Market penetration of imported agricultural products: A hedonic analysis of the Japanese table wine market

Although hundreds of thousands of agricultural products are traded on a daily basis, it is less known how imported agricultural products gain consumer acceptance and penetrate a domestic market. This paper analyzes Japanese wine point of sale (POS) data and examines how consumer valuation of imported wines changes with their market penetration. Although there is a considerable variation in sales of wines, previous papers have not accounted for it in their hedonic analyses. The wine hedonic analysis accounted for the variation in sales shows that the retail sales prices of imported wine decreases with their market penetration. The analysis also shows that although consumers pay a premium for wine with a long sales history, this premium is not large enough to compensate for the price reduction brought about by sales expansion. Many exporting counties promote organic farming for environmental conservation. The paper further examines whether consumers in an importing country differentiate between local and imported organic products. The result shows that the premium for imported organic red (white) wines is about 42.996% (8.872%) while that for domestic red (white) organic wines is about 6.440% (1.214%), implying that Japanese consumers pay higher premiums for imported organic agricultural products than for those produced in Japan. Length: 42 pages