Jill McCluskey, an economist at Washington State University, says many of the organic or sustainability certifications, such as those behind her, may increase wine ratings but confuse consumers. (TJ Mullinax/Good Fruit Grower photo illustration)
More vineyards are going green and pursuing the certifications to prove it, such as organic, biodynamic and salmon-safe. Broadly, wine prices today reward such efforts, but all certifications don’t fare equally in the marketplace, according to a recent analysis that attempts to measure the value of so-called green or sustainable certifications.
Unlike the fresh fruit market, where growers can expect a handsome price premium for complying with organic standards, this study and others paint a far more complex picture of how wine consumers respond to the wide variety of certifications now seen on labels.
“When you get too many certifications or standards, it’s confusing to consumers and makes them worth less,” said Washington State University economist Jill McCluskey. Her study of 45,000 red wines found that some certification programs offer $3- or $4-a-bottle price premiums over conventional counterparts, while others appear not to be worth the cost of certifying.
Environmentally conscious millennials may select green wines at modest prices, yet high end consumers still perceive organic wines as lower quality, said Magali Delmas, an economist at the University of California Los Angeles who specializes in sustainability. And while there are some quality concerns with U.S. Department of Agriculture certified organic wine because of the ban on sulfites, the agency also certifies wine made with organically grown grapes. In recent years those wines have received just as favorable, if not better, ratings from experts, according to an analysis Delmas did in 2016. But consumers may not know the difference, she added.
As a result of this perception, it’s not uncommon for growers to adopt organic or sustainable practices because of the environmental and fruit quality benefits but not advertise them on the labels, Delmas said, especially for high-end wines.
“There is a premium for wine made with organically grown grapes, but if you put it on your label that it’s a green wine, the consumer may be wary,” she said.
Consumers aren’t necessarily the primary audience for certification programs. Chris Serra, director of the Low Input Viticulture and Enology program in the Pacific Northwest, said that effort began as a way to help growers convey their environmentally and socially responsible practices to wineries who buy their grapes.
The LIVE certification is more popular for vineyards in the Northwest than organic certification, because the standards are tailored to the specifics of viticulture in the region and growers have a sense of camaraderie and ownership in the process, he said.
McCluskey’s findings also show that, generally, wines marketed as organic garnered less of a price premium than wines advertising their sustainable, biodynamic or salmon-safe practices.
The analysis is based on over 45,000 red wine ratings by Wine Spectator magazine from 1989 to 2014 from almost 3,000 California wineries and 460 wineries from Washington. Data included price, expert panel rating, region, varietal, age, vintage year, label information such as reserve, estate, or specific vineyard, and sustainable practices touted on labels or websites, cross referenced with lists from certifying agencies.
A mathematical analysis was done to highlight the price implications of certain characteristics. Higher marginal prices were found for prestigious regions, such as Sonoma or Napa, for reserve wines, and for some sustainability claims and certifications.
The economists also found that some wines make claims about organic, biodynamic or sustainable practices without being certified, and many of those wines garner prices comparable, or in some cases, better than certified wines.
“I was surprised that there wasn’t a larger premium for the certified wines,” McCluskey said, adding that people must trust their winemakers. “With wine, the marketing is really relational and people are telling a story. It’s easier to self-claim in wine than in apples.”
As more consumers seek sustainable products, the natural or organic production process is becoming a story that can help sell a wine or distinguish it from neighbors on the shelf, said Dan Ewer, senior vice president for business development at Young’s Market, a large wine wholesaler.
That’s a change from 10 or 15 years ago when wineries typically hid certifications from consumers, he added. “Now it’s a badge. The quality has come up to at or above the non-green grapes.”
A recent survey of people in the wine trade found that most believe the trend toward sustainably produced wine is growing, and a certified label has at least a small impact on sales and marketability. The survey, commissioned by the California Sustainable Winegrowing Alliance, found that 21 percent of respondents frequently factor sustainability into recommendations to customers, while 52 percent say it’s occasionally a factor.
Still, it’s rare for consumers to specifically seek out organic or biodynamic wines, and there’s no organic section in the wine department yet. “People are asking for Robert Sinskey’s wine, not just any biodynamic wine,” Ewer said. It’s up to the trend-setters in the wine world to educate people about the certifications, he said, which creates marketing opportunities.
Of course, wine prices reflect quality, not just marketing. Many growers find that the additional attention to detail required by certification programs makes for better grapes, according to several certification organizations contacted for this story.
Minimizing inputs and promoting biodiversity enhances the expression of terroir, according to proponents, who say this quality is driving the price premiums far more than consumer preference for green wines.
That’s why the wine industry was an early adopter of the principles of biodynamic farming, said Elizabeth Candelario, managing director of the Demeter Institute, which certifies biodynamic farms in the U.S.
This ecological approach to agriculture dates back to 1920s Germany and combines animal and plant diversity, soil building and avoidance of synthetic products with spiritual elements like using a lunar calendar and herbs, minerals and animal parts to increase the vitality of grapes.
“People started noticing that some of the best wines in the world were coming from biodynamic vineyards. Biodynamics really represents the platinum standard for regenerative agriculture,” Candelario said. “But people don’t pursue it for marketing reasons; they pursue it to be better viticulturists and to make better wine.”
That said, Demeter wants to grow consumer awareness of biodynamic farming in the U.S., Candelario said, and ensure that the certification has value to growers.
Some wineries that describe their practices as biodynamic are not certified by the Demeter Institute, which owns the trademark for the term in the U.S. McCluskey found that those wines actually had a higher price premium than the wines certified by Demeter, a finding which Candelario questioned.
“We take enforcement of the certification mark quite seriously. It allows us to protect the standards and prevent biodynamic from becoming a generic term like sustainable,” Candelario said.
Sustainable may mean different things to different people — efficient water use, low inputs, soft pesticide programs, renewable energy, recycled packaging and livable wages for workers — but it’s a term consumers recognize and it doesn’t carry the same perception problems as organic wine.
Wines certified through sustainability programs Napa Green and Low Input Viticulture and Enology (LIVE) had $4.40 and $3.28 price premiums respectively, compared to $1.27 for wines certified by the USDA organic program.
The organic program works well for fresh produce because people who buy it perceive health benefits, Delmas said. People don’t think of wine the same way, so they are unlikely to pay more for certified wines unless they perceive it to be higher quality.
In a 2016 study, she found that experts at Wine Advocate, Wine Spectator and Wine Enthusiast give biodynamic wine and wine made with organic grapes higher quality ratings than conventional wines by an average of 4 points on a 100-point scale.
“People are not going to buy green products just because it’s good for the environment, they need it to be good for them,” Delmas said. “Wine has to get that quality benefit and right now, it’s only the experts who see it.”
The National Organic Program offers two certifications for wine: Organic Wine, which contains no added sulfites, and the far more common, Wine Made with Organic Grapes. About 450 vineyards nationwide are certified to grow organic grapes, including 364 in California, 35 in Oregon, and 26 in Washington. Costs vary with certifier.
Biodynamic, certified by Demeter Institute
The program promises “Healing the Earth Through Agriculture” and combines organic farming practices with a holistic approach to the farm as an ecosystem that brings out the terroir in wine. Just over 80 vineyards and wineries are now certified in the United States.
Costs for fees and annual inspections range from $750 to $1,500 a year, and certified wineries are assessed at $.06 on the dollar for wine sales as a licensing fee.
Low Input Viticulture and Enology (LIVE)
The grower-focused sustainability program in the Pacific Northwest now certifies 320 vineyards comprising over 30,000 acres. The group also partners with the Salmon Safe program so that certification encompasses both standards. Standards are tailored to reflect regional growing conditions and challenges and are certified by the International Organisation for Biological and Integrated Control. Dues range from $300 to $3,000, depending on size, plus inspection fees when needed.
More than 45,000 acres of vineyard are now certified by this sustainability program that focuses on reducing soil loss, protecting creeks and regulation compliance and partners with California Land Stewardship Institute’s Fish-Friendly Farming program. A separate winery certification is also available. Fees vary depending on audit partner.
The Lodi region is making a bid to be known as a green growing region with sustainable standards for business, human resources, ecosystem, soil, water and pest management. Growers have to have sufficient points in each category to be certified, as well as pass a pesticide risk assessment. Over 36,000 acres of vineyards certified.
Certified California Sustainable Winegrowing
Sponsored by the California Sustainable Winegrowing Alliance, this certification program seeks to encourage progress and continuous improvement across the entire wine industry, with a focus on stewardship, conservation, and social responsibility. Over 100,000 acres are certified. Costs $200 to $2,000 a year, depending on vineyard size, plus costs of third-party audits. The Alliance also offers self-assessment tools to educate and support growers.