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.

International Wine Exhibition,August 2008 ,Hongkong

We consider that it will be very huge success and we rate it as A++ and ROI can be upto 75%, one engaged in wine industry cannot afford to loose this international exhibition.

The international wine industry has responded positively to news that Hong Kong will host the first HKTDC Hong Kong International Wine Fair, 14-16 August 2008.

Around 150 exhibitors are expected to come from over 20 countries & regions to participate in the inaugural event. They will include wine dealers and cellar representatives from Hong Kong and Asia and leading New World and Old World wine producers and dealers. Those who have already confirmed their presence are important Hong Kong distributors Maxxium Hong Kong Ltd, Moet Hennessy’s, Ponti Food and Wine Cellar Ltd. The overseas exhibitors will include Premium Wine Services Pty Ltd of Australia, Coopers Creek Vineyard Ltd of New Zealand, MSE-Deutsche Weine of Germany, Fremura Group SRL of Italy, Grupo San Jose De Allende SPR of Mexico, Ghiya Extrusions PVT Ltd of India and Yevpatoria Winery Ltd of Ukraine.

According to Juergen Mueller and Ulrike Endrolath, General Managers of MSE-Deutsche Weine, Germany, the timing has additional advantages. “MSE-Deutsche Weine believes that the time for this exhibition is just right because it leaves enough time between the filling of the 2007 wines and the exhibition in order to choose the best wines from a large variety to exhibit. Furthermore, it is just the right time for customers to make their choice for autumn and winter business.”

MSE-Deutsche Weine is a young company specialising in the export of German wine to Asia. “We have a large variety of excellent German wines, mostly white wines, including wines of all famous wine regions in Germany such as Mosel, Middle Rhine, Rheingau, Rheinhessen and Pfalz. Our wines suit the Asian style of cooking extremely well with their rich flavour and mostly semi-dry appearance.

“Our main targets for this exhibition are to make a lot of contacts with potential customers and dealers from the Asian region (mainly Hong Kong and the Chinese mainland). We hope to initiate business and gain interest for the excellent German wines we exhibit and represent. We want to make the name MSE-Deutsche Weine known in the Asian region as an expert for German Wines.”

Makul Ghiya, director of Ghiya Extrusions PVT Ltd of India, says that now is the time to make Asia’s presence felt in the global wine market through the Hong Kong International Wine Fair. Ghiya is the only Asian company offering a comprehensive range of wine seals used in aluminum screw caps. “Our main purpose in participating is brand promotion,” says Mr Ghiya.

Olga Turuk, who is Marketing-analyst for Ukraine’s Yevpatoria Winery Ltd, cites the growth of wine consumption in Asia as one of the reasons why the timing of this fair is just right. “Wine consumption in Asia is growing annually. In particular, the Chinese mainland market is considered to be the wine market with the most potential in the world. And Hong Kong is a trading and investment centre of Asia. Therefore, holding a wine exhibition in Hong Kong will allow potential importers and dealers of wines to establish contacts and to enter into this potentially valuable market.

“By participating in the Hong Kong International Wine Fair, we expect to gain more detailed information about the Chinese mainland and Hong Kong wine markets, the basic tendencies and forecasts of development; to communicate with local manufacturers of wine and importers of wines in Asia; to come into contact with distributors and buyers of wine and, in the long term, to start working in this market.”

The Hong Kong International Wine Fair gives exhibitors and buyers the opportunity to tap into the enormous potential of the Asian market. The Asian market (excluding Japan) is forecast to grow at a phenomenal 10-20% pa over the next five years. This equates to a consumption value of US$17 billion by 2012, estimated to rise to US$27 billion by 2017.

In the Chinese mainland, Hong Kong, Singapore, Korea and Taiwan an increasingly affluent and knowledgeable middle class market is growing rapidly. The Chinese mainland alone is predicted to import wine to the value of US$570 million by 2017.

The Hong Kong International Wine Fair will allow winemakers, dealers and distributors to reach out to a wider audience through wine tasting sessions at the fair, which is concurrent with the hugely popular Food Expo event, attended by over 8,500 trade buyers and over 314,000 members of the public in 2007.

Wine education for both consumers and trade buyers will be fostered through the fair’s seminars and conferences, conducted by international wine experts.

The recent abolition of import duty on wine by the Hong Kong SAR government has created a favourable environment for wine trading and distribution in Hong Kong, already a trading hub of global importance. The HKTDC Hong Kong International Wine Fair 2008 will bolster this position by providing an excellent venue for trading and a high-profile showcase for brand promotion.