Cluster Analysis of Wine Market Segmentation – A Consumer Based Study in the Mid-Atlantic USA

Abstract

The U.S. wine market has been steadily increasing over the past 15 years. The number of wineries has increased from 2688 in 1999 to 8862 in 2016. About 7% of all those wineries are located in the Mid-Atlantic region, which includes New Jersey, New York, and Pennsylvania. However, competition has been rising as the market is growing. Many foreign wine companies from Europe, South America, and Oceania, are either selling or planning to sell their products to the fast-growing U.S. wine market. It is important to promote local wine industry in the U.S. In this connection, this study has attempted to predict the segment of Mid-Atlantic wine market - based on purchasing behavior, attitudes, and social demographic attributes. A Cluster Analysis used to segment the Mid-Atlantic wine market into four clusters namely Class 1 Detractors, Class 2 Enthusiasts, Class 3 Neutral and Class 4 Advocators. Class 1. Detractors are the cluster that is the most unlikely to buy local wine. Neatly, 67.4% of Detractors indicated that they had never obtained local wine before. 2. Enthusiasts and Class 4 Advocators are the target market of Mid-Atlantic local wineries and hence we should pay more attention to these two market segments. 74.5% of Class 2 indicated that they had bought wine from the Mid-Atlantic wine region. About 60% of Class 4 Advocators stated that they had purchased local wine before. The characteristics of Class 4 are very similar to Class 2. The chance of Class 3 Neutral to buy local wine is 50/50. They drink and buy wine more frequently than consumers in other clusters. Typically, we do not recommend Mid-Atlantic wineries to target this market segment, unless they want to expand their market beyond Class 2 and Class 4. The assessment of perception of consumers will help the producers, wholesalers, and retailers to target ultimate consumers and specific market segments.