Exploring the nature of price satisfaction in the Australian wine supply chain

Abstract

In recent years, there has been an increasing realisation of the need for Australian Wineries to develop and maintain quality relationships with their suppliers of grapes. This is especially against the background of the realisation that quality relationships can reduce the level of transaction cost and improve efficiency in the supply chain. One important factor which has been considered as having the potential to enhance and sustain high quality business relationships is the price satisfaction, which measures the perception of the price levels that is paid to the farmers. The aim of this contribution is to explore the main dimensions of price satisfaction between the Australian grape growers and wineries, and determines its impact on overall price satisfaction. Based on the results of the online interview with 396 Australian grape growers, we identify price transparency, relative price satisfaction, price quality ratio and price reliability as the main factors which influence grape growers satisfaction with the price. We conclude that wineries need to focus on the psychological aspect of the price such as price information, stable prices as well as the process of price determination in order to enhance the perception of price fairness from the grape growers.