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03.07.2010

If Your Wine is Organic, Don't Tell Consumers

Apparently, organic wines taste better but consumers don't think they're worth as much money as conventionally produced wines. At least, that's a plausible interpretation of a study conducted by a UCLA professor and her graduate student that was recently published in Business and Society, the official journal of the International Association for Business and Society.

Professor Magali Delmas and PhD candidate Laura E. Grant conducted an analysis of 13,426 wines from 1,495 California wineries for eight consecutive vintages from 1998 to 2005. The two tracked correlations between the scores of the wines, their prices, whether they were made from certified organically grown grapes, and whether the wineries broadcast their organic certification on the label.

An overview of the study published last week in Science Daily suggests they found some very interesting results. Wines made with organic grapes during the time period they studied scored higher in the Wine Spectator by a point, on average, than wines made with conventional grapes. Whether this means, in fact, that organic wines taste better is open to some debate, but the statistics seem quite clear.

Perhaps the more interesting finding, however arose when the researchers looked at the price of those wines that were "eco labeled" and those that were not. The wines that chose to prominently display their certified organic status sold for 7% less than those that didn't. The prices used to define this gap were the suggested retail prices published alongside the scores in Wine Spectator magazine.

Assuming you believe in the economic principle that prices are set in the marketplace and reflect supply and demand, the conclusion you might draw here is that there is a significant negative value to labeling your wines as organic. Meaning, in short, that consumers don't want to pay as much for wines labeled as such.

Economists are often let of the hook, understandably, for explaining exactly why things are the way they are. Exactly why an eco-label is a penalty rather than a plus hasn't been determined, but I think some of it may have to do with the residual damage that early organic wines did to consumer perceptions when they hit the market in the 1980s. Many of these wines were very poorly made, and then their quality was further compromised by the lack of added sulfur dioxide, which meant that many consumers opened their bottles to find the wine fermenting for a third time. A rash of lousy wines prominently labeled as organic created a sweeping set of negative connotations that apparently the wine industry nor the American consumer has yet to leave behind.

For now, the right approach as an organic winemaker seems clear. Farm your grapes organically to make better wines, but for heaven's sake, don't tell your customers.

The study summarized in Science Daily was originally published about two years ago as a working paper by the American Association of Wine Economists.

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