Quality signals in wine marketing: the role of exhibition awards

Wine producers have their products evaluated at various wine exhibitions for the purpose of receiving awards that can be displayed on the bottles. This contribution introduces an approach to estimate optimal prices for wine exhibition awards. A case study has been employed in cooperation with a major Czech wine company to investigate the practical usefulness of the method. Estimating the relative importance of selected wine exhibitions as award origins and determining the partial utilities of selected awards (medals) is based on a conjoint experiment. Price equivalents and markups can be derived based on consumer preferences.


Competition in the Czech market for bottled wines has already been stiff with the entry of European Union suppliers resulting in a signi1cant downsizing of national production areas (EU, 1998). Major importers are Italy, Spain, Hungary, Slowenia and Yugoslavia (Czech Ministry of Agriculture, 1999). The recent appearance of an increasing number of wines from ‘new’ production areas worldwide (e.g., California, Chile, South Africa, Australia) still increases the pressure on national suppliers. Consequently, Czech wine producers are searching for ways to match their offers more closely to consumer preferences
to maintain or to increase their market share as well as to generate suf1cient income from their sales.


Quality perception, quality evaluation, and quality signals-Quality has been found to be amongst the most prominent factors influencing consumer’s choice of wine (Hauck, 1991). The question arises as to what factors can be employed by producers (or by the retail trade) for creating favorable product quality perception leading to higher preference and/or to the willingness to pay higher prices.

Product attributes, in general, can be classi1ed as either search, trust or experience attributes. For a particular product, all three categories may be relevant (Kaas & Busch, 1996). Search attributes like, i.e., the price are usually accessible prior to purchase and are being employed by consumers to identify relevant offers (evoked set). Experience attributes (i.e., the taste), can only be evaluated after the purchase. Trust attributes (Darby & Karni,1973) cannot at all be evaluated by the consumers or only at high costs. Typical trust attributes for wine are alcohol content, sulphur content or preservatives content.

The cues used by consumers to judge product quality can be classi1ed as either‘‘intrinsic’’ or ‘‘extrinsic’’ (Olson & Jacoby, 1973). Intrinsic cues are those product attributes which cannot be changed without also changing the physical properties of the product itself, i.e., sugar content of a wine. Typically, those intrinsic cues are responsible for the taste, the ultimate product quality measure in food marketing. Extrinsic cues are attributes which, while product-related, are not a part of the physical product, i.e., labels. Earlier quality- perception studies have suggested that consumers’ quality perceptions are strongly affected by extrinsic cues (for an overview see Rao & Monroe, 1989) but little attention has been paid to wine labels (Schrattenecker, 1986: Gierl, 1993) and no study could be found examining exhibition awards.

Prior to purchase, consumers do not recognize whether or not a product meets his/her quality standards. This indicates de1cits in quality perception.

De1ciencies in consumer quality perception are closely associated with the absence of complete information. Only very few markets exist where market transparency is perfect. Most frequently, one party (usually the seller) has better access to product information than the other party (usually the buyer): resulting in information asymmetry (Von der Schulenburg, 1993). Incomplete and asymmetric information has a strong impact on consumer quality perception and evaluation. Quality labels (created by producers or as a third party certi1cation mark) are designed to provide consumers with product quality information, hence reducing information asymmetry between supplier and buyer (Kaas & Busch, 1996). Quality signals are being most frequently employed by producers and retailers in markets where product quality information is distributed asymmetrically. That makes quality labels an important cue in consumer quality perception.
Wine exhibition awards can be categorized as third party certi1cation marks. Those are granted by numerous institutions to products that meet their predetermined standards (Taylor, 1958). According to the information content provided by third party certi1cation marks those may be classi1ed into three major categories: factual certi1cation, evaluative certi1cation, and warranty certi1cation (Laric & Sarel, 1981). Wine exhibition awards belong to the group of evaluative certi1cations providing attribute-speci1c evaluation. The certifying party is committed to present evaluative opinions (e.g., varietal-speci1c quality assessments) carrying affective connotations.