The current issue and full text archive of this journal is available at www.emeraldinsight.com/1751-1062.htm IJWBR 22,1 Appellation as an indicator of quality Thomas Atkin 42 Wine Business Program of the School of Business and Economics, Sonoma State University, Rohnert Park, California, USA, and Ray Johnson Wine Studies Program, Santa Rosa Junior College, Santa Rosa, California, USA Abstract Purpose – The purpose of this paper is to examine the consumer use of geographical information in the wine purchase decision. Consumers often rely upon the place of origin of a wine product in order to assess its quality. This research examines the importance of place-of-origin information and what level of place is meaningful to consumers, as well as which consumers utilize that information. Design/methodology/approach – Data collection took place by means of a highly structured online survey of 409 geographically dispersed wine consumers across the USA. Respondents were recruited by Survey Sampling International and screened for at least occasional wine consumption. Findings – Brand and place-of-origin information such as region, country and state were the most important attributes in the consumers’ choice of a wine. One type of geographical indicator, appellation, was not well utilized. Core wine consumers and those with greater expertise utilized place-of-origin cues to a greater extent than less frequent and less knowledgeable consumers. Research limitations/implications – The study sample represents US wine drinkers and should not be taken as a general population sample. Potential respondents were required to have consumed at least one bottle in the last year in order to take the survey. The non-probability sample includes participants from 46 states, 189 of whom are male and 211 are female. Practical implications – Wineries in established regions should increase their efforts to promote regional identity at the county, state and national level, to enhance their existing product images. Regional information is more heavily utilized by consumers than appellation information, which allows producers to take advantage of pre-existing levels of awareness. This research suggests that marketers develop strategies to increase sales that emphasize larger regions such as county or state rather than appellations. Originality/value – This paper is of value to academic readers, wine industry practitioners and regional trade and tourism associations and other commercial entities that market their products with regional cues. The geographically dispersed sample provides results that generalize well to the wine consuming public. Keywords Quality, Consumer behaviour, Wines, Viticulture, United States of America, Regional marketing Paper type Research paper Introduction Does the name ‘‘Russian River Valley’’ on a bottle of wine carry such prestige that it’s worth fighting to rewrite the area’s boundary line? (Berger, 2008, p. 1) International Journal of Wine Business Research Vol. 22 No. 1, 2010 pp. 42-61 # Emerald Group Publishing Limited 1751-1062 DOI 10.1108/17511061011035198 A petition by Gallo Family Vineyards to expand the boundaries of the Russian River Valley American Viticulture Areas (AVA) (appellation) has met opposition from others who believe it will dilute the value of the current appellation and confuse consumers (McCallum, 2008). This raises the issue of assessing the importance of appellation information in the minds of consumers as opposed to geographic entities such as county or state. Which level of place is useful to consumers? As the wine industry has evolved through consolidation and globalization, it has truly become an international business. US wineries continue to lose market share even as overall demand for wine is expanding here (Hussein et al., 2007). To compete with the onslaught of imported wines, US wineries need to identify attributes that will make their wines more attractive to consumers (Frey, 2008). It is necessary to develop wine products that can be differentiated from the competition (Bruwer, 2004). With the continued expansion of new products and competition, wineries are under constant pressure to differentiate their products in order to stand out in the marketplace (Lockshin, 1997). One way to differentiate products in the wine business is to emphasize the place of origin as an indicator of quality. It has been suggested that smaller wineries should build an image as quality wine producers by utilizing a placebased marketing strategy. The development of regional variants of their products is one strategy that small- and medium-sized enterprises can use to distinguish their product and realize added value (Van Ittersum et al., 2003). In such instances, a link would have to be established between the product’s place of origin and product quality (Thode and Maskulka, 1998). The geographic origin of the product is an attribute that can help persuade a consumer to buy a particular wine and is particularly useful to new wineries that have yet to develop a strong brand image of their own (Van Zanten et al., 2003). Consumers often employ information about the region of origin of a product to make inferences about the quality of the product (Verlegh and Steenkamp, 1999). There are many different cues on the wine package that may influence the consumer’s evaluation. These include region, sub-region, and country of origin as well as vintage, grape variety, style and vineyard. Recent studies have found that origin of wine is often perceived as an indicator of quality and may be used as the basis of decision making when purchasing wine (Duhan et al., 1999). An interesting question concerns the level of geographic detail that is useful to consumers. There is a trend toward promoting smaller appellation identities in the USA, such as the recently approved Rockpile appellation in Sonoma County and the proposed Calistoga appellation in Napa. In Australia, there has been a shift from ‘‘Brand Australia’’ to regional areas such as Barossa or Coonawarra (Tolley, 2005, p. 22). It is not known how much impact these strategies have on consumer wine-buying decisions and brand image perceptions (Bruwer, 2007). The aim of this research is to examine the utilization of appellation and other geographical information in the wine purchase decision. We tested appellation along with other information commonly found on wine labels. Consumer use of geographic cues to determine wine quality may vary based upon: . . The level of region (i.e. USA, California, Sonoma County, Dry Creek Valley). Which place of origin is most effective to promote wine? This is extremely important to small- to medium-sized wineries as they strive to remain competitive. Attributes of the consumer such as gender, age, knowledge and consumption frequency. . Attributes of the wine itself such as red or white. . Price category of the wine. Literature review Wine buying is a risky activity for most of the world’s wine consumers due to a high level of confusion stemming from the complexity of the wine market. Traditional wine Appellation as an indicator of quality 43 IJWBR 22,1 44 producing countries in Europe present information based on a combination of place names, vineyards, winemaking families and negociant labels. There are often growing techniques and winemaking requirements associated with the appellations. New World wines, on the other hand, are often identified by grape variety and brand name, but typically do not specify any quality requirements. This has allowed US brands like Smoking Loon and Turning Leaf to use grapes from other countries. More expensive wines from the New World, especially those at icon price points, rely more on place-oforigin cues to distinguish themselves from competitors. This still does not, however, specify any legal quality requirements. Ram and Sheth (1989) outlined five areas of resistance to consumer adoption of new products: usage barriers, value barriers, risk barriers, tradition barriers and image barriers. Risk barriers become relevant when customers are uncertain about physical, economic, functional or social risks from using a product (Mitchell and Greatorex, 1988). This is certainly the case in the wine market. For instance, most supermarkets carry ten or so brands of a particular product but they may carry over 700 wines (Lockshin, 2003). Wine is widely regarded as a complicated product from the viewpoint of the consumer so consumers employ risk reduction strategies. Reviewing the label for pertinent information such as place of origin is part of the wine consumers risk reduction strategy. ‘‘If we can understand how consumers choose wine, then we have a much better framework to decide pricing, packaging, distribution, advertising, and merchandising strategies’’ (Lockshin, 2003, p. 5). This will also help the industry in the product development process. Intrinsic and extrinsic cues Wine is a product that has a high proportion of characteristics that can only be assessed during consumption so the ability of the consumer to gauge quality prior to purchase is very low. According to Lockshin and Rhodus (1993), the average wine consumer is likely to rely upon extrinsic cues such as price or region of origin when making quality assessments. They also consider label, brand and shelf position (Jacoby and Olson, 1985; Lockshin et al., 2006; Lockshin and Spawton, 2001). Consumers use these cues as shortcuts or decision heuristics to inform their choice. Consumers also build trust with brands and regions whose track records have pleased them before (Bruwer and Wood, 2005). Intrinsic cues for wine buyers include grape variety, alcohol content and wine style – things that relate to the product itself. Because the quality-related attributes (such as taste and aroma) are not available, the consumer is forced to rely upon the extrinsic cues ( Jacoby and Olson, 1985). Many of these attributes are under the control of the producer so consumer response should be considered before implementing these attributes. These are also features that can be changed without actually changing the product (Lockshin and Rhodus, 1993). Lockshin (2000) asserts that brand name acts as a substitute for attributes such as quality and that brand acts as a shortcut in dealing with risk. However, it has been asserted that consumers do not have a clear understanding of branding in the wine market. Gluckman (1990) postulated that consumers attach the same status to generic grape varietals and regions as they do to brands. It appears that in certain wine consumption situations there is an element in the decision process that involves a risk-aversion strategy (Spawton, 1991b; Mitchell and Greatorex, 1989; Gluckman, 1990). Mitchell and Greatorex (1989) proposed that purchasing wine mostly involves functional risks such as social risks, financial risks and physical risks. Social risks may involve trying to avoid being embarrassed in front of business associates and friends; financial risks involve the cost of the wine and physical risks involve the actual effects from alcohol consumption. In the academic literature, Spawton (1991a) contended that the major influences on wine purchase decisions are: perceived risk; product cues such as brand, label and price; product experience and knowledge; and the product-use situation. Consumers employ a variety of strategies to cope with these risks. The author asserted that consumers strive to reduce the likelihood of making a bad purchase decision by using a variety of coping mechanisms. These include: . selecting wine brands that represent consistent quality and are included in the range of ‘‘safe brands’’ established in the mind of the wine consumer; . selecting wines based on the recommendations of friends and colleagues; . following the advice of sales associates; . using their own knowledge gained through wine education; . price (as an indicator of quality); and . packaging and labeling as an indicator of quality. Place of origin Place of origin is an attribute that can help persuade a consumer to buy a particular wine. Consumers often employ information about the place of origin of a product to make inferences about the quality of the product (Verlegh and Steenkamp, 1999). According to Van Ittersum et al. (2003), the influence of a product’s place of origin on product evaluation has mainly been studied from a country of origin perspective. In the words of Ballestrini and Gamble (2006, p. 400); ‘‘Wine is quintessentially a product related to territory, even if that territory is as widely defined as a country.’’ Wine is a product that has a very close connection to its place of origin and the origin of the wine is often used as an indicator of quality. Consumers often use origin image to ‘‘chunk’’ information and make a decision. An international research project recently indicated that the most important attribute for both Australia and New Zealand consumers was the geographic origin of wine (with local wines preferred over all other choices presented (Atkin et al., 2007a). Origin information typically serves as a halo from which inferences are made about unfamiliar wines. In the USA, the reputation of the Napa Valley can be used as an indicator of quality. Wines from other parts of the USA have a difficult time competing with Napa’s reputation. The origin information helps consumers to reduce perceived risk and assess the social acceptability of their choices (Papadopoulos and Heslop, 2002). Duhan et al. (1999) also found that the origin of wine is often perceived as an indicator of quality and may be used as the basis of decision making when purchasing wine. In a similar vein, Jarvis and Rungie (2002) used a choice-based experiment to reveal consumer utility values. The category ‘‘well known region’’ had the highest stated choice utility among all respondents. Those findings were in agreement with research performed by Tustin and Lockshin (2001). Rasmussen and Lockshin (1999) undertook to clarify the effect that regional branding has on consumer choice behavior. Wine has an enormous number of brands and thus can make the task of choosing a wine complex and difficult. They placed consumers on a novice to expert continuum. The degree of expertise was based upon Appellation as an indicator of quality 45 IJWBR 22,1 46 involvement, knowledge and usage level. Their results suggested that, while regional branding was not the most important cue, consumers who do use regional branding as a cue generally have higher perceived knowledge of wine. In this study, we sought to clarify how place of origin and level of place (such as appellation) are utilized by particular consumer segments in evaluating wine quality. This paper adds to the knowledge base in these areas. Appellation In Europe, there is a long tradition which recognizes the importance of wine regions going back at least as far as the Middle Ages (Halliday and Johnson, 1992). The place of origin where grapes are grown is more than simply noted; it is researched, described and ultimately protected. The French expression terroir encompasses the gamut of unique influences on a particular region, district or site (Bomrich, 2006). If for example, the angle of slope on vineyard x is different than that of vineyard y, there is a point of differentiation. This is useful to the winemaker in the crafting of the wines and useful to the wine marketer to exploit in the marketing of the wines. Terroir can be used as layer in the building of the image of the place where a wine is grown (Turner and Creasy, 2003). The French term for a wine region that acknowledges a unique terroir is called an appellation. Beyond defining geographic boundaries, the laws associated with an appellation can regulate the grapes grown and winemaking methods employed, all with an eye toward protecting the quality and brand equity that the region and its producers have achieved over time. The word appellation has worked its way into the vernacular of winegrowing throughout the world. Yet it is not used throughout the world in the same way that one finds in France. Its meaning depends upon the desires of the stakeholders in the local, regional or national industry. Winegrowers in the USA have embraced the concept of appellation but in a much broader and more lenient way than the French (Conaway, 1990). In the USA, the Bureau of Alcohol, Tobacco and Firearms (today the TTB) issued Rule 53 in 1978 that recognized state and county boundaries for appellations on wine labels. If an industry member desires a further differentiation, a more distinct viticultural area may be defined which does not conform to political boundaries (Gay, 2003). These more distinct areas constitute what are generally known as appellations or AVAs. AVAs are geographically based names for winegrowing regions that are believed to show unique characteristics such as soil, climate and more. They are geographic and historical in nature and include no quality-related provisions such as grape varieties or yield per acre (Fallis, 2000). In this sense, US appellations (AVAs) differ from their French and Italian counterparts. That being said, consumers may assign quality expectations to approved areas (Johnson and Bruwer, 2009). Napa Valley has established a reputation for quality and, to a lesser extent, so has Sonoma County. With the ongoing creation of appellations, the wine industry in the USA is interested in determining whether or not appellations truly aid in the marketing of wine. Some in the industry feel that appellations add to the mystique of wine and form a further barrier to consumer adoption (Falchek, 1999). Yet others see appellations as a driving force in the marketing of wine (Metinko, 2000). A major goal of this research was to uncover what place-of-origin information is meaningful to the consumer. Specifically, do consumers utilize appellation information to the same extent that they use information relating to larger geopolitical regions, such as county, state or country? Demographic and behavioral factors The analysis of buyer behavior using market segments based on demographic variables is very common. In order to develop marketing strategies, industry professionals have an interest in linking observable consumer characteristics to product choice behavior (Orth, 2005). In that study, personality and situational factors such as age, gender, spending per bottle and purchase frequency were found to be associated with one or more brand benefits. The current research examines similar demographic and behavioral variables as drivers in the consumer utilization of label information. Variables included in the current analysis include consumption frequency, age, price, gender, expertise and type of wine usually purchased. Recent research by Hussain et al. found that wine consumption was positively related to knowledge of wine, age, and income (Hussein et al., 2007). They suggest that US wineries consider such demographics and behavior characteristics in their marketing plans. The US Wine Market Council (2008) has segmented the wine market into core consumers and marginal consumers as the basis of a large portion of their wine industry analysis (Wine Market Council, 2008). Age is another factor to analyze because wineries are attempting to increase sales by targeting a younger consumer (Bayer, 1998). Hall et al. (2004) demonstrated that the importance of region was different for different age group segments. The price of a bottle of wine acts as an indicator of quality for many wine consumers (Quester and Smart, 1998) and it is an important item to investigate in wine purchasing (Zaichkowski, 1988). Thomas and Pickering (2003) determined that price was one of the most important informational items consumers use to assess wines before buying. There has been a large increase in the sales of wine to women (Barber et al., 2006). Prior research has shown that men and women search for information differently when faced with a wine purchase decision (Atkin et al., 2007b). These differences may also apply to the utilization of appellation information. Perrouty et al. (2006) suggest that novices utilize wine origin cues, like the bottler, but they shift their attention to cues like brand and price as they gain more knowledge. Young, less experienced consumers tend to rely more heavily on descriptions from labels and other sources (Chaney, 2000). We would expect that consumers with different levels of expertise will utilize region and appellation differently. Lastly, the type of wine the consumer is considering may have an impact on their utilization of label information. Zaichkowsky (1988) concluded that consumers highly involved with red wine placed less emphasis on price than consumers with low red wine involvement. Research questions Based on the preceding discussion of wine-buying behavior, the following research propositions were developed: RP1. A higher level of region such as state or county is more heavily utilized by consumers than appellation. RP2. The importance of regional information will differ depending upon attributes of the consumer such as consumption frequency, price usually paid, gender, expertise, wine type usually purchased or age. Appellation as an indicator of quality 47 IJWBR 22,1 48 Methodology The sample utilized in this study represents a geographically diverse group of respondents in the USA who were screened for at least occasional wine consumption before proceeding with the survey. The sample size was 409 respondents who were recruited by Survey Sampling International. The respondents then completed the survey online at Survey Monkey. The overall goal was to collect a representative sample of study participants on the basis of gender, consumption habits and location. The survey was available on Survey Monkey between October 22 and October 28, 2008. Data analysis required downloading the results in Excel and then inputting the data into SPSS. The study sample of 409 respondents represents US wine drinkers and should not be taken as a general population sample. Potential respondents were required to have consumed at least one bottle in the last year in order to take the survey. A key feature of the sample is its geographical diversity. In this study, 46 states were represented. Table I shows exact make-up of the sample on a state by state basis. As shown in Table II, the geographic dispersion of the respondents compares fairly closely to the state consumption shares presented by Cholette (2004). Response (%) Table I. Demographics Gender Male Female Age group 21-29 30-39 40-49 50-59 60 and over Community Urban Suburban Rural Farm Origin state California Florida New York Pennsylvania Texas Colorado Illinois Ohio New Jersey Virginia Washington Michigan North Carolina Arizona Massachusetts Georgia Idaho 33 other states, each less than 2% 47.3 52.8 14.4 18.8 26.0 16.6 24.3 22.8 55.4 19.8 2.0 16.5 9.8 8.8 6.3 5.0 4.0 4.0 4.0 3.8 3.8 3.8 3.5 2.8 2.5 2.3 2.2 2.2 As for gender, 189 were male and 211 were female. It is a non-probability sample based on criteria similar to Hall et al. (2001). Another key demographic was the frequency of wine consumption. When asked how often they consumed wine, 65.7 percent replied that they drank wine at least once per week. The Wine Market Council defines those who drink wine at least once per week as core wine consumers. One of the goals of the study was to examine the information utilized by a broad array of wine consumers so the results could be generalized to wine consumers nationwide. Several previous studies have used samples dominated by California residents and highly involved consumers (Atkin et al., 2007b; Johnson and Bruwer, 2007; Hussein et al., 2007). This has restricted the generalizability of previous findings because the samples were not obtained in a probabilistic fashion. The more rigorous approach taken to obtaining a sample here, although not completely random, answers the call for larger sample sizes and greater geographic coverage (Hussein et al., 2007). The sampling method used here made the findings more useful. The survey delved into the nature and extent of information search undertaken by respondents and the coping mechanisms used in conditions of uncertainty. For example, a key question related to information used to evaluate wine. It asked ‘‘Which of the following information do you evaluate on a wine label to gauge the quality inside the bottle? Check all that apply.’’ This question was followed with ten choices including State, Vintage, Region, Brand Name, Alcohol Content, Appellation, Organic, Label Imagery, Country of Origin and Medals Won. Appellation as an indicator of quality 49 Results and discussion The focus of this article is the importance of geographical information in the consumer’s evaluation and purchase of a wine. Although not the focus of this study, it is critical to note that brand was by far the single piece of information that consumers use the most. The current study features a fairly representative sample of wine consumers across the USA. As the information was analyzed along a variety of consumer attributes, brand emerged as the leading criteria for evaluating the quality of wine. Differences in the utilization of information became notable as we looked at how consumers supplement the brand information. An earlier study, viz., Johnson and Bruwer (2007) provided results counter to the assertion that brand is the piece of information used by the largest percentage of consumers. Perhaps it is critical to contrast the nature of the sample in that study. It utilized a convenience sample of respondents that had recently taken wine classes or were from specific areas and thus had special knowledge. In that study, 85 percent of the respondents utilized region when evaluating wine labels, whereas only 72 percent utilized brand and 71 percent appellation. State California New York Florida New Jersey Illinois Texas Massachusetts Cholette (2004) % of consumption Atkin and Johnson % of respondents 19 8 7 5 5 5 4 16.5 8.8 9.8 3.8 4.0 5.0 2.3 Table II. Comparison of state consumption to respondent distribution IJWBR 22,1 50 Table III. Information on wine labels used to gauge quality In looking at the overall results of the current study, brand was utilized by the largest percentage of the respondents (76.7 percent), followed by two geographical elements, country (55.7 percent) and region (55.2 percent). Vintage (51.5 percent) and state (45.0 percent) completed the top five. There was a large drop off after that as fewer consumers utilized label imagery, medals won, alcohol content, appellation and organic attributes. Appellation was mentioned by only 19.6 percent of respondents, a figure that is much lower than the 71 percent utilization in the Johnson and Bruwer (2007) study. The first issue to address is which information consumers use to gauge the quality of the wine inside the bottle. The customer typically is not able to sample the wine so he/she is faced with assessing the wine using external cues such as the information appearing on the label. Respondents were invited to check all options that apply. The number of times an option was chosen gives us an idea of which information the consumers are using. Brand name was the runaway favorite, selected by 310 respondents or 76.7 percent of the respondents. This was a bit of a surprise because the Johnson and Bruwer (2007) study had brand coming in second to region. That data showed region to be the most important information. The closely grouped trio of appellation, brand and vintage trailed behind region. The more diverse sample in the current study shows that, after brand, country of origin was the second most popular pick at 55.7 percent, followed by region at 55.2 percent. Vintage was also picked by a majority of respondents (51.5 percent). State was also popular (45.0 percent). There was a large drop-off after that as state was followed by label imagery, medals won, alcohol content, appellation and organic. The rankings and a comparison with Johnson and Bruwer (2007) are shown in Table III and Figure 1. The low utilization of appellation information in the current study must be emphasized. The system of American Viticultural Areas has been in effect in the USA for many years but it makes little contribution to the decision of consumers in general. It is apparent that consumers rely more upon geographical and political entities such as region, country and state. It may be that the appellation information is too complex to be meaningful. The relative importance of regional vs appellation information was then analyzed see if there were differences in the consumer use of information based on a variety of consumer traits. The data from the respondents were split in groups based on several different criteria in order to examine which information consumers use to evaluate the quality of a wine in the purchase process. Brand Country Region Vintage State Label Medals Alcohol Appellation Organic Atkin and Johnson (2008) % Johnson and Bruwer (2007) % 76.7 55.7 55.2 51.5 45.0 24.5 23.5 22.8 19.6 7.9 72 56 85 71 63 31 N/A 22 71 N/A Consumption frequency The first analysis was to look at the information usage based on consumption frequency. Those who drink at least once a week are core consumers and they accounted for 65.7 percent of respondents while those who consumed less frequently were 34.3 percent of sample. As shown in Table IV and Figure 2, Brand is most important to both groups. Region, however, is utilized much more by core consumers than appellation. Core consumers also use country, vintage, state and appellation information to a greater extent than infrequent consumers. It is interesting to note that appellation is next to last in usage by infrequent consumers while triple the percentage of core consumers use appellation. These results are generally in agreement with previous research such as Rasmussen and Lockshin (1999). This demonstrates that the consumer’s use of information varies depending upon factors such as consumption frequency. An important comparison is the core consumers vs the infrequent consumers. Both groups rely the most on brand information but core consumers go on to utilize geographic and vintage information more heavily than infrequent consumers. Infrequent consumers pay very little attention to appellation information, ranking it slightly above the word organic, which was consistently the least used information. Almost three times as many core consumers reported consideration of appellation information as opposed to infrequent consumers. Appellation as an indicator of quality 51 Figure 1. Information on wine labels used to gauge quality Response (%) Brand Region Country Vintage State Appellation Alcohol Label Medals Organic Core Marginal 76.1 61.6 59.7 56.7 48.1 25.0 24.3 23.1 23.1 8.2 75 40.7 45.7 39.3 37.1 8.6 19.3 26.4 23.6 7.1 Table IV. Information used by consumption-based segments IJWBR 22,1 52 Price An interesting pattern occurs when we segment the sample according to the price typically paid by the consumer (Table V and Figure 3). Brand is the most important consideration for those spending less than $15.00 a bottle while vintage takes the top spot in the over $15.00 category. Region is the second ranked information in the higher priced group, placing slightly above brand. Appellation is ranked sixth by the over $15.00 group while it places ninth in the under $15.00 group. In general, the over $15.00 group seeks out much more information than the under $15.00 group. This echoes the findings of Johnson and Bruwer (2007) where a majority of the respondents in their more highly involved sample of wine consumers reported spending over $15 per bottle. This compares fairly closely to the findings of Johnson and Bruwer (2003, 2004). Consumers of under $15.00 (Australian $) wines relied most heavily on brand to reduce risk. Information was more actively sought by consumers of more expensive wines while the importance of brand decreased for them. In that study, the segment Basic Wine Drinkers was the only group that relied on favorite brands across all price points. Similarly, Sanchez and Gil (1998) concluded that consumers with higher consumption of quality wines consider the origin of the wine to be the most important attribute. Gender When gender is taken into account, men utilize information more intensely than women (Table VI and Figure 4). Women relied a bit more on brand but men utilized Figure 2. Information used by consumption-based segments Response (%) Table V. Information used by price-based segments Brand Country Region Vintage State Label Medals Alcohol Appellation Organic Over $15 Under $15 69.6 67.6 71.6 78.4 52.9 23.6 24.5 24.5 26.5 13.7 78.5 50.8 49.2 41.9 41.6 24.8 22.8 21.8 16.8 5.9 Appellation as an indicator of quality 53 Figure 3. Information used by price-based segments Brand Region Country Vintage State Appellation Alcohol Medals Label Organic % Male % Female 74.1 61.9 59.3 54.5 51.3 28.0 22.8 21.2 20.6 5.8 77.7 46.4 50.2 46.9 38.9 11.4 21.8 25.1 28.0 10.0 Table VI. Information used by gender Figure 4. Information used by gender region, country, vintage and state much more heavily than women. A total of 28 percent of men utilize appellation information while only 11.4 percent of the female respondents indicated that they utilize appellation information. Women use medals and label imagery with greater frequency than appellation. Atkin et al. (2007b) found a similar difference in coping mechanisms of men and women. Women tended to place a stronger emphasis on secondary information such as medals won and label artwork while men relied somewhat more on geographic information. IJWBR 22,1 54 Expertise Respondents were asked to report their level of expertise (Table VII and Figure 5). While self-categorization is inherently problematic, the scope and time frame of the study did not allow for the testing of the respondents’ knowledge. A shift in the utilization of information can be seen as the expertise of the consumer increases. Brand is the most heavily used piece of information for the categories new to wine, know a little about wine and somewhat knowledgeable about wine. The very knowledgeable group, however, relies the most on regional information. It can be seen that region takes on more importance as the expertise level of the respondents increased. Vintage also rises to exceed brand in importance as expertise increases and country rises to equal importance. In general, geographic information becomes more important as expertise increases while brand diminishes a bit. While appellation is unimportant to those new to wine, it almost equals state among the knowledgeable group. Wine type preference When looking at the information utilized according to the type of wine usually purchased by the respondent, brand was the most popular for all types of wine (Table VIII and Figure 6). The second most utilized information differed for the wine types with region following brand for reds, country of origin second for whites and vintage second for rosé. Table VII. Information used by expertise categories Figure 5. Information used by expertise categories Brand Country Alcohol State Vintage Label Region Medals Organic Appellation % New % Little % Somewhat % Very 80.9 27.7 27.7 23.4 23.4 21.3 19.1 19.1 8.5 6.4 78.7 47.5 21.9 42.6 42.1 29.5 46.4 22.4 7.7 11.5 73.2 70.9 25.2 52.8 64.6 21.3 68.5 26.8 7.1 24.4 77.5 77.5 15.0 57.5 82.5 17.5 90.1 25.0 12.5 55.0 Age The results were very consistent when looking at age groups (Table IX and Figure 7). Brand was the leader in all age categories, followed by country and region. It is interesting to note that vintage is the second most utilized information in both the 21-29 and the 40-49 age groups. Appellation as an indicator of quality Management implications Wine consumers are in need of useful information on the wine label in order to evaluate the quality of wine in their purchase decision. The findings here suggest that simpler 55 Brand Region Country Vintage State Appellation Label Medals Alcohol Organic % Red % White % Rosé 78.1 63.7 62.7 57.2 47.8 24.9 23.4 22.4 21.4 8.0 75.1 48.9 53.3 47.4 46.0 11.7 24.1 25.5 20.4 8.0 75.5 39.6 37.7 41.5 34.0 15.1 28.3 24.5 30.2 5.7 Table VIII. Information used by wine type Figure 6. Information used by wine type Brand Country Region Vintage State Label Medals Alcohol Appellation Organic % 21-29 % 30-39 % 40-49 % 50-59 % Over 60 77.2 47.4 45.6 47.4 36.8 40.4 40.4 40.4 21.1 14.0 75.0 56.6 56.6 50.0 43.4 28.9 17.1 21.1 18.4 10.5 73.8 60.2 60.2 63.1 45.6 23.3 22.3 20.4 20.4 7.8 76.9 53.8 55.4 46.2 50.8 21.5 24.6 18.5 21.5 9.2 81.6 56.1 53.1 45.9 46.9 15.3 19.4 19.4 17.3 2.0 Table IX. Information used based on age segments IJWBR 22,1 56 Figure 7. Information used based on age segments place-of-origin information based on larger geographical areas is more heavily utilized by consumers than appellation information. This is consistent with the findings of Barber et al. (2006) who called for marketing managers to keep the label information simple. Those sentiments are echoed by Johnson and Bruwer (2007) in their call to reduce consumer confusion caused by the proliferation of wine regions because a majority of the population is not ready for anything more than the most basic information. There is a fear that the value of regional image will be diluted by promoting smaller appellations (Falchek, 1999). In order to remain competitive, the US wine industry, and California in particular, may benefit from promoting a stronger sense of place at the regional level (i.e. county or state). The results presented here are important because wineries need to know how to make wine more accessible to the public to help reduce the risks of purchasing wines that they have not tasted previously. Small producers acting alone, without a unified voice have a difficult time assuring that members of the distribution chain pass along relevant information to consumers (Chaney, 2002). This study demonstrates that promoting a higher level of place on the label may be more beneficial to the average consumer than focusing on smaller appellations. Thode and Maskulka (1998) asserted that one of the underexploited positioning opportunities in business today is place of origin. Place matters if there is a perceptible, not necessarily quantifiable, link between the product’s place of origin and the presumed quality of that product (Thode and Maskulka, 1998). For example, Johnson and Bruwer (2007) found that the Sonoma County brand image enhances the image of appellations within Sonoma County and strengthens consumer confidence, especially when the consumer has no opinion of the appellation displayed on the label. Johnson and Bruwer (2004) recognized that consumers use a variety of cues to reduce the risk of a bad wine purchase decision. If retailers are aware of the risk reduction strategies of their customers they can adapt the product mix and display the wines to accommodate consumer information needs. For instance, if Chardonnays are grouped by county on the shelf, it may allow the consumer to make a decision more easily. Benefits of a place-based strategy include: incentive to emphasize product development and stimulate specialization; competitiveness; and sustainable competitive advantage. This could be important because in the competitive environment of the wine industry, very little attribute superiority is sustainable (D’Aveni 1994). Wine styles and grape varietals can be duplicated in other countries but the traits due to origin will remain unique. This gives the wineries of a region or the producers who source grapes from a specific region a selling proposition that is unique to that group and its regional source. If geographic origin imparts a quality differentiation, the producer possesses an attribute that cannot be easily duplicated (Thode and Maskulka, 1998). This paper investigates the utilization of information by various consumer segments when evaluating wine quality. The results of this research suggest that marketers develop strategies to increase sales that emphasize larger regions such as county or state rather than appellations. Labels and shelf tags are important sources of information in the retail setting and should prominently display region of origin. These origin indications also enable a consumer to distinguish a product from both foreign and domestic competitors. The results of this study can be useful for the wine industry in general as a means for understanding how best to design labels and promote wine products. It illuminates how consumer traits may affect the acceptance of wine products and the decisionmaking process. For wine marketers, the results demonstrate the need for a targeted approach to their consumer segments. In order to reach less expert customers, for instance, simpler and higher-level geographical information should be presented. Appellation-based marketing efforts may be best targeted at core wine consumers because they utilize such cues to a greater extent than less frequent consumers. Small wineries may opt to distribute in states where information such as county of origin is most meaningful. If a winery decides to enter the export market, it may need to present its information more simply. In the Chinese market, for example, packaging and branding decisions need to be made in the light of the relative lack of wine knowledge of Chinese customers (Ballestrini and Gamble, 2006). Higher level regional indicators such as country and state of origin might be the most relevant attributes to promote. Limitations Although this study provides several new insights, it is not without its limitations. First, the study is focused on a geographically diverse sample of wine consumers in the USA. This is a useful sample for assessing wine decision-making habits but readers should recognize that it is not a totally random sample. It was obtained from a subset of wine consumers willing and able to take the survey on the internet. Second, the study focused upon information appearing on the wine label. Consumers may utilize criteria which were not included, such as bottle shape, weight and size or closure type. Nonetheless, this study expands the research on these topics to a national sample so results can be more easily generalized to wine consumers as a whole. Future research This article dealt mostly with categories of consumers. Future research will delve more deeply into consumer attitudes. Although place of origin can have a large effect on product evaluation, the processes behind this effect are not well understood (Verlegh and Steenkamp, 1999). This could also lead to a more direct tie to marketing theories such as the elaboration likelihood model (Petty and Cacioppo, 1986) or the heuristic systematic model (Bettman et al., 1991). It would also be interesting to compare attitudes of various consumer groups concerning awareness and quality evaluation of various regions and appellations. Another potential analysis would consist of an experiment based on consumers choosing between labels that contain different levels of geographic information. Their choices would help illuminate which types of information are most useful to them in evaluating a wine purchase decision. Appellation as an indicator of quality 57 IJWBR 22,1 It may also be fruitful to perform this survey on international samples to ascertain which information British consumers, for example, find to be the most useful. Similar information could also be gathered from members of the distribution chain and tasting room customers. The existence of a brand community in the wine business could also be investigated. 58 Conclusions Upon entering a store, a wine buyer tends to have a price point in mind and a then looks to a varietal to help make a choice ( Jarvis et al., 2007). Within that context, it is important to know how the rest of the information is used in evaluating wine quality. What happens next? We have shown in this research that AVA (appellation) information is not as heavily utilized by consumers as county, state, or country indicators. Based on these results, it is recommended that wineries in established regions increase their efforts to promote regional identity at the county and state level. This is more meaningful to consumers and allows producers to take advantage of pre-existing levels of awareness. Packaging is pivotal to the acceptance of a wide range of products (Thomas, 2000). It represents the last chance to communicate with and influence the buyer (Kotler and Armstrong, 2001). Consumers assess wine products by attributes such as origin, prestige, region, vintage, quality, taste and price (Sanchez and Gil, 1998). The purpose of this study was to examine the consumer use of geographical information in the wine purchase decision. We believe that the findings provide new insights that are important to the development of wine marketing strategies. References Atkin, T.S., Garcia, R. and Lockshin, L. 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Wine Market Council (2008), The US Wine Market Consumer Trends and Analysis, Wine Market Council, St Helena, CA, January 16. Zaichkowski, J. (1988), ‘‘Involvement and the price cue’’, in Honston, M.J. (Ed.), Advances in Consumer Research, Vol. 15, ACR, Provo, UT, pp. 323-7. About the authors Thomas Atkin is an Associate Professor of Operations and Supply Chain Management at Sonoma State University where he teaches in the Wine Business Program. He received his PhD in Supply Chain Management from Michigan State University in 2001. His research interests include customer-supplier relationships, packaging innovation and wine consumer preferences. Thomas Atkin is the corresponding author and can be contacted at tom.atkin@sonoma.edu Ray Johnson teaches in the Wine Studies Program at the Santa Rosa Junior College in Sonoma County, California. He also leads the Wine Entrepreneurship Course at Sonoma State University. His research interests include regional branding and sensory analysis. To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints Appellation as an indicator of quality 61