Willingness to pay for appellation of origin: results of an experiment with pinot noir wines in France and Germany

Abstract

This paper proposes to estimate consumers’ willingness to pay (WTP) for wine characteristics using incentive compatible laboratory experiments with participants randomly selected from the general population. The main question is to identify the value of a supposedly well known Appellation of Origin (namely “Appellation d’Origine Contrôlée Bourgogne”) compared to other quality signals like grape variety or brand, in the lowermiddle range segment of the market. In order to assess the respective values of these different characteristics for consumers, the experiments compares wine made from the same grape variety, “Pinot Noir”, which is the grape variety of red Burgundy wines. Sessions were carried out in France, and Germany. Real sales at a random selling price,based on the Becker, DeGroot, Marschak (BDM) mechanism, revealed consumers’ WTP in three different information conditions (blind tasting, label examination, tasting and label examination). Results show that sensory characteristics and label information influence differently French and German consumers. They also reveal that Appellation of Origin information is of little value outside the country of origin for middle range wines. Moreover, it appears that the small differences observed in mean WTP for each wine, in each country and information condition do not result from consumers’ lack of discrimination. Participants in both samples display strong individual preferences,however being very heterogeneous these preferences tend to cancel out when individual WTP are aggregated.

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