What internal characteristics could explain US wineries targeting upper-tier price segments?

Abstract

Purpose This paper aims to examine how internal strategic and organizational characteristics are associated with upper-tier list-price positioning among US wineries, moving beyond accounts that focus mainly on terroir or regional reputation. Four directional hypotheses, derived from portfolio-focus, resource-based, signaling and cluster-theory perspectives, are tested. Design/methodology/approach This study analyses original survey data for 175 wineries in 25 US states. Respondents allocated production volume across four retail list-price bands (Value, Premium, Luxury and Iconic); upper-tier positioning is operationalized as a binary indicator equal to 1 when a volume-weighted price-band index exceeds the Premium/Luxury midpoint – equivalently, for nearly all wineries, when at least half of production volume lies at =$40 per 750 ml. Nested binary logits, an ordered logit and a mixed-effects ordered logit with a state random intercept are estimated, with the cutoff itself subjected to a systematic sensitivity analysis. Explanatory variables cover production scale, portfolio breadth, vertical integration, diversification, human and organizational capital, sustainability certification and regional location. Findings Upper-tier list-price positioning is more often reported by wineries that have operated longer, are organized as LLCs or corporations, source a higher share of grapes from their own vineyards and hold organic or biodynamic certification. A focused portfolio with fewer wine types and labels is positively associated with concentrating volume in Luxury/Iconic tiers, while tourism-intensive diversification into food/events and hospitality is negatively associated with upper-tier positioning. The four pre-stated hypotheses receive broad support, and the results are robust across model specifications and across alternative definitions of upper-tier positioning, although premium list-price positioning remains strongly clustered in California. Research limitations/implications The cross-sectional design supports associational rather than causal inference, and the dependent variable captures list-price positioning rather than realized prices or revenue. The sample skews toward medium- and large-sized producers and uses fixed pre-defined price bands. Residual regional confounding cannot be fully ruled out. Future research should test these patterns with longitudinal data, quasi-experimental designs based on certification waves, comparative cross-region studies and peer-benchmarked price measures. Practical implications For wineries seeking to move into or sustain upper-tier price segments, the results of this study suggest concrete strategic priorities: maintaining a focused product portfolio, avoiding tourism-intensive diversification that may dilute wine-centered identity, building accumulated organizational capabilities and stable labor structures, strengthening vertical integration in grape sourcing and adopting credible sustainability certifications. Originality/value To the best of the authors’ knowledge, this is one of the first US-wide, firm-level studies to test, within an integrated hypothesis-testing framework, whether portfolio focus, internal capabilities, vertical integration, diversification choices and certified sustainability are correlated with premium list-price positioning, using volume-weighted price-tier shares and multiple complementary regression frameworks.

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