Willingness to pay for red wines in China

Abstract

China's rapidly expanding wealthy population has expressed a new desire for imported red wines. Using data collected in China's major red wine consumption region of Beijing, this study analyzes the impact of country of origin, price, wine age, and brand on consumer-derived utility and willingness to pay for red wines. Findings from a conditional logit model and a mixed logit model indicate that price remains the key factor in Chinese consumers' red wine choices. For gift purchases, consumers are willing to pay an additional $20 to move from a US wine to a French wine. For own consumption, French wines are preferable if their price is within a reasonable range of $13–20 above Chinese or US wines. Chinese consumers also strongly favor branded and matured red wines. China's rapid and sustainable economic growth and its stronger integration to the global economy have led to greater disposable income and the expanding consumer demand for luxury beverage of red wines.