Baliwag Polytechnic College

Baliuag, Bulacan

Factors Affecting on Consumers Potential Willingness to Pay a

Premium for the Health Benefits of Organic Wine

in the Philippines

A Research Proposal Presented to

Baliwag Polytechnic College

Group 6

Labor, Jasmin M.

Manuel, Ma. Yza Angelica A.

Mantala, Marjorie B.

Manlapaz, Rochelle B.

Nabor, Darell M.

BAFM 3A
Factors Affecting on Consumers Potential Willingness to Pay a Premium for the Health
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Benefits of Organic Wine in the Philippines

CHAPTER I

INTRODUCTION
 Factors Affecting on Consumers Potential Willingness to Pay a Premium for the Health
2
Benefits of Organic Wine in the Philippines

1.1 Background of the Study

In recent years, the production and sales of organic wine worldwide have shown a notable

positive trend. (Willer and Lernoud, 2019) This proliferating popularity and demand for organic

wine are said to be driven by consumer preferences which are influenced by their growing

awareness of health and environmental benefits that are linked to them. In view of this fact,

consumers are now more willing to pay a premium price for food, as well as for beverage

products made with fewer chemicals, perceiving these to be healthier and more ethical (Hughner

et al. 2007; Mann et al. 2012; Michaud et al. 2013). However, the benefits claimed for organic

wine are not yet fully understood and are still questionable. Likewise, the price levels of organic

wine have become a relevant issue for producers and consumers in the wine industry. Predicting

how much consumers are willing to pay for the health benefits of organic products is a challenge

(Gribben & Gitsham 2007).

Considering recent studies that directly investigated the producers' viewpoints, it is stated that

consumers will have to pay higher prices to make organic wine production to be possible. This is

because of the higher production costs of organic wine than the conventional alternative and the

perceived benefits inherent in their products. In addition, they believed that the higher the prices

for organic products, the greater value will place on them by the consumers, who perceive them

as higher-quality, healthier, and more environmentally friendly. On the contrary, as per

Schäufele and Hamm's study, price premiums are considered a major purchase barrier for

organic products and therefore may consequently prevent the growth of the organic wine

industry. In line with this, consumers, who are lacking precise knowledge of organic wine,
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perceived that the organic label wine is equivalent to lower prices, which results in organic wine

consumption regardless of the associated lower quality.

However, it is important to indicate that it is hard to predict the behaviors of wine consumers.

They vary in their demographics, wine knowledge, preferences, and behavior (Rojas-Mendez et

al., 2017). In fact, a study conducted by Schäufele and Hamm confirmed that higher levels of

knowledge are related to a more positive perception, and a greater willingness to purchase and

pay a premium for organic wine. Similarly, organic wine knowledge particularly at the attribute

level instills confidence in consumers during the purchase decision process. They are better able

to assess the product and put a value on it (Alba & Hutchinson 1987; Dodd et al. 2005

This study, therefore, would focus mainly on exploring the factors that influence consumers’

willingness to pay premiums for the health benefits of organic wine in the Philippines. This

paper intends to contribute to a further understanding of greater insights into consumers'

knowledge, perceptions, and preferences regarding organic wine, along with their attitudes,

motivations, and estimation of their willingness to pay a premium for organic wine. Behavioral

variables that include knowledge of organic wine, consumer attitude, motivation, perceived risk,

and risk reduction strategy, and, the social-demographic factors have been incorporated into this

model as determinants of willingness to pay.

1.2 Statement of the Problem

Compared to other food products, consumers’ wine choice is more complex (Lockshin and Hall,

2003). Due to the limited and incoherent knowledge of organic wine and organic farming, many
producers and consumers were initially skeptical of organic wine. They were cast doubt by the

marketing claims that the organic wine was of higher quality and free of potentially harmful

chemicals. As a result, they perceived the product as more prone to spoilage since it typically

lacked added sulfites and was more expensive to make as it was more labor-intensive compared

to conventional wine. (Geoffrey Jones & Emily Grandjean, 2018) Consumers’ knowledge of

organic wine is said to be significant and somehow affects their willingness to pay for a premium

organic wine. Nowadays, organic wine is taking a leap in the market and is primarily promoted

to consumers for its health and environmental benefits (Organic Research Centre 2008).

However, some studies have noted that consumers may perceive wine labeled as organic to be of

a lower quality, whereas others have found that consumers are willing to pay a premium price for

it. These findings seem to be confirmed by the results of Delmas and Lessem (2017), who have

found that consumers prefer an organically labeled wine over a conventional one when the wine

price is lower, which could be read as an indication that consumers perceive organic wine to be

of lower quality. On the other hand, the benefits of organic wine production without labeling

have been confirmed by the research of Delmas and Grant (2014), who demonstrated that

organically certified wine without an organic logo on the label increases the willingness of

consumers to pay more than they would for conventional wine. The purpose of the study is: (1)

to investigate the willingness of the consumer to pay a premium for the health benefits caused by

organic wine and; (2) to recognize and examine the factors that influence customer willingness to

pay more for the health benefits of organic wine. This research study was made to further

evaluate the importance of the organic attribute for wine in relation to other attributes, and to

identify the most important factors. The outcomes of the study will be beneficial to the producers

and consumers of the product.

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1.3 Research Question

Therefore, the current research paper can be summarized by the following questions:

I. Does consumer’s knowledge of health, environment and organic wine have an impact to

the consumer’s willingness to pay for the health benefits of organic wine.

II. Does consumer’s motivation towards organic wine influence the consumer’s willingness

to pay for the health benefits of organic wine.

III. Do consumer’s positive attitude towards organic wine have an impact to the consumer’s

willingness to pay for the health benefits of organic wine.

IV. Does consumer’s perceived risk have an impact to the consumer’s willingness to pay for

the health benefits of organic wine.

V. Do consumer’s risk reduction strategy influence the consumer’s willingness to pay for the

health benefits of organic wine.

1.4 Objectives of the Study

This research aims to determine the factors affecting on consumers potential willingness to pay a

premium for the health benefits of organic wine in the Philippines. This study aims to analyze

the impacts of consumer’s potential willingness to pay in relation to consumer’s knowledge,

consumer’s motivation, positive attitude, perceived risk, and risk reduction strategy to the health

benefits of organic wine. To end this 5 specific objectives are followed:

 Factors Affecting on Consumers Potential Willingness to Pay a Premium for the Health
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Benefits of Organic Wine in the Philippines

I. To determine the impacts of consumers knowledge of health, environment and organic

wine on the costumer’s willingness to pay for the health benefits of organic wine.

II. To analyze the effectiveness of consumer’s motivation towards organic wine on the

consumer’s willingness to pay for the health benefits of organic wine.

III. To investigate the impacts of consumer’s positive attitude towards organic wine to the

consumer’s willingness to pay for the health benefits of organic wine.

IV. To examine the effectiveness of consumers perceived risk in relation to the consumer’s

willingness to pay for the health benefits of organic wine.

V. To analyze the correlation between consumer’s risk reduction strategy and the

consumer’s willingness to pay for the health benefits of organic wine.

1.5 Scope and Delimitation

The scope of our study is for finding the factors affecting on consumers potential willingness

to pay a premium for the health benefits of organic wine in the Philippines.

The main focus of our study is to identify and asses the different reasons and goals of purchasing

organic wine and what are the factors affecting them to do so.

Due to the stringent guidelines required from the researchers, the data gathering will be

delimited to the subdivisions in the city of Baliuag, Bulacan particularly in Camella and Lumina

Incorporations. The respondents are the people who are aligned in the middle-class that has

capacity to purchased organic wine.

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The researchers will use a survey-questionnaire as an instrument to identify the factors affecting

on consumers potential willingness to pay a premium for the health benefits of organic wine.

Descriptive method in research will be utilized in this study to describe and know all the factors.

The duration of the study will be conducted within the first semester of the school year 2022-

2023. This study will also be utilized with limited amount of financial resources.

1.6 Significance of the Research

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1.7 Definition of terms

Willingness to pay - In behavioral economics, the willingness to pay (WTP) is the highest price

at or below which a customer will unquestionably purchase one unit of a good. This is equivalent

to the traditional economic concept of a customer reservation price. WTP, however, is viewed as

a range by other studies.

The constructive preference approach holds that consumer willingness to pay is a context-

sensitive concept, meaning that a consumer's WTP for a product is influenced by the specific

choice environment.

Organic Wine - that has been produced using organic farming practices, which forgoes the use

of synthetic chemical fertilizers, pesticides, fungicides, and herbicides, is known as organic wine.

There is a lot of jargon to understand if you want to consume organic wine. There are several

types of wine: conventionally produced wine, sustainably produced wine, wine made with

organic grapes but not produced in accordance with the National Organic Program, certified

organic wine, biodynamic wine, and wine made with organic grapes but not produced in

accordance with biodynamic standards. We provide some definitions to help people understand

the distinctions between various wine-making techniques.

Health Knowledge - is a theoretical construct that comprises particular and in-depth information

about the causes, risks, transmission, prevention, symptoms, and treatments of diseases, as well

as regarding health services and patient rights. Since the information in these categories is

obtained from reputable outside sources and is consequently regarded as explicit and factual, it is

of an objective nature. Previous research has shown the beneficial impact of a community's

general level of health literacy on illness prevention and health promotion. Similar to this, during

public health emergencies, public health information plays a critical role in lowering risky

behaviors and implementing protective and preventative activities. However, in the broad

empirical research in public health, a consistent and clear definition of health knowledge has not

been provided, and its lack of conceptual clarity has prevented solid evidence that shows its

effects on behavior, people's attitudes, or their contribution to the creation of public policies.
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1.8 Organization of the Thesis

RESEARCH START

CHAPTER I
INTRODUCTION

CHAPTER II
REVIEW OF
LITERATURE