Tennessee Consumers’ Willingness to Pay for Tennessee Wine

With a large and growing market, grape production and wineries are emerging in areas of the United States that have not been previously recognized as wine producing states. Tennessee is an example of such a state that has a history of limited wine grape production, but has recently seen a growing interest in state produced wines by consumers. However, there is no information regarding whether a Tennessee produced and labeled wine would impact consumers’ purchases and willingness-to-pay (WTP) for wine. The objective of this research is to determine the factors influencing consumers’ purchases of Tennessee labeled wine and to estimate consumers’ WTP for Tennessee produced and labeled wine. Data were collected through an online consumer survey conducted in September 2015. The survey presented respondents with a choice between a ‘base’ wine and a Tennessee labeled wine. Three separate probit models were used to estimate the likelihood that the Tennessee consumers would purchase a Tennessee labeled red, white or muscadine wine. Estimated coefficients from the models were used to calculate WTP for each of the Tennessee wines. Factors such as gender, income, frequency of purchases, importance of buying local, and importance of low price all influence consumers’ WTP. The overall average price consumers were willing to pay for Tennessee labeled white wine was $19.48/bottle, ($7.48/bottle premium above the base wine), $16.62/bottle for the Tennessee labeled red wine, ($4.62/bottle premium above the base wine), and $16.03/bottle for the Tennessee labeled muscadine wine ($6.03/bottle premium above the base wine). The results of this study may help guide marketing and promotion decisions for Tennessee wine producers.