KEY MARKET VALUES FOR BOTTLED WINE

IN AN EMERGING MARKET:
PRODUCT ATTRIBUTES OR BUSINESS STRATEGY?
The case of chilean wine.
 Introduction

Nowadays chilean market :

3% of the worldwide wine growing area,
4% of wine production,
1% of world consumption.
4th largest exporter (8%)

In the 80's : lowprice / domestic market

Since the 90's: strategy evolved / International market
Chilean market:

Highly competitive and highly segmented /

about 400 companies Importance of the relationship between price and the
implied value of the different product attributes.

The formation of the price of bottled wine in the

Chilean market is defined by the different attributes of
Diverse range of products, with different the product and by the strategy adopted by the
price ranges and different objective and companies.
subjective attributes
Objective of
the paper
How do the strategies of companies and the objective and subjective
attributes of wine determine the price charged to consumers in the
local market?

Model used in the study is the quantile regression (QR) model.

Literature

review
Most of studies about wine pricing use an Option A Option B
hedonic methodology A wine without any A wine with both
specific cultivar geographical and
Definition: The hedonic pricing method stipulates mentionned cultivar appellation

that the price of a good or service depends on its

characteristics. (INSEE)

Origin: Frederik Waugh 1928: “Quality Factors

Influencing Vegetables
Prices.” Journal of Farm Economics 10: 185–196.

Buyers will prefer the

option B and are ready
to pay more
 Variables
Example of variables:
These studies defined the variables that affect
-quality designation, vine, production
the wine pricing
region, harvest year

-Oenological aspect (colour, aroma,

Objective variables bouquet, sweetness, acidity,

astringency, mouthfeel, body, typicity

Sensory variables and general evaluation

Chemical variables -Sugar content, alcohol content,

density

Other variables: Marketing; producer

related variation...
Method of The study is based on a unique database
of 810 bottles of only red wine available on
Data Analysis the Chilean market from a wine club, the
CAV.

what are the attributes of

Why CAV ? Why red wines ?
the objectives
• Largest number of wine • Different sensory
• National quality Wine score provide by
references characteristics
designation tasters
• Wine prices are identical • Different price ranges
• International quality • Age of wine
among outlets • Largest share of the
designation vine • The vineyard's business
• Wine are rating by experts domestics market (80%)
• Geographic origin strategy
 The classification of strategic groups

01 02 03
Group 1 Group 2 Group 3
Exclusive Low -to medium- Grand Traditional,
emerging, 30% priced, 18% 20%
Result Analysis

Prices in Chilean Pesos

Average price : $14,911

Median price: $8,545
Maximum price: $160,000
Result Analysis
Result Analysis
Result Analysis
Conclusions

Such as national and international quality

01 Objective attributes
designations, have a greater impact on the final
price.

02 Subjective attributes Such as promotion campaigns have been based

on the country of origin to position Chilean
wines in the domestic market.

03 Strategies Their importance varies depending on the type

of strategy used by the companies and the
analysed price level.
Improve

01 Increase wine sample size Especially in the high-priced wine segment.

02 Analyse white&sparkling wine together To determine if the results can be generalized to

the entire wine market.

03 Include other attributes in the study Such as label colour and design or organic
attributes of the product. This would offer a
more global view of the different attributes
affecting the final price of wine.
THANK
YOU
Group 4:
Gillot Vasseur Emma
Groubier Tristan
Husson Lucile
Manchon Chloé
Meng Ziyu