Wine certifications and geographic indications

Abstract

The defining feature of the conflict between the “New World” and “Old World” of wine labeling is the proper use of geographic terms. In the New World (United States, Australia, South America, etc.) the geographic origin of wine plays a relatively minor role, while Old World producers see terroir as perhaps the most important indicator signaling the type and quality of the product. The Old World appears to have won the most recent battle, as international regimes embody robust protection of geographic indicators for wine and spirits. The quintessential Old World, terroir-based protection of geographically-related term for wine is the French Appellation d'Origine Contrôlée (“AOC”). Although the New World deemphasizes the geographic origin of wine, it does not ignore it. In the United States, an American Viticultural Area (“AVA”) is a designated wine grape-growing region that provides an official appellation for the benefit of wineries. Indeed, commentators frequently refer to the AVA as an American AOC. However, the AVA is not, and in its current form will never be, the equivalent of an Old World-style geographic indicator. The differences are obvious and apparent. Although the AOC and similar designators have stringent controls on production methods and product content to control the style and quality of the wine, the only requirement for a producer to use an AVA is that 85% of the grapes used to produce the wine must originate within the designated geographic region. Because of the lack of controls in the production process, the AVA conveys less information than its Old World counterpart. In order to explore the dramatic differences in approach taken by the Old World and New World, this article will first explain how the economics of information (“EOI”) affects consumers generally and then specifically in the wine industry. The article will then explain the legal requirements defining the two systems. To complete the description, the article will turn to developments in international law that adopt and strengthen the Old World approach. Finally, principles from the economics of information provide a theoretical basis to argue that an AVA can never create the strong consumer identification associated with an Old World geographic indicator.