The roles of geographic indication and ethnocentrism in the preferences of Central European spirit consumers

Abstract

The purpose of this study is to examine consumer preferences towards a Central European alcoholic beverage possessing a Geographical Indication (GI), paying special attention to the role of ethnocentrism in decision-making. Pálinka is one of the best-known products in Hungary, and the regulation and perception of the product have undergone significant changes in recent years. A total of 1,000 Hungarian consumers, taken to be representative of the Hungarian alcohol consumer population, participated in the study using an online survey. A discrete choice model was applied, including a latent variable (ethnocentrism). Willingness to pay (WTP) calculations were also carried out for the product attributes examined. The presence of the most important identified product attributes (brand, GI, production method) indicated on the bottle all have a positive effect on consumer preferences; moreover, higher WTP also applies. As the level of ethnocentrism increases, the level of utility ascribed to the GI-labelled product also increases. The level of ethnocentrism is significantly higher among respondents over 60 and lower among those with higher education and who are urban. In previous literature, very little attention has been given to discrete choice experiments (DCEs) on alcoholic products, even in the case of pálinka's direct competitors (mainly whisky and vodka). Our study, however, clearly indicates that it is possible to segment the market based on different product attributes and ethnocentrism.