How Product Properties Drive Wine Sales in Norway

University essay from KTH/Matematisk statistik

Abstract: This project investigates the Norwegian wine market and attempts to provide models of how the sales volume is influenced by different product attributes. The purpose was to examine if and how such relationship can be modelled using multiple linear regression. Additionally, the aim was to give insights in what drives the sales - which is especially valuable and useful for wine producers in order to efficiently enhance their business strategies. Accordingly, the research questions were: which wine attributes have a positive respectively negative effect on sales, and how can wine producers improve their business using this information? The data was retrieved from Vinmonopolet (which has monopoly on wine sales in Norway) and consisted of the best-selling red wines and white wines during January-June of 2020. The model building and analysis were separated for red wines and white wines, hence resulting in two final models. Evaluation of the models showed that they were reasonable for describing the interaction between sales volume and product attributes. For instance, the model validation generated R^2 values of approximately 56% for red wine and 61% for white wine. For both red wine and white wine, the final models indicated that high-volume packages have a positive effect on sales volume. Conversely, high sales prices and high alcohol contents, as well as ordering items and bag-in-box packaging, were negative properties in respect of sales volume. In addition, the red wine model implied that sales are improved by high sugar contents, the grape Rondinella and the food recommendations cattle, vegetables and big game - while high acid contents and France (as the production country) have negative effects on sales. Furthermore, the white wine model pointed out that younger wines and the food recommendation cheese increase sales, whereas high sugar contents and the food recommendation fish decrease sales. The discussion presents interpretations of the results in conjunction with economic theory and articles about wine. The marketing mix model (the 4 Ps) was also applied to employ the project results and thus provide wine producers guidance in marketing and product development. In conclusion, this project offers a deeper understanding of wine markets - in particular, the Norwegian market. The research questions are answered and the purpose and aim are satisfied. Moreover, proposed further research is for example to conduct a similar analysis but with adjustments of taxes and fees on wine and to further investigate the balance between alcohol, acidity, tannins and sweetness.

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