Evaluating the net benefits of collective reputation: The case of Bordeaux wine

In this paper we develop an original approach to assess the net benefits associated with a generic promotion program using an application to Bordeaux wines. The benefit is computed from the marginal impact of the program's collective reputation on the individual reputation for sub-regions within Bordeaux. These different marginal impacts are estimated using detailed survey data about the image of Bordeaux wines in seven European countries. We find positive and significant spillover effects from the collective reputation (Bordeaux) that moreover increase with the reputation of the sub-region. These spillover effects, when significantly positive, vary from a minimum of 5% to a maximum of 15% of additional favorable quality opinions. We then calculate a measure of the average net benefits earned by producers from the regional promotion program in selected sub-regions within Bordeaux. Our results indicate that producers in some sub-regions are more likely to benefit from the promotion program and suggest that the current fee structure may not be properly aligned with market conditions. (C) 2017 Elsevier Ltd. All rights reserved.