When Generation Y Buys European Wine: A Consumer Decision-Making Model

WHEN GENERATION Y BUYS EUROPEAN WINE: A CONSUMER DECISION-MAKING MODEL Over the past several years, European wine consumption has declined, even as much as 42.3 percent over an 18-year period (Gual and Colom, 1997; Serra-Majem and Araceta, 2001; Gual, 2006; Rabinovich et al., 2009). Although no one single factor has been identified as the cause of the decline, researchers have posited that several factors have led to this phenomenon. These factors include "marketing factors, public health policies, the evolution of prices and taxation, European Union agricultural policies, a growing awareness of public opinion about the toxicity of alcohol and competition from non-alcoholic beverages" (Gual and Colom, 1997, p. S21). Although the consumption of wine has decreased in European countries, table wine consumption in the United States (U.S.) has grown every year since 1994. As a result, European wine producers may need to expand their exports to U.S. consumers. This intention was specifically identified in the European Union Commission's "review of the Common Agricultural Policy: compete internationally on quality rather than quantity" (Europa, 2009). According to Europa (2009), alcohol is a very important economic commodity to the European community. Alcohol sales create jobs, generate fiscal revenues through alcohol taxes, and contribute approximately nine billion euros annually to the EU's economy through trade. One of the most significant measures of quality to the European Communities is geographical indicators. France alone has 466 geographical indicators for wine that generate 16 billion euros of income annually. Likewise, Italy's 300 geographical indicators generate five billion euros for wine and spirits on an annual basis; Spain's geographical indicators contribute 2.8 billion euros of income for wine and spirits annually (Europa, 2009). Geographical indicators are signals of both product origin and quality. They provide information to assist consumers in making purchase decisions and have been found to be of such value that consumers are willing to pay a premium if the product origin is guaranteed. However, geographical indicators are not sufficiently protected by World Trade Organization rules. The result is that European Union geographical indicators are not adequately protected and efforts to compete on quality in the international market are being stymied. A perusal of the literature shows little research that addresses the importance of a wine's geographical indicator in relation to U.S. consumers. The growth in U.S. wine consumption is driven by several factors, including the adoption of wine as a beverage for a variety of occasions by Generation Y, the quality of wines available at all price points, and the acceptance of moderate wine consumption as part of a healthy lifestyle. It is common practice to segment the U.S. market by consumer age cohorts and "marketing managers need to fully understand age-related changes and identify effective ways to target these changing age segments" (Schewe and Noble, 2000, p. 129). To take advantage of the growth opportunities provided by Generation Y in the U.S. market, it is important to understand the characteristics of this segment of the population. Although the literature addressing this segment lacks a coherence relating to their age span, for purposes of this study, Generation Y will be defined as those individuals born between 1977 and 1994 (Paul, 2001; Bakewell and Mitchell, 2003; Weiss, 2003; Hawkins et al., 2004; Geringer, 2007). In 2005 there were over 75 million members of Generation Y in the United States, numbering at least two million more than Generation X (Brooks, 2005). This segment is such an important market in the United States that Stapinski (1999, p. 62) commented that brands who "miss their mark with Generation Y may not recover." Generation Y has immense buying power. It is estimated that this group of consumers spend between $175 billion to $187 billion per year for products such as clothing and wireless technology (Weiss, 2003; Sanchez, 2004). …