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An Organic Discount?

For most products, an “organic” label results in a significant price premium. However, a new study finds that the opposite is true for California wines labeled as “made from organically grown grapes.” California wines made from organic grapes are generally better, as measured by ratings in Wine Spectator, and command a price premium of about 13%-as long as the wine doesn’t carry an organic label. The higher rating, and subsequent price premium, is due to the higher quality of wines made from organically grown grapes. “Growers have to devote more time and attention and take better care of organically certified vines than conventional vines, and our results show that these efforts are apparent in the product,” says Magali Delmas, the study’s lead author. But once vintners slap an eco-label on the bottle, the price premium disappears (although the wines still carry a higher Wine Spectator rating). Laura Grant, Delmas’s coauthor, suspects the price difference is due to consumer confusion over organic wine (which is made without chemical preservatives), and wine made with organically grown grapes (which does contain preservatives): “Organic wine earned its bad reputation in the ’70s and ’80s. Considered ‘hippie wine,’ it tended to turn to vinegar more quickly than non-organic wine. This negative association still lingers.” Vintners seem to be aware of the price penalty – two-thirds of vintners who use organically grown grapes do not label their wines as such.[%comments]