Susan Cholette

Determinants of wine consumption of US consumers: an econometric analysis

Purpose – The purpose of this paper is to identify econometrically the determinants of wine consumption of US consumers.Design/methodology/approach – In empirically identifying driving forces of wine consumption, we used 122 survey responses from Northern California consumers.Findings – The study found that even knowledgeable or frequent consumers of wine purchase across all price points. Further, a significant positive correlation exists between knowledge and volume of wine consumed. All three regression techniques applied in this paper indicate that knowledge remains the most important determinant in wine consumption.Practical implications – The results emphasize the need for US wineries to better educate and connect with consumers by developing compatible positioning strategies and marketing programs that are as informative as they are appealing.Originality/value – As one of the few studies of the US wine market employing econometric analysis, this paper offers a fresh perspective on the consumption be...

An Analysis of Globalization Forces in the Wine Industry

Abstract This paper examines the driving forces and key success factors related to the increasing globalization of the wine industry. It further analyzes the current competitive advantage positions of four Old and five New World wine producing countries. The group with the strongest sources of competitive advantage position includes the United States, Australia, and Chile. The group of countries with moderate competitive advantages includes Italy, Spain, Argentina and South Africa, and the countries with the weakest competitive advantages in the global wine industry are two traditional strongholds of wine production from the Old World: France and Germany. This competitive advantage scenario should be a wake-up call to many countries. The study offers three specific recommendations for wineries of all sizes in all nations. They are: (i) increased emphasis on market orientation, (ii) increased export assistance, (iii) managing trade barriers effectively.

Mitigating demand uncertainty across a winery's sales channels through postponement

Wineries must allocate production across multiple sales channels before demand is known. Misallocation may result in undesirable surpluses in some channels and lost sales opportunities in others. We investigate this problem by constructing a mathematical model for postponing channel differentiation. We provide a process overview for a winery and present a two-stage stochastic linear program with fixed recourse that maximises expected profit over a distribution of demand scenarios. In the first stage, the winery allocates production to finished goods by channel and to intermediate inventory points. Once demand is known, recourse variables include transformation of intermediate inventories. Results from solving this model using a mix of data derived from interviews and literature review suggests that a considerable portion of production should be held at both the labelling and packaging level and can lead to significant improvement in product profitability. We investigate how different product configurations and restrictions may affect the degree and level of the postponement strategy. We find that postponement usage is advisable over a range of demand probabilities, costs and other considerations. Although other stochastic programming applications evaluate postponement strategies within verticals such as high technology, this research is their first application within the wine industry.

Food transportation issues and reducing carbon footprint

Transportation is the largest overall contributor to greenhouse gas emissions in many developed countries. Because food products often travel long distances to reach consumers, one might expect transportation to be the major food-related contributor to greenhouse gas emissions. As we show in this chapter, this is rarely the case. Supply chains tend to be long and complex, especially in the food industry. We provide an overview of supply chain basics and the special issues related to transport and storage of food from the point of production to the retail shelf. We include a variety of carbon audits and discuss the lessons learned from several industry case studies. We evaluate several options for packaging and distributing food and beverage products. We also consider interactions and trade-offs associated with these options. In carrying out these analyses, we are often able to identify opportunities for significant energy savings and overall greenhouse gas emissions reductions.

Exploring purchasing preferences: local and ecologically labelled foods

Purpose – The growing presence of foods that are labelled “locally/ecologically produced” leads to the question of how many consumers consider the impact of their food purchases. Do they value local/ecologically-produced food sufficiently to drive their purchasing behaviour, even if such foods are more costly? Can consumer segments be identified and, if so, what are their characteristics? This paper aims to focus on these questions. Design/methodology/approach – In an exploratory study, the authors surveyed over 400 students from a public university in California asking them to select between apples based on a combination of price, origin and presence/absence of an ecological indicator. The authors collected information on their shopping attitudes, their affinity for international trade and demographic identifiers. Findings – Evidence is found for three consumer segments: the deep green, the price conscious and switchers. The latter are the most prevalent category across demographic and attitudinal indica...

A Novel Problem for a Vintage Technique: Using Mixed-Integer Programming to Match Wineries and Distributors

Wineries must find distributors to represent their wines, and distributors seek interesting wines to sell to clients. Wineries and distributors often form partnerships at trade shows. I created a system to qualify potential partnerships for one such trade show, the World Wine Market, by formulating a mixed-integer program that is an embellished transportation model. I based its parameters on answers to a questionnaire I obtained from a subset of trade-show attendees who were seeking partners. Of 675 possible matches between wineries and distributors, the program recommended 31 as the optimal set of matches. This resulted in an allocation of just over 50,000 cases of wine. Participants provided positive feedback. In addition, the program introduced at least one winery and a corresponding distributor who have formed a profitable, long-term partnership.

Postponement Practices in the Wine Industry: Adoption and Attitudes of California Wineries

With the global growth of both export programs and private label brands, wineries must allocate production across an increasing variety of sales channels before demand is known. Misallocation may result in surpluses in some channels and lost sales opportunities in others. Although postponement would aid in solving this problem, this strategy has not been widely adopted. The research in this article involved surveying California wineries (N=142) on their current exporting, private labeling, and postponement practices and on their predictions for future usage. A majority of the respondents export, but many fewer have private label channels or engage in postponement. Additionally, wineries anticipate increasing adoption of export and private label practices but show less enthusiasm for utilizing postponement.

Optimal Keyword Bids in Search-Based Advertising with Stochastic Advertisement Positions

US expenditures on search-based advertising exceeded

Case Article---Embedding a Sustainability Module Into Quantitative Business Courses

12 billion in 2010. Advertisers bid for keywords, where bid price determines ad placement, affecting click-through and conversion rates. Advertisers must select keywords, allocating each a proportion of their fixed daily budget. In this paper, we construct a stochastic model for the selection and allocation process. We provide analytical results for the single-keyword problem and examine the multiple-keyword problem numerically. We investigate trade-offs between keywords given varying levels of risk and return. We show the implications of enforcing a probabilistic budget constraint. Our paper provides a critical analysis of the advertiser’s problem that may guide future research.

UCSF Increases Consumer Value Through Optimal Vendor-Show Scheduling

Business schools face pressure to incorporate sustainability and ethics into curricula, not only by offering single-themed classes but also by including these topics in existing classes. We embed a stand-alone module, sustainability and supply chain management, into two quantitative courses, the graduate core operations class and an undergraduate concentration class in management science. We develop this module to provide students the background and tools to analyze energy usage and resultant greenhouse gas GHG emissions for a product or process. Students research a supply chain, use carbon auditing software, and make recommendations for improvement. To answer the research question of whether students perceive the module as useful and objective we perform an exploratory survey N = 76. We find that students are engaged and consider delivery as unbiased. In short, this module adds value to the learning experience and can be integrated into classes without extensive instructor preparation. Readers may freely download all supporting materials for use in their own courses. More generally, our approach could prove useful in developing modules on other sustainability subtopics to place into quantitative courses, so as to support the relationship between analytical and qualitative approaches to decision making, especially when those decisions involve ethical or environmental issues. Case Teaching Note: Interested Instructors please see the Instructor Materials page for access to the restricted materials. To maintain the integrity and usefulness of cases published in ITE, unapproved distribution of the case teaching notes and other restricted materials to any other party is prohibited.