew faster and experienced a wineries, along the Highway 29 corridor, as our
greater holiday boost than the Gallo Sonoma high-traffic “commercial” oriented tasting
wines. rooms. We are able to identify 16 wineries that
Both results are statistically significant. have tasting rooms along our Highway 29 cor-
While early trend in the data is consistent with ridor and are represented in the retail sales scan
the idea that tasting rooms act as an effective data for major retail outlets. A list of the Napa
means of increasing brand awareness and creat- wineries is provided in Appendix Table A2
ing brand loyalty that results in greater off-pre- along with a map of the tasting rooms shown
mise sales through traditional retail outlets, the in Figure A2. Within this sample, each winery
latter half appears inconsistent with that hypoth- sells multiple products resulting in a total sam-
esis. We provide an explanation for this appar- ple of approximately 461 unique wines sold per
ent conflict later. month over our sample time frame of 52 months
for a total sample of 25,373 observed wine
sales.
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opinions as evidence of the difference between such as Opus One and Francis Ford
Highway 29 and the Silverado Trail tasting Coppola’s Rubicon Estate. But it can get
room atmospheres. awfully crowded in summer. The other
route is the Silverado Trail, which avoids
the towns, is quieter, and has breathtaking
views.” (Locke, 2011)
Reviews
“Most people visiting Napa Valley stay on
“Most visitors stick to Highway 29, the the main Highway 29. That’s understandable
major thoroughfare through the Napa as the highway is lined with big name wine-
Valley. While the majority of the valley’s ries all in a row. But parallel to Highway 29 is
wineries are located on the highway, more The Silverado Trail, the road less travelled
than three dozen can be found on the less- but certainly no less rewarding for those
traveled Silverado Trail… The Silverado looking for scenic travels and great wineries
Trail… is the ideal choice… for people along the way. From small boutiques to
who’d rather spend their time in a winery famous names, wine caves to wine pairings,
tasting bar than in the stop-and-go traffic The Silverado Trail is the other Napa.” (Napa
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that clogs the main artery… usually trans- Tourist Guide, 2011)
lates to less crowded tasting rooms…”
(Olmstead, 2011) “Highway 29 is busy enough in certain
areas to require four lanes of traffic. The
“Yesterday, I had a meeting up in Silverado Trail, on the other hand, is quiet
Calistoga and figured I would take a lei- and serene, a winding, two-lane highway
surely drive down Highway 29, which running at a slightly elevated position and
most will agree is the most famous wine nestled against mountains on the valley’s
road for tourists in Napa. I thought that I eastern side.” (Nelson, 2001)
was going to visit a few wineries to see
how they handle wine tourism… Oh my The consensus of online opinions is that
god. Bumper to bumper traffic on 29. My there is a significant difference in tasting room
friends had told me how busy certain experience between Highway 29 and the
wineries got at the height of tourist season, Silverado Trail. Moreover, this difference is
but I was unprepared for such a huge flow consistent with our grouping of tasting rooms
of visitors so early in the year. In fact, into congested and sales orientated versus more
there were hundreds of people at the relaxed customer-oriented atmospheres. As we
winery between the tasting room, barrel will show, however, this is not to say that every
cellar, BBQ cookout, deli, and picnic tasting room along the Highway 29 corridor is
area. The tasting room had about 15 peo- congested and commercially oriented or that
ple staffing it, all busy with 3–7 people every tasting room along the Silverado Trail is
paying for tasting flights. And then there relaxed and enjoyable.
were about five cash registers churning Summary statistics for our Napa sample of
through very happy customers as fast as wineries are shown in Table 3, along with the
they could.” (O’Connell, 2012) summary statistics for all wines. As Table 3
“Silverado Trail is another popular road indicates, the sample of wineries along
for wineries and runs parallel to CA 29, Highway 29 are on average bigger in terms of
this road is less crowded and therefore average monthly cases sold and are lower
sometimes it is preferred over CA 29 priced than their Silverado Trail counterparts.
since the traffic moves faster on this Our methodology combines these elements
road.” (Travel and Tourism Info) into an estimation of how different tasting
room characteristics generate different retail
“Highway 29 is a straight shot from Napa sales environments for wineries in the Sonoma
to Calistoga and hits all the big names and Napa wine regions in California.
Cuellar, Eyler, and Fanti 543
Group Mean Mean Obs Under $10 $10 to under $20 to $30 to under Over $40
Cases Price $20 under$30 $40
Figure 3 shows indexed retail sales of wines than that of the Highway 29 wineries, but less
from our two Napa County samples as well as than that of the Silverado Trail wineries.
that of all wines. There are several points worth Once again we measure the effects of tasting
noting in Figure 3. First, the Silverado Trail room atmosphere on brand loyalty by re-esti-
wineries experienced a growth rate in retail mating Equation 1 for our Napa sample of
sales equal to or better than their Highway 29 wines. The first column of Table 4 represents
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counterparts in the off months, although similar the data shown in Figure 3 and indicates that
to that of all wines. Second, during the all- wines from the Silverado Trail experienced a
important holiday months, the growth in sales greater growth than wines from the Highway
of the Silverado Trail wineries significantly out- 29 as well as all wines, although the difference
performs both the Highway 29 wineries and all between the Silverado Trail and all wines is
wines. Third, since November 2008, the growth not statistically significant. However, the
rate in sales of the Silverado Trail wineries has Silverado Trail wines did experience a greater
been increasing while that of the Highway 29 holiday boost than the Highway 29 wines and
wineries has remained flat. Fourth, the growth all wines, both of which are statistically
rate in retail sales of all wine is slightly greater significant.
1
Hwy 29 Open
All Wines
0.8 Silverado Trail Open
0.6
Indexed Case Volume
0.4
0.2
–0.2
1-May-07
1-Jul-07
1-Sep-07
1-Nov-07
1-Jan-08
1-Mar-08
1-May-08
1-Jul-08
1-Sep-08
1-Nov-08
1-Mar-09
1-May-09
1-Jan-09
1-Jul-09
1-Sep-09
1-Nov-09
1-Jan-10
1-Mar-10
1-May-10
1-Jul-10
1-Sep-10
1-Nov-10
1-Jan-11
1-Mar-11
544 JOURNAL OF TRAVEL & TOURISM MARKETING
All Under $10 $10 to Under $20 $20 to under $30 $30 to under $40 Over $40
Cases Cases Cases Cases Cases Cases
Analysis by Price Point in sales than all wines in the under $10 segment
during the holiday seasons and experienced a
Recall from the Table 1 summary statistics, greater boost than the Gallo Sonoma wines
that the mean prices of our comparison group across all price segments during the holiday
wines were all different. This could potentially seasons.
bias our results if greater growth of the The results by price segment from Napa are
Highway 12 wines is the result of, for example, similar to those Sonoma. In particular, Table 4
lower-priced wines selling at a faster rate than shows that in the under $10 price segment, the
higher priced wines and not the result of tasting Silverado Trail wines grew at a faster rate than
room traffic. To control for differences across all wines as well as wines from Highway 29.
prices, we disaggregate our samples by price Both results were statistically significant. Again,
segment. Columns 4–5 in Table 2 show the similar to the Sonoma comparison, wines priced
regression results for five price segments: $30 to under $40 from the Silverado Trail grew
Under $10, $10 to under $20, $20 to under at a greater rate than all wines and wines from
$30, $30 to under $40 and over $40. Highway 29, although neither is statistically
Table 2 indicates that growth in sales for the significant.
lowest price segment (under $10) of Highway Similar to the Sonoma County sample,
12 wines was similar to that of all wines and Silverado Trail wines priced under $10 experi-
greater than that of the Gallo Sonoma wines. enced greater holiday sales than all wines and
Both results are statistically significant. wines from Highway 29, although neither is
Additionally, the growth in $30 to under $40 statistically significant. Finally, wines priced
wines from the Highway 12 sample grew faster over $40 from Silverado Trail experienced sta-
than all wines, although the difference is not tistically significant greater holiday boost than
statistically significant. More importantly, wines from Highway 29, but were not statisti-
Highway 12 wines experienced a greater boost cally different than all wines.
Cuellar, Eyler, and Fanti 545
The results from Sonoma and Napa provide marketing efforts aimed at off-premise retail
an interesting insight into the effects of tasting sales. This would lead to the spurious conclu-
rooms. Much of the increase in long-term off- sion that it was the difference in tasting rooms
premise sales comes from the lowest price seg- driving the results.
ment. This is in contrast to the wines offered at While this type of unobserved heterogeneity
the tasting rooms which are generally the may exist, it seems unlikely to bias our results
higher-priced wines. We view this as indicating for two reasons. First, summary statistics show
that consumer attachment built at the tasting that Highway 29 wineries are on average larger
room is to the brand and not to the specific than the Silverado Trail wineries and would
wines sampled at the tasting room. presumably have greater distribution and mar-
keting efforts. This would be inconsistent with
the Silverado Trail wineries experiencing
Econometric Issues greater growth in off-premise retail sales away
from the tasting room. Second, if our results
Our results from the Sonoma experiment are were driven by unobserved difference in winery
consistent with the hypothesis that wineries characteristics, these factors would have to have
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with higher traffic tasting rooms experience opposite effects in Napa and Sonoma given that
greater retail sales growth through off-premise the larger wineries experienced greater growth
outlets than wineries with lower traffic tasting in retail sales in Sonoma but lower growth in
rooms. Likewise, our results from the Napa Napa.
experiment are consistent with the hypothesis Despite our questions as to the effect of
that less congested and more relaxed tasting endogeneity and unobserved heterogeneity on
rooms that create a pleasurable tasting room our results, we nevertheless attempt to correct
experience are more effective at building brand for these with another set of experiments.
loyalty which results in greater retail sales
growth through off-premise outlets than more
congested commercial-oriented tasting rooms. Experiment no. 3―Open versus Reserved
Our results may, however, be biased due to Tasting Rooms
several econometric issues.
To begin with, a winery’s decision of where Ideally, we would like to test for differences
to locate its tasting room may be dependent on among wineries along the same stretch of
the level of its off-premise retail sales. This Highway 29 that differ only in tasting room
would occur if, for example, wineries with environment. Unfortunately, unlike wine which
greater retail sales chose to locate their tasting has many third-party rating agencies, there is no
rooms in high traffic regions. While this type of formal third-party measure of a tasting rooms’
endogeneity seems reasonable and would bias ambiance. Instead, we rely on a proxy variable.
our results, it would appear unlikely given that All of the tasting rooms we have examined thus
high sales wineries would have to have chosen far in both Sonoma and Napa are open to the
high traffic areas in Sonoma but lower-traffic general public. However, that is not true of all
areas in Napa. Nonetheless, we address this of the tasting rooms in our sample areas.
question below. Specifically, we identify a subset of tasting
A second problem may exist if the difference rooms along the same Highway 29 corridor
in the growth rates of retail sales between wine- that require a reservation prior to visiting. We
ries with high and low traffic tasting rooms was test whether a reservation requirement, which
the result of some unobserved difference in the ostensibly reduces traffic through a tasting
wineries unrelated to difference in tasting rooms room, acts as an effective proxy in differentiat-
characteristics. For example, the difference in ing our subsample of tasting rooms from those
the retail sales growth between Highway 29 open to the general public. A list of the wineries
and Silverado Trail wineries could be attributed with open and reserved tasting rooms is pro-
to factors such as greater distribution or greater vided in Appendix Table A3. If a reservation
546 JOURNAL OF TRAVEL & TOURISM MARKETING
requirement does differentiate those wineries Off-premise retail sales of wines from wine-
from the more highly trafficked and commer- ries with reserved tasting rooms along Highway
cially oriented tasting rooms, then tasting rooms 29 are not only greater than the growth in retail
that require reservations should experience sales of wines from wineries along Highway 29
greater off-premise retail sales growth than with open tasting rooms, but they are also
those that do not. Since many of the reserved greater than the growth in retail sales of the
tasting rooms are next to open tasting rooms Silverado Trail wineries and the Highway 12
along the same Highway 29 corridor, these wineries.
would appear to create an ideal control group Furthermore, while our comparison of retail
for the open Highway 29 tasting rooms. sales of wineries with tasting rooms along
Figure 4 shows indexed retail sales for open Highway 29 and the Silverado Trail may have
and reserved tasting rooms along the Highway been the result of some unobserved differences
29 corridor while Table 4 provides the regres- between the wineries along Highway 29 and the
sion results. Silverado Trail, this is clearly not an issue for
As Figure 4 and Table 4 indicate, not only is wineries with open and reserved tasting rooms
the growth rate in retail sales of wines from along Highway 29.
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wineries with reserved tasting rooms greater Figure 5 shows indexed retail sales for open
than that of wineries with open tasting rooms and reserved tasting rooms along the Silverado
during the off season, but also during the critical Trail. As can be seen in Figure 5, the results are
holiday season of October, November and mixed. While the growth in off-premise retail
December. Both results are statistically signifi- sales of the reserved tasting rooms is less than
cant and are consistent with the idea that wine- that of the open tasting rooms, off-premise holi-
ries with reserved tasting rooms along Highway day sales of the reserved tasting rooms’ wines
29 benefit from both the high profile of are greater than that of the open tasting rooms.
Highway 29 and the relaxed environment of Regression results from Table 5 confirm the
the reservation requirement. graphical interpretation and indicate that both
FIGURE 4. Case Volume of Open versus Reserved Tasting Rooms along Highway 29, In Napa
County, California
4.5
Hwy 29
Open
4
Hwy 29
3.5 Reserved
3
Indexed Case Volume
2.5
1.5
0.5
–0.5
1-May-07
1-Jul-07
1-Sep-07
1-Nov-07
1-Jan-08
1-Mar-08
1-May-08
1-Jul-08
1-Sep-08
1-Nov-08
1-Jan-09
1-Mar-09
1-May-09
1-Jul-09
1-Sep-09
1-Nov-09
1-Jan-10
1-Mar-10
1-May-10
1-Jul-10
1-Sep-10
1-Nov-10
1-Jan-11
1-Mar-11
Cuellar, Eyler, and Fanti 547
FIGURE 5. Case Volume of Open versus Reserve Tasting Rooms along the Silverado Trail, Napa
County, California
1.5
Silverado Trail Open
1.3
Silverado Trail Reserved
1.1
0.9
Indexed Case Volume
0.7
0.5
0.3
0.1
–0.1
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–0.3
–0.5
1-May-07
1-Jul-07
1-Sep-07
1-Nov-07
1-Jan-08
1-Mar-08
1-May-08
1-Jul-08
1-Sep-08
1-Nov-08
1-Jan-09
1-Mar-09
1-May-09
1-Jul-09
1-Sep-09
1-Nov-09
1-Jan-10
1-Mar-10
1-May-10
1-Jul-10
1-Sep-10
1-Nov-10
1-Jan-11
1-Mar-11
of these observations are statistically significant. “An effective [tasting room] may generate
While these results may seem to contradict the lower immediate sales but, by placing
results from Highway 29, recall that the emphasis on factors like empathy and
Silverado Trail tasting rooms experience less responsiveness, generate very strong sub-
traffic than the Highway 29 tasting rooms and sequent brand loyalty, at a far greater
may be more similar to the tasting rooms along profit to the winery in the long term.”
Highway 12 in Sonoma. As a result reducing
traffic through reservation requirements may Tasting room managers must weigh the loss
reduce traffic to levels similar to the low traffic of high margin tasting room sales with potential
North Sonoma Wineries. long-term future sales away from the tasting
Finally, if our initial results comparing high- room. Our analysis provides some insight into
and low-traffic tasting rooms in Sonoma resulted the cost-benefit analysis tasting room managers
from high sales wineries choosing high traffic must make with respect to what kind of tasting
locations, our results comparing open and room atmosphere they want to create. In three
reserved tasting rooms along the same stretch of different natural experiments, using different
the Silverado Trail clearly do not suffer from the samples, different regions, and different sub-
same problem of endogeneity. samples within regions, we show that tasting
rooms are able to increase brand awareness
and build brand loyalty through the use of tast-
ing rooms. Our results from Sonoma tasting
SUMMARY rooms (Highway 12 versus North Sonoma)
show that more tasting room traffic is better
The question of how to train tasting room than less tasting room traffic in increasing off-
staff is of vital importance. As O’Neill and premise sales through traditional retail outlets.
Charters (2000) state, These results are confirmed by our analysis of
548 JOURNAL OF TRAVEL & TOURISM MARKETING
TABLE 5. Napa Reserved Regression Results concentrating on high margin tasting room
sales, tasting room managers may want to
Estimated Variable Cases instead concentrate on turning “A one off cus-
tomer …into a loyal advocate for the winery”
Time 0.004
[0.10]
(O’Neill & Charters, 2000). While those visit-
Napa29*Time −0.004 ing a winery’s tasting room may be a small
[0.28] subset of consumers, these “loyal advocates”
Silverado Trail*Time 0.003 not only become long-time purchasers, but
[0.47]
Napa29 Reserved*Time 0.029
they also work to convert others who have not
[0.00]** visited the winery tasting room into regular
Silverado Trail Reserved*Time −0.005 buyers.
[0.20] The conflict between creating a relaxed or
Holiday 0.266
commercial tasting room environment is exem-
[0.00]**
Napa29 −0.005 plified in a recent article in Wines & Vines,
[0.97] where a Napa-based firm that trains tasting
Silverado Trail −0.109 room staff noted that its,
Downloaded by [Steven Cuellar] at 07:31 12 August 2015
[0.33]
“mantra for tasting room staff is to
Napa29 Reserved −0.177
[0.11]
Silverado Trail Reserved −0.213 ● Sell wine
[0.06] ● Sell wine club memberships
Napa29*Holiday −0.01 ● Capture contact data”
[0.94]
Silverado Trail *Holiday 0.133
[0.30] and not to “pour wine and entertain visitors”
Napa29 Reserved*Holiday 0.678 (Franson, 2012). The results of this research
[0.00]** clearly question that philosophy and its ability
Silverado Trail Reserved*Holiday 0.425
[0.00]**
to create brand loyalty and long-term repeat
Constant −0.017 sales away from the tasting room.
[0.83]
Observations 260
Adjusted R-squared 0.75
DIRECTIONS OF FUTURE RESEARCH
Absolute value of t-statistics in brackets
* significant at 5% level; ** significant at 1% level Our results show that tasting rooms are effec-
tive at increasing brand awareness and creating
open and reserved tasting rooms along the brand loyalty resulting in long-term repeat sales
Silverado Trail in Napa. in off-premise retail outlets. Furthermore we
Our results from Napa show that wineries show that relaxed tasting room environments
along the Silverado Trail with more relaxed are more effective than commercial tasting
tasting room environments experienced greater room environments at building brand loyalty
growth in off-premise retail sales than the wine- and increasing long-term off-premise sales.
ries along Highway 29 with more commercial There are some limitations to our analysis. For
oriented tasting rooms. These results were con- example, we do not consider differences in
firmed even more emphatically in our examina- advertising, promotions or social media that
tion of open and reserved tasting rooms located may be driving the differences in sales.
along Highway 29. Additionally, there are several questions that
As noted, wine tasting is as much about the remain unanswered. For example, for wineries
wine country experience as it is about the wine that sells exclusively or mostly through tasting
and this research has broad implication as to rooms, wine clubs and restaurants, our results
what kind of tasting room environment wineries may not be relevant. A question more directly
may want to create and how tasting room staff related to these wineries is “what type of tasting
is trained and incentivized. Instead of room environment results in the greatest tasting
Cuellar, Eyler, and Fanti 549
room sales and the most wine club sign-ups?” Presentation at the Wine Tourism Conference, Napa,
Our analysis of third-party sales away from the CA.
tasting room does not address this question. Bruwer, J. W., & Alant, K. (2009). The hedonic nature of
wine tourism consumption: An experiential view.
In a broader context, for wineries such as
International Journal of Wine Business Research,
those included in our study who do sell through 21(3), 235–257. doi:10.1108/17511060910985962
both the tasting room and traditional retail out- Bruwer, J. W., & Lesschaeve, I. (2012a). Sources of infor-
lets, we do not investigation if greater off-pre- mation used by tourists travelling to visit canadian
mise sales through the retail channel outweigh winery tasting rooms. Tourism Planning &
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destination region brand image perception and ante-
and club sign-ups. While this would provide a cedents: Conceptualization of a winescape frame-
more complete picture of the costs and benefits work. Journal of Travel & Tourism Marketing,
of tasting room environment, there are several 29(7), 611–628. doi:10.1080/10548408.2012.
obstacles. First, there is no single source of data 719819
for tasting room sales and club membership Bustillo, M. (2012, May 29). Best buy forced to rethink
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APPENDIX