Geographical brand and country-of-origin effects in the Chinese wine import market

Abstract

The effect of origin on consumer choice, which is a pivotal topic for wine and food products, has not been fully explored in relation to the strength of geographical brands. This research provides new insights into geographical brand and country-of-origin (COO) effects in China. It focuses on the power of geographical brands in catalysing consumer expenditure, and the effect of COO in competition with Protected Designations of Origin (PDOs) and Protected Geographical Indications (PGIs) as specific typologies of geographical brands in the EU wine industry. With the help of the Restricted Source Differentiated Almost Ideal Demand System model, the study analyses Chinese still bottled wine imports. The main findings highlight the dual effect of geographical indications as umbrella brands and quality cues, depending on the level of aggregation. PDOs, PGIs and COO are found to have the same expenditure elasticity, and the European PDO policy played an important role to support the competition with the geographical indications of New World countries. The study sheds light on the opportunities and constraints for existing businesses and new entrants operating in the emerging Chinese wine market. The findings may also interest other industries seeking to deepen their COO brand management in China.