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Category Signaling: Biodynamic and Organic Winemaking in Alsace

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Listed:
  • Negro, Giacomo

    (Emory University)

  • Hannan, Michael T.

    (Stanford University)

  • Fassiotto, Magali A.

    (Stanford University)

Abstract

We propose that category membership can operate as a collective market signal for quality. This requires that gaining category membership is more costly for low-quality producers. The strength of such signals increases with the distinctiveness, or contrast, of the category. Our empirical study focuses on biodynamic and organic viticulture in Alsace. The codes for both categories proscribe the use of fertilizers and pesticides. But the biodynamic category has higher contrast due to additional farming rules and eccentric practices that make it stand out to a considerable degree. And, unlike the organic category, biodynamics is not perceived to overlap significantly with sustainable viticulture. We find that wineries of higher quality have higher hazards of becoming biodynamic but not organic. Ratings by critics tasting blind increase significantly for wineries after they become members of either the biodynamic or organic categories. However, a parallel analysis finds that ratings by critics who know the identity of the producer favor biodynamic but not organic wines.

Suggested Citation

  • Negro, Giacomo & Hannan, Michael T. & Fassiotto, Magali A., 2012. "Category Signaling: Biodynamic and Organic Winemaking in Alsace," Research Papers 2101, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:2101
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    File URL: https://gsbapps.stanford.edu/researchpapers/library/RP2101.pdf
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    References listed on IDEAS

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    1. Ali, Héla Hadj & Lecocq, Sébastien & Visser, Michael, 2010. "The Impact of Gurus: Parker Grades and en primeur Wine Prices," Journal of Wine Economics, Cambridge University Press, vol. 5(01), pages 22-39, March.
    2. Giacomo Negro & Michael T. Hannan & Hayagreeva Rao, 2010. "Categorical contrast and audience appeal: niche width and critical success in winemaking," Industrial and Corporate Change, Oxford University Press, vol. 19(5), pages 1397-1425, October.
    3. Delmas, Magali A. & Grant, Laura E., 2008. "Eco-Labeling Strategies: The Eco-Premium Puzzle In The Wine Industry," Working Papers 37325, American Association of Wine Economists.
    4. Giacomo Negro & Michael T. Hannan & Hayagreeva Rao, 2011. "Category Reinterpretation and Defection: Modernism and Tradition in Italian Winemaking," Organization Science, INFORMS, vol. 22(6), pages 1449-1463, December.
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