Market inefficiency of the day, Maple syrup edition

By Felix Salmon
November 9, 2011

Maple syrup is made by boiling down the sap of maple trees. Early in the season, there’s lots of sugar in the sap and it only takes 20 or 30 gallons of sap to generate a gallon of syrup. Because it hasn’t been boiled down very much, that syrup lacks intensity. Later on in the season, however, there’s less sugar in the sap and it can take as much as 60 gallons of sap to generate a gallon of syrup. And that syrup is much darker and more flavorful.

Obviously, more effort is expended generating each gallon of dark syrup than is expended on making the early-season light syrup. And the dark syrup tastes better too. So you’d expect it to be much more expensive.

And you’d be wrong.

Nick Rizzo went to Whole Foods in Union Square last night to get the numbers. The most expensive maple syrup on the shelves was, interestingly, the Whole Foods own brand — the 365 Organic line which ostensibly offers cheap, everyday prices. But the 365 Organic Grade A light maple syrup sells for $7.99 per 8oz jar — that’s $64 per half-gallon.

And “Grade A light”, remember, means the early-season stuff with the least maple taste or flavor.

If you stick with the 365 Organic line, the next one down is Grade A medium, at $9.99 for a 12oz jar, or $53 per half-gallon. Then there’s Grade A dark, where a 12oz jar is just $7.99. That’s $43 per half-gallon. And finally there’s Grade B — the tastiest of the lot, and the hardest to make — which comes in a 32oz jug for $19.99, or $40 per half-gallon. For good measure, it’s labeled “cooking”, just to hammer home the idea that this stuff isn’t designed for direct ingestion.

Other Grade B maple syrup at Whole Foods is even cheaper — a different 32oz jug was selling for just $11.99, or $24 per half-gallon. That’s just 37% of the price of the top-end stuff. I’ve been to Vermont; everybody there told me to buy Grade B if possible. Not because it was cheaper, but rather because it was better.

And some purveyors are working this out. At Amazon, the Shady Maple Farms Grade B is $32.89 for 32oz — a whopping $66 per half-gallon — while the Grade A is slightly cheaper, at $30.08.

But more generally, the trend is very clear: the lighter, cheaper-to-make, and less tasty maple syrup is also the most expensive, being presented lovingly in small glass jars rather than being moved in bigger plastic jugs.

And the maple syrup industry seems to be entirely complicit in this, happy to slap a “cooking” label on the really good Grade B stuff, which by rights should be its premium product.

This weirdly inverted state of affairs won’t last forever — under “new standardized grades and nomenclature”, the grading is going away. But for the time being, now’s your opportunity to take advantage of a curious historically-driven arbitrage. Grasp it!

Update: Apologies for betraying my European roots by not knowing how many ounces there are in a gallon. I originally was giving prices per gallon here; in fact, they were prices per half-gallon. Oops.

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Comments
21 comments so far

Most people prefer Grade A – which used to be called fancy – and don’t like the intense taste of Grade B – my favorite. More people like Grade A but that’s because it is usually close in taste to the fancy grade.

There was an old Grade B. The taste was almost a maple caramel with burnt flavor.

Posted by jomiku | Report as abusive

If you buy directly from maple farm sugar shacks in New England this is not so: the light and dark stuff is usually priced the same, and the dark stuff generally sells out quicker.

Posted by alkali | Report as abusive

How do we know this is an inefficiency without knowing the demand curve?

Posted by Winecoff | Report as abusive

A gallon has twice as many ounces as you seem to think it does.

Your point about the relative prices remains, but the per-gallon cost (and savings) is twice what you indicate.

Posted by ottnott | Report as abusive

I am breathlessly awaiting word from this blogs resident maple sap boiling expert.

Which is better KidDynimite… light or dark syrup?

Also if you want to talk about market ineffeciencies look at the price of another local produced commodity in my state… Lobster. The boat price has dropped below $4/lb and local demand is down! It is theorized that people have learned to identify Lobster as a luxury good; something to be cut back on irrespective of its current low price.

Posted by y2kurtus | Report as abusive

fear not, y2kurtus – I am here.

I’m not sure if i’m the only one of Felix’s readers who makes maple syrup, but I can tell you a few things:

1) I don’t think that the “intensity” comes from the fact that the later season syrup is “boiled down more” – it’s not more concentrated or anything, I THINK that it (the finished syrup) has the same sugar content

2)the late season stuff is definitely more flavorful. Not everyone likes that – I happen to like it. A lot of the late season stuff I made is what i’d describe as “Artisanal” – if this were whiskey, people would rave about it. In fact, you may very well see a niche market develop in the next few years along the lines of what Felix is talking about in this post – real rich, complex maple syrup with distinct flavors, as opposed to the Grade A Light stuff that sells for a premium now and is very “clean” tasting

3) There is less sugar content in the SAP at the end of the season, but the finished syrup is still the same sugar content

4) as far as I understand it, a lot of the “complexity” comes from the fact that there are more bacteria in the starting late season sap – maybe almost like a yeast/bear kinda thing

then again, I’ve only been making syrup for 2 years, and I’m no sort of expert. we did make 10 gallons last year – which is a lot for a small home operation. and yes, our ratio went from 33-1 (sap/syrup) at the beginning of the season to 45-1 at the end of the season

-KD

Posted by KidDynamite | Report as abusive

I don’t make my own, but I frequent a wildlife sanctuary where they do (in reasonably large quantities). If I remember correctly, the opening of the buds imparts a bitter flavor to the sap/syrup. Presumably the late-season sap reflects the beginnings of this change?

Posted by TFF | Report as abusive

We produce about 1,400 hard-earned gallons of organic maple syrup each year Ferdinand, Vemront. For us, where the sugar content of the sap runs from 1%-2.5%, it takes 35-85 gallons of sap to make a gallon of syrup. Early season sap actually tends to be low in sugar content, it peaks in the middle of the season, then drops off. People’s preferences have recently shifted towards darker syrup, mine included, but the Fancy grade syrup we made last year had an absolutely exquisite flavor. There are an untold number of variables that contribute to maple syrup’s flavor. It changes year to year, even day to day. If you really want good maple syrup, buy directly form a producer. Single source syrup is invariably better than any syrup bought from a chain store. Know that the producer, if they are willing to put their sticker on the container, is proud of the product.

Posted by OsborneMaple | Report as abusive

Isn’t this a combination of gov’t and market failure? The gov’t are the ones that set “grades”. But people like signals?

Posted by Bill.D | Report as abusive

Outside of New England and little enclaves like the small fraction of NYC with Whole Foods access, most Americans have no idea what real maple syrup tastes like. “Pancake Syrup” (sugar solution) costs significantly less than any of your options and is stocked at breakfast joints across the land. When people raised on that crap happen upon a shelf of different maple syrups, they have no idea what the differences are, but they can see that A is higher than B, A costs more than B, and A looks more like things they’re used to consuming (light color). If they ever do a side-by-side tasting, the more intense B flavor might be off-putting at first. I imagine the wholesale prices for the two do not correspond to the store prices, and the markup on A is free gross margin for stores that have realized customers have no idea what maple syrup is or how much it should cost (but will occasionally pay a lot for it).

Posted by najdorf | Report as abusive

@ megalomaniac

Yes, Felix should have referenced this as a link in his blog.
Ah, the rigour of shallow writing ….

Posted by scythe | Report as abusive

Felix, really you want to start the Maple Syrup of 2011! First off, the A grade also has different levels of lightness, the very lightest stuff hardly taste of anything at all. Second, and much more important, American maple syrup is a pale imitation to the Canadian stuff.

That’s the most important point, and I’m sure that even Kid Dynamite would agree with this. When it comes to Maple Syrup Canada rules!

There you go, my contribution to the great Maple Syrup war of 2011!

Posted by FitN | Report as abusive

My Dear Man,

It is not only your gallon gaffe that betrays your unamerican roots.

We like white bread, “lite” beer, golden delicious apples, and syrup that is maple in name, only.

A long time ago (Prejudices: Sixth Series (1927)), H. L. Mencken wrote of the the American “Libido for the Ugly”. We not only lack taste, but reject it in the rare instances when we encounter it.

Get used to it.

Posted by samadamsthedog | Report as abusive

I wouldn’t be surprised if this had something to do with market structure: Québec produces 75% of all maple syrup and the supply is managed through the “Fédération des producteurs acéricoles du Québec”. They even have a maple syrup strategic reserve to manage the market and make up for good and bad years. This is a heavily manipulated market, it might have something to do with these inconsistencies.

Posted by lemarin | Report as abusive

Maple syrup is a product of mud season. It’s a sign of the times that this post comes out in November.

Most large producers use reverse osmosis to shorten the boiling time. I think the marginal cost difference of the higher sugar content of mid-season sap (thanks OsborneMaple)is immaterial. The issue is one of demand, and until recently everyone wanted “fancy.”

But when does Felix think seriously about economics?

Posted by Publius | Report as abusive

Bottomline – if you buy maple syrup from New England instead of Quebec you’re getting crapola anyways!

Posted by CDN_Rebel | Report as abusive

Kids actually prefer the light stuff. I suspect kids drive most of the syrup demand and household buying decisions. Economics saved.

Posted by pickandroll | Report as abusive

Historically, maple syrup and maple sugar were used in New England in place of white sugar. As such, there was a desire to get a product as close to traditional white sugar as possible, that would not “throw off” the flavors of the things you were sweetening. These days, even the cheapest maple syrup is far more expensive than white sugar, so this really shouldn’t matter, but, as in many cases, history and tradition have a tenacious hold. Also, as some folks have noted, de gustibus non disputandem est: there are surely some people who find the strong flavor of Grade A Dark Amber (my preferred level) and Grade B (my second choice) off-putting. Many years ago I had a girlfriend whose palate was so sensitive that I would joke that she didn’t like food with flavor in it. A basic Italian pomodoro sauce, with a bit of oregano in it, and no pepper at all, would strike her as “spicy”.

Posted by Auros | Report as abusive

The market price (and implied efficiency) of a product is determined by the market structure and demand, not costs alone.

Posted by JamusLim | Report as abusive

Next up, please investigate extra virgin olive oil. As the New Yorker reported a couple years back, it’s likely that a fair percentage of EVOO isn’t really even olive oil. But my gripe is that EVOO isn’t what you always want. It has a flavor that you may not want to add to the food.

What you want is “pure” grade, which is a later pressing, and no lower in quality. Rather, it has much less taste and is enormously cheaper, typically.

However, I have gone through incredible journeys to find “pure” olive oil in the last 3 or 4 years. Rachel Ray spread the gospel of EVOO, and in Whole Foods and other markets, I can find 40 brands of EVOO, and no pure. Trader Joe’s has had (and sometimes still does) have a single lonely “pure” shelf item.

Posted by GlennFleishman | Report as abusive
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