In 2015, the US and Canada re-graded maple syrup and I’ve been inexplicably fascinated with this process. Let’s consider the market design underpinnings at work. Grading food allows for commoditization which decreases congestion and makes transactions safer. As a weaker effect, it simplifies choices available to consumers making it easier for customers to navigate the market and making the market thicker. How sweet is that?

Maple syrup grades

Maple syrup is big business in North America with intricate market workings. For example, the Fédération des producteurs acéricoles du Québec is a government-sanctioned cartel that controls a strategic reserve of maple syrup. It uses the International Strategic Reserve to regulate global maple syrup and supplies. Maple syrup is such a big deal that in 2012, this reserve was robbed in what would be known as the Great Canadian Maple Syrup Heist. 

Until 2016, The US and Canada had their own maple syrup grading systems, though Vermont, Ontario, and Quebec each had their own systems. In 2016, North American maple syrup producers unified their different systems. The updated guidelines now include some qualitative description: 

• Grade A
  • Golden Colour and Delicate Taste
  • Amber Colour and Rich Taste
  • Dark Colour and Robust Taste
  • Very Dark Colour and Strong Taste
• Processing Grade
• Substandard

What prompted the change?

Why did so many grading systems exist before unification and what changed to make unification possible? 

Vermont enjoyed a strong reputation for high quality maple syrup and fiercely guarded its competitive position. Examples: to be labeled “Vermont” maple syrup, it must be 100% grown and produced in Vermont, a distinction that other syrup producing regions didn’t enforce. Vermont even has laws on the use of the generic term “maple syrup”. It enforces that too. Why did Vermont, which had a distinct grading system from the rest of the US, lead the push towards unification?

The common explanation references changing consumer preferences: 

The change was driven in large part by taste. Consumers appear to prefer dark syrup, formerly known as Grade B, a designation which conveyed inferiority. “We’ve seen a real interest in the dark, strongly flavored syrups using a system that downgraded that by calling it Grade B, just didn’t make sense anymore.”

I believe consumer tastes didn’t change drastically and I don’t see how a new grading system was needed just because of that. The same article offers a better explanation: 

Gordon thinks the new flavor descriptors will help grow the market for maple syrup, as it’s now competing with table syrup, or high fructose corn syrup, with maple flavoring.

That makes more sense to me. So the new grades are meant to increase thickness by attracting more customers. Consumers have been moving away from the real stuff due to price competition from high fructose corn syrup (HFCS). The unification is also helpful in making things simpler for everyone, especially the supermarket shopper.

Takeaways

Classification, or re-classification in this case, is a potent market design mechanism that many market designers use to make markers simpler for users. Like all market designs though, it isn’t a universal solution. Imagine if Uber didn’t have UberX, UberXL, and Uber Black classifications. How would you know if you were getting a suitable ride?