The Country of Origin Effect: A Hedonic Price Analysis of the Chinese Wine Market

Lala Hu, Andrea Baldin

Research output: Contribution to journalJournal articleResearchpeer-review

117 Downloads (Pure)

Abstract

Purpose: The purpose of this paper is to analyse the country of origin (COO) effect on wine purchase in China by considering a sample from an e-commerce website. The paper contribute to the literature on hedonic pricing by applying this model to the Chinese market and including COO as product attribute.
Design/methodology/approach: A hedonic price model is adopted to measure the effect of search attributes on wine sales in China. A reduced form of the classical hedonic analysis is used as in Nerlove (1995), given the assumption that prices and attributes are taken as exogenous to consumers.
Findings: Results show that the COO represents the attribute that most influences wine sales in China. Protected indicators of origin, which denote wine with recognised certificates, are also significant, reinforcing the importance of the production area. Vintage attribute does not impact sales, suggesting a low level of consumer experience with wine.
Research limitations/implications: The study suffers from the limitations of results’ generalisability, given the size and characteristics of the sample. In the future research, the model should be tested on a larger sample. Moreover, it can be applied on other products, in which COO represents an information and quality cue.
Practical implications: Firms operating in sectors where COO implies specific characteristics of quality should enhance this attribute in their marketing strategies to increase their competitive advantage. Also policy implications with respect to the governmental actions to support wine producers are discussed.
Originality/value: Hedonic price analysis represents a well-established model; however, to the best of the authors’ knowledge it has never been used in China before. This study also highlights the primary role of COO as search attribute in wine purchase.
Original languageEnglish
JournalBritish Food Journal
Volume120
Issue number6
Pages (from-to)1264-1279
Number of pages16
ISSN0007-070X
DOIs
Publication statusPublished - 2018

Bibliographical note

Published online: 19. June 2018

Keywords

  • China
  • Consumer
  • Country of origin
  • Wine
  • Hedonic price
  • New world wine

Cite this