This article provides an overview of perceived risk during wine decision-making, highlighting the value and previous international successes of consumer-driven marketing initiatives, while providing direction for future research on the local market.
On the risk continuum of food and beverage choices, wine is a product category where consumers are inherently confronted with at least some amount of uncertainty. Consumers are bombarded with numerous options during wine decision-making, while some are even intimidated by wine and wine selection as a result of highly technical information and supposed “wine rules”. As wine often accompanies food and is shared socially, risk and complexity of wine choice furthermore increase in consumers’ minds (Lockshin & Corsi, 2012; Spawton, 1991).
Risk perceived by consumers can be defined as their uncertainty about the possible negative consequences (Schiffman et al., 2014) as a result of the wine purchase. This whole, almost panicky ordeal of assessment occurs before a choice of wine is made – a true sales barrier (Figure 1).
FIGURE 1. Perceived risk during the decision-making of wine (adapted from Engel et al., 1995).
To practically illustrate risk in the context of consumers’ wine choices, the following known dimensions of risk perception can be applied (Schiffman et al., 2014):
- Functional risk (will this wine taste good and complement my food or not?).
- Financial risk (will this bottle of wine be worth the price I pay/good value for money?).
- Physical risk (will I get a headache/hangover from this specific cultivar/blend/brand?).
- Social risk (will my friends approve/disapprove this wine?).
- Psychological risk (will this wine make me feel embarrassed after offering it to friends?).
- Time risk (will it be worthwhile to search for a specific wine?).
In the South African context, it can also be argued that the inherited and mostly Eurocentric wine practices might be foreign and intimidating to the majority of the South African population, causing wine consumers to perceive risk. Moreover, consumers hardly ever have the chance to evaluate wines’ sensory characteristics through tastings prior to the purchase which is especially true in the supermarket setting where a substantial amount of wine purchases are made in South Africa. In essence, the higher the risk a consumer perceives, the lesser the chance of the wine to be purchased. Fortunately, there is a brighter side: when risk can be effectively reduced, a wine market might show some significant expansion.
At the Institute for Wine Biotechnology (IWBT), in conjunction with the Department of Business Management at Stellenbosch University, a current research project is underway to explore South African consumers’ perceived risk of Chenin blanc. The results of this Department of Science and Technology (DST) and Winetech-funded doctoral project could feed into a marketing plan with the ultimate aim to improve Chenin blanc sales in the local market. This project will also be a pioneering effort to investigate risk perception of a specific cultivar and similar endeavours for other cultivars could follow.
Perceived risk, marketing strategy and new product development
In the late 1980s, the UK had an oversupply of wine coupled with low per capita wine consumption. Marketing managers needed information on how to expand the wine market and academic researchers hypothesised that the slow growth could be attributed to consumers’ risk perception of wine. It was consequently established that UK wine consumers across different socio-economic classes perceived functional, social and financial risk in their purchase decisions of wine. These consumers furthermore specifically voiced that “foreign wine names” had been difficult to pronounce and remember, while men disliked the feminine image of wine drinking. Also, those consumers with lacking information about wine tended to perceive higher amounts of risk (Mitchell & Greatorex, 1988).
The current situation in South Africa, with few experienced wine drinkers and possibly a lot of “high risk perceivers”, might mimic that of the UK in the late 1980s. Insights gained from the study on UK consumers’ risk perception of wine allowed for concrete marketing initiatives with specific recommendations for product, price, place and promotional decisions to reduce consumers’ perceived risks and to ultimately grow the market. For marketing strategies to be more effective, consumers should firstly be clustered according to the dimensions (e.g. social/financial) and amounts of risk they perceive (high-low risk perceivers). The different consumer clusters should also be given the chance to voice their preferences for information that they use and rely on to ultimately make a purchase decision, also known as risk-reducing strategies. Risk-reducing strategies, such as label information, a familiar brand/producer name and advice from a store assistant, sommelier or friend are central to steer consumers away from their stressed state of cognitive dissonance. To illustrate: in previous international studies, it was found that consumers perceive significant amounts of functional risk (Mitchell & Greatorex, 1988; Bruwer et al., 2013) as they were uncertain about the taste of the wine or the pairing of wine with food. As a risk-reducing strategy, in-store tastings on the day of purchase reduced functional risk and increased sales by 400% in a previous Australian experiment (Lockshin & Knott, 2009). However, for social risk perceivers who might (for example) mostly buy their wine online, in-store tastings would certainly not have the same impact. It is therefore a little more complex than just force feeding already overloaded consumers with arbitrary information.
Research is critical as different consumers choose and prefer different information and sources of information to reduce their risks (Atkin & Thach, 2012). For example: an experienced, middle-aged wine drinker that buys online might rely on web-based terroir and vintage descriptors (Parr et al., 2011), while an inexperienced millennial that buys from the supermarket relies on a familiar brand name and aesthetics of the packaging. Further insights on individual differences, such as level of knowledge, purchase and consumption practices, as well as environmental influences, such as culture, are therefore needed to ensure that marketing communication efforts from producers are accurate and effective to reach the intended target market (Johnson & Bruwer, 2004).
The study of risk perception also has relevance for new product development/modifications. Research indicated that some consumers perceive physical (health) risks in the purchase of wine due to added SO2. Consequently, preliminary experiments are currently being done in Argentina to replace sulphates with added resveratrol as anti-microbial alternative in red wine (Pastor et al., 2015). If these experiments are successful and commercially viable, it would once again be of utmost importance to reach the anti-sulphate consumer segment with accurate and effective marketing communication; if not, the efforts on the production side would be fruitless. More research is therefore needed to establish who the anti-sulphate consumers are, where they buy and on what information they rely to make their wine purchasing decisions. Anti-sulphate, health-conscious consumers might for example buy wine from supermarkets and be meticulous label-readers; a health claim stating “sulphur free, added resveratrol” could subsequently be put on the front of the bottle which would, in this case, be an effective risk reducer. Research about perceived risk and risk-reducing strategies are therefore believed to provide direction on where to effectively apply marketing resources (Bruwer et al., 2013).
On fertile home soil, there are ample opportunity to nurture the local wine market which is still in its infancy, but holds great potential in terms of buying power. Studying consumer risk-related behaviour in various segments is only one inquiry which might provide valuable insight. Irrespective of the inquiry, the crux is to really understand wine consumers to assist in the design of a total product management strategy, including marketing communication, that could create repetitive positive experiences, satisfaction and consequent loyalty. Due to the diverse South African wine-drinking population, a clustering of consumers according to e.g. similarities in preferences, demographics or other behavioural traits, such as risk perception, is probably a good starting point. These types of strategic exercises require a collective effort from producers, distributors, academics, marketers, sponsors and governing bodies. A local wine-drinking culture is yet to be established and marketing initiatives should therefore be carefully planned and executed to develop this promising market.
Although state-of-the-art packaging, a well-known risk reducer, cannot compensate for low product quality, promotion by means of advertising and branding should be equally as important as the contents of the bottle. Success in terms of sales therefore depends on both product quality and effective consumer communication, a dual responsibility of the producer. However, the individual wine producers surely are not supermen; they are sublime wine-makers, and that should always be their primary focus. What producers rather need is dedicated consumer behaviour and wine marketing professionals to provide practical advice and assistance to research wine consumers and match and manage the total product offering according to consumer needs and wants.
Wine is infamous for causing a lot of consumer uncertainty, i.e. perceived risk during point-of-purchase selection. Perceived risk is also likely to differ between product categories or even wine cultivars and brands. Consumers tend to buy the wine where the least amount of risk is involved, while less experienced consumers are prone to perceive higher levels of uncertainty. Reducing consumers’ perceived risk using various product development and strategic marketing initiatives should therefore be a priority in efforts to improve sales. However, in-depth consumer research is firstly needed to identify and describe consumers’ risk behaviour prior to strategy development.
NRF, Winetech, DST, IWBT-DVO and SU.
- Lockshin, L. & Corsi, A.M., 2012. Consumer behaviour for wine 2.0: A review since 2003 and future directions. Wine Economics and Policy 1(1): 2 – 23.
- Spawton, T., 1991. Of wine and live asses an introduction to the wine economy and state of wine marketing. European Journal of Marketing 25(3): 1 – 48.
- Schiffman, L., Kanuk, L., Brewer, S., Crous, F., Du Preez, R., Human, D., Jansen van Rensburg, M., Raninger, S., Tshivhase, T. & Shrosbree, T., 2014. Consumer behaviour global and Southern African perspectives, Cape Town: Pearson.
- Engel, J.F., Blackwell, R.D. & Miniard, P.W., 1995. Consumer behavior 8th ed. Fort Worth, Texas: Dryden.
- Mitchell, V. & Greatorex, M., 1988. Consumer risk perception in the UK wine market. European Journal of Marketing 22(9): 5 – 15.
- Bruwer, J., Fong, M. & Saliba, A., 2013. Perceived risk, risk-reduction strategies (RRS) and consumption occasions: Roles in the wine consumer’s purchase decision. Asia Pacific Journal of Marketing and Logistics 25(3): 369 – 390.
- Lockshin, L. & Knott, D., 2009. Boozing or branding? Measuring the effects of free wine tastings at wine shops. International Journal of Wine Business Research 21(4): 312 – 324.
- Atkin, T. & Thach, L., 2012. Millennial wine consumers: Risk perception and information search. Wine Economics and Policy 1(1): 54 – 62.
- Parr, W.V., Mouret, M., Blackmore, S., Pelquest-Hunt, T. & Urdapilleta, I., 2011. Representation of complexity in wine: Influence of expertise. Food Quality and Preference 22(7): 647 – 660.
- Johnson, T. & Bruwer, J., 2004. Generic consumer risk-reduction strategies (RRS) in wine-related lifestyle segments of the Australian wine market. International Journal of Wine Marketing 16(1): 5 – 35.
- Pastor, R.F., Gargantini, M.R., Murgo, M., Prieto, S., Manzano, H., Aruani, C., Quini, C.I., Covas, M. & Iermoli, R.H., 2015. Enrichment of resveratrol in wine through a new vinification procedure. Journal of Life Sciences 9: 327 – 333.
– For more information, contact Nadia van der Colff at firstname.lastname@example.org or Hélѐne Nieuwoudt at email@example.com.