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Organic price premium or penalty? A comparative market analysis of organic wines from Tuscany

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  • Abraben, Lane A.
  • Grogan, Kelly A.
  • Gao, Zhifeng

Abstract

Previous literature suggests that the price of wine is a function of its intrinsic and extrinsic attributes. Studies have examined the price of wines from various wine producing regions using the hedonic price model to determine the correlation between wine attributes and price. However few studies have examined the relationship between organic production or certification and price. This study uses a hedonic pricing model to examine the price premiums associated with organic production and organic certification for Tuscan red wines produced between 2000 and 2008 in both the Italian and American wine markets. Controlling for a variety of wine attributes, the analysis finds that wines produced with organic practices, but not certified as organic and wines certified, but not labeled as organic receive a higher price compared to conventional wine, for wines with low quality ratings. However, as the wine’s quality rating increases, the positive effects of organic practices and certification on price decrease, and for wine with higher quality ratings, organic practices and certification is associated with lower prices relative to otherwise comparable conventional wines.

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  • Abraben, Lane A. & Grogan, Kelly A. & Gao, Zhifeng, 2017. "Organic price premium or penalty? A comparative market analysis of organic wines from Tuscany," Food Policy, Elsevier, vol. 69(C), pages 154-165.
    • Handle: RePEc:eee:jfpoli:v:69:y:2017:i:c:p:154-165
    DOI: 10.1016/j.foodpol.2017.04.005
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    3. Matthias Staudigel & Aleksej Trubnikov, 2022. "High price premiums as barriers to organic meat demand? A hedonic analysis considering species, cut and retail outlet," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(2), pages 309-334, April.
    4. Wei-Chun Tseng & Ya-Chu Yang & Yun-Ju Chen & Yung-Chih Chen, 2021. "Estimating the Willingness to Pay for Eco-Labeled Products of Formosan Pangolin ( Manis pentadactyla pentadactyla ) Conservation," Sustainability, MDPI, vol. 13(17), pages 1-18, August.
    5. Niklas, Britta, 2024. "The effect of South African wine certifications on price premiums and marginal costs: A two-stage hedonic approach," Economic Modelling, Elsevier, vol. 132(C).
    6. Yuting Liu & Abdoul G. Sam, 2022. "The organic premium of baby food based on market segments," Agribusiness, John Wiley & Sons, Ltd., vol. 38(3), pages 533-556, July.
    7. Fabio Boncinelli & Andrea Dominici & Francesca Gerini & Enrico Marone, 2021. "Insights into organic wine consumption: behaviour, segmentation and attribute non-attendance," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-16, December.
    8. Trestini, Samuele & Stiletto, Alice, 2020. "Does Italian origin really determine a price premium for fluid milk? Evidences from a hedonic price analysis," Economia agro-alimentare / Food Economy, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA), vol. 22(1), June.
    9. Donato, Carmela & Adıgüzel, Feray, 2022. "Visual complexity of eco-labels and product evaluations in online setting: Is simple always better?," Journal of Retailing and Consumer Services, Elsevier, vol. 67(C).
    10. Naama Teschner & Daniel E. Orenstein, 2022. "A transdisciplinary study of agroecological niches: understanding sustainability transitions in vineyards," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(1), pages 33-45, March.
    11. Delmas, Magali A. & Gergaud, Olivier, 2021. "Sustainable practices and product quality: Is there value in eco-label certification? The case of wine," Ecological Economics, Elsevier, vol. 183(C).
    12. Christine Mauracher & Isabella Procidano & Marco Valentini, 2019. "How Product Attributes and Consumer Characteristics Influence the WTP, Resulting in a Higher Price Premium for Organic Wine," Sustainability, MDPI, vol. 11(5), pages 1-15, March.
    13. Wei, Hanlin & Goodhue, Rachael & Zhang, Minghua, 2024. "Pesticide Use and Cropland Consolidation in California Organic Agriculture," Ecological Economics, Elsevier, vol. 218(C).

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