Australian consumers and environmental characteristics of wine: price premium indications

There has been increasing consumer interest in recent times in the environmental providence of what they eat and drink. A number of different environmental wine certifications have been created and these include biodynamic, fairtrade, organic, natural and sustainable. The purpose of this study is to survey wine consumers in Australia about their interest in these eco-certifications and their willingness to pay (WTP) a price premium for wine with one of these eco-certifications.

An online survey was developed to capture the knowledge and attitudes of consumers and their socio-demographic characteristics about their WTP for eco-certified wine. Data from 454 wine consumers in Australia were collected and analysed. Descriptive statistics and Pearson’s chi-squared test analysed the significant factors which determine consumers’ attitudes towards eco-certified wines. Ordinal logistic regression with marginal effects was used to examine whether the WTP a premium for different certified wines differs significantly based on wine knowledge, attitudes and socio-demographic characteristics.

The findings of this study indicate that consumers often buy pro-environmental goods. The majority have a positive (greater than 0) WTP a premium for biodynamic, fairtrade, organic, natural and sustainable-labelled wines. The main factors influencing eco-certified wine purchase decisions by Australian consumers are previously bought eco-certified goods, previously bought eco-certified wine and respondent age. Income, education or previous wine knowledge did not positively influence WTP a price premium for eco-certified wines. Gender was not significant in the ordinal logistic regression.

Most studies in the literature use stated preference experiments to elicit WTP and these are valuable exercises, as they can provide an indication of consumer preferences for potential certifications, before they have been introduced to the market. In this study, we used an ordinal dependent variable in the logistic regression instead of a continuous variable (because of data limitations). Using ordinal dependent variables provides information on the probability or likelihood of occurring an event.

The study results provide the first price premium indications that Australian consumers are willing to pay for eco-certified wines (other than organic).