1. Are there wine preferences? Pascale BAZOCHE Pierre COMBRIS Eric GIRAUD-HÉRAUD INRA, ALISS, Ivry sur Seine

2. 1.Assessing Willingness to Pay for Appellation of Origin with Pinot Noir wines from Burgundy 2.Investigating preference heterogeneity with Chardonnay wines Outline

3. 1. Willingness to Pay for Appellation of Origin: an Experiment with Pinot Noir Wines in France and Germany

4. Can we assess the respective effects of sensory characteristics and label information on consumers' willingness to pay (WTP) for wines? What is the impact of grape variety, brand and appellation information on WTP? Do consumers from different countries react differently to this information? Can middle range Pinot Noir wines from Burgundy compete with generic Pinot Noir and branded Pinot Noir on the international market? Questions

5. Bourgogne : Magnien Bourgogne Passe-tout-Grains : La cuvée des Ducs Pays d’Oc : Les Salices (Lurton) Gallo : Turning Leaf Pinot noir Which wines?

6. Alternative Labels Which wines?

7. Labels

8. Alternative labels

9. 4.Random selection of 1situation X 1wine Actual sale 1.Blind tasting 4 wines: 4 prices 2.Label 8 wines: 8 prices 3.Full information + 4 wines: 4 prices Protocol (1)

10. 0 € Maximum buying price Participant Experimenter I don't buy I buy 4 € Incentive mechanism: the BDM procedure

11. 0 € Maximum buying price Participant Experimenter I don't buy 6 € Random selling prices 4 € Incentive mechanism: the BDM procedure

12. 0 € Maximum buying price Participant Experimenter I (must) buy 2 € Random selling prices 4 € Incentive mechanism: the BDM procedure

13. 0 € Maximum buying price 2 € 4 € 6 € All the prices you would be pleased to pay to obtain the bottle All the prices you would be pleased not to pay for that bottle Incentive mechanism: the BDM procedure

14. Subjects who did not usually drink or buy wine were not selected for the experiment Subjects who agreed to participate signed a consent at the beginning of the experiment Participants were asked not to communicate with each other before the end of the experiment (wines in random order) They were reminded that the experiment was not an assessment of the wines' market value but a sale They were asked to write down a maximum buying price on a paper after each evaluation They could refuse to buy and tick the corresponding option Protocol (2)

15. | n sex age size income price example -------+------------------------------------------------------------- Paris | 60 0.55 41.19 2.41 1558.47 4.83 6.93 Munich | 59 0.51 40.81 2.39 1240.96 5.42 7.00 -------+------------------------------------------------------------- Total | 119 0.53 41.00 2.40 1399.72 5.10 6.96 --------------------------------------------------------------------- Prob(  )| 0.65 0.86 0.92 0.03 0.25 0.92 n = sample size sex = sex of participant (Female=0, Male=1) age = age of participant size = household size income = monthly per capita income price = usual price paid for wine example = price example (control for anchoring) Participants

16. 119 participants X 16 wines = 1904 prices, 1538 prices > 0 Price (WTP) distribution

17. Refusals: 19 % 87% Price (WTP) distribution

18. All prices Participants' characteristics influencing WTP

19. % refusing to buy 95% confidence intervals of % of WTP=0

20. Probability(WTP=0) Probit-marginal probabilities of factors affecting participants’ decision to buy (1)

21. Probability(WTP=0) Probit-marginal probabilities of factors affecting participants’ decision to buy (2)

22. 95% confidence intervals of WTP>0

23. Factors influencing positive WTP (1)

24. Factors influencing positive WTP (2)

25. How to explain the small differences in WTP? 1.Consumers are unable to discriminate between wines OR 2.Consumers discriminate but their preferences are very heterogeneous and aggregations cancel out the differences Question

26. For each participant, in each situation, wines are ranked according to WTP: id wine price rank --------------------------- 1 Bourgogne 5 1 PTG 5 1 Gallo 0 3 Pinot 0 3 --------------------------- 2 Gallo 8 1 Pinot 7 2 Bourgogne 3 3 PTG 2 4 --------------------------- Mean WTP are then computed by rank WTP according to participants' preferences

27. 95% confidence intervals of WTP according to preferences

28. % Refusing to buy 95% confidence intervals of WTP=0 according to preferences

29. €/bouteille 95% confidence intervals of WTP>0 according to preferences

30. Blind Tasting ---------------------------------- | Rank Wines | 1 2 3 4 ----------+----------------------- Bourgogne | 35 23 39 22 PTG | 38 32 23 26 Gallo | 38 31 33 17 Pinot | 38 36 33 12 ---------------------------------- Full Information ---------------------------------- | Rank Wines | 1 2 3 4 ----------+----------------------- Bourgogne | 40 37 21 21 PTG | 36 32 35 16 Gallo | 42 16 33 28 Pinot | 41 29 34 15 ---------------------------------- Wine rankings in situations 1 and 3

31. Sensory characteristics and label information influence differently French and German consumers French participants respond very positively to AOC information AOC does not seem to be an efficient signal outside the country of origin Consumers have strong preferences Heterogeneity in preferences is very important and averages out differences when observing aggregated data What did we learn?

32. 2. Investigating heterogeneity with Chardonnay wines

33. ►Preference heterogeneity –Pinot Noir? –Non-expert consumers? –Wines were too similar? ► Chardonnay 1.Same experiment in Munich 2."Sensory oriented" participants (pilot study) 3.Wider price range (pilot study) Investigating preference heterogeneity

34. Chardonnay: "Munich" tasting 64 participants, Munich, 2007 (April 17-19th) Men: 55% Age: 18 to 65 (mean: 40)

35. 95% confidence intervals of WTP according to wines Chardonnay Munich Price (€/bottle)

36. 95% confidence intervals of WTP according to ranks Chardonnay Munich Price (€/bottle)

37. Chardonnay: "Sensory oriented" participants Sexe | Freq. Percent ------+----------------------- F | 14 60.87 M | 9 39.13 ------+----------------------- Total | 23 100.00 age | Freq. Percent ------+----------------------- 30-39 | 7 30.43 40-49 | 7 30.43 50-59 | 6 26.09 >60 | 3 13.04 ------+----------------------- Total | 23 100.00 23 participants, European Sensory Network meeting, Dijon, 2007 (November 22th)

38. 1.Blind tasting 3.Full information + 2.Label 4.Random selection of 1 situation X wine 2 wines: 2 prices Actual sale Protocol

39. Two Chardonnay wines Chardonnay Pays d'Oc: 3.60 € Pouilly Loché AOC: 6.00 €

40. Mean and 95% CI of reservation prices (€/bottle) according to wines and ranks Blind tasting Label Label + tasting -------------------------------------------------- | sit and Rank | -- Taste - -- Label - -- Full -- vin | 1 2 1 2 1 2 ----------+--------------------------------------- Chrdny | 13 10 5 18 15 8 Pouilly | 14 9 22 1 15 8 --------------------------------------------------

41. Chardonnay: "Wide price range" tasting Sexe | Freq. Percent ------+----------------------- F | 8 32.00 M | 17 68.00 ------+----------------------- Total | 25 100.00 age | Freq. Percent ------+----------------------- 30-39 | 6 24.00 40-49 | 7 28.00 50-59 | 9 36.00 >60 | 3 12.00 ------+----------------------- Total | 25 100.00 26 participants from Norway, Paris, 2008 (June 9th)

42. Chardonnay: "Wide price range" tasting Savigny-les-Beaune AOC: 25 € Gallo Chardonnay Sierra Valley: 5 € Chardonnay Pays d'Oc: 3.60 € Chassagne Montrachet AOC: 28 €

43. Mean and 95% CI of reservation prices (€/bottle) according to wines

44. Mean and 95% CI of reservation prices (€/bottle) according to wines and ranks

46. -------------------------------------------------------- | Sit and Rank | --- Taste -- --- Label -- --- Full --- wine | Rank1 Rank2 Rank1 Rank2 Rank1 Rank2 ----------+--------------------------------------------- Chrdny | 13 13 7 19 8 18 Brgne AOC | 14 12 22 4 21 5 --------------------------------------------------------

47. 1.Apparently there are clear preferences 2.Obviously they are very heterogeneous 3.What if they are not stable over time? Where are we now?