Reputation and relative price positioning of small wineries in Québec, Canada

Abstract

Purpose In a highly competitive market, the price of wine is a variable controlled by suppliers to suggest a level of quality. An index of relative firm position in the market based on relative prices is calculated for a sample of wine producers. The purpose of the paper is to analyze some of the factors related to the characteristics of a firm and quality that may explain the price strategy of wine producers in a new and small wine region, i.e. Québec province in Canada. Design/methodology/approach Data on types of wines and prices are collected from a sample of 40 small wine producers in Québec, Canada for the selected years 2008, 2010 and 2015. Findings The authors demonstrate that a high price strategy is significantly related to the reputation of the vineyard rather than the age of the domain, the size or the number of wines produced. Research limitations/implications The analysis has been carried out based on a data set of only 40 firms for which the price-position index could be calculated. Unfortunately, only limited information is available on producers and production volumes. Practical implications This analysis is of particular relevance for small or new wine-producing regions, which lack an established reputation. Because wine quality and taste differ by geographic origin and variety, new wine-producing regions may have opportunities to define a wine’s image (or a winery image) and the producer must inform the market on quality of the wine by reflecting it on the final selling price. Originality/value Prior works on the analysis of the price-quality relationship give rise to various and sometimes contradictory results. This analysis is of particular relevance to explain the price strategy of small wine producers in a strongly competitive market where the price remains an obvious commercial argument to signal the quality of a wine.