Wednesday, 05 August 2015 15:34

The Organic Wine Market

Written by 
Carrick in Central Otago. Photo supplied by NZW. Carrick in Central Otago. Photo supplied by NZW.

My  family lives in the middle of our vineyard, so the vineyard environment is also our environment, it is also our winery environment, our restaurant and cellar door environment.

It is where we work, live and play. The dirt that grows the vines also grows our’s and the restaurant vegetables. The condition of our soils and what goes onto the vineyard impacts on everyone and everything around us so it is understandable and not surprising that we have chosen to be organic. 

It is easy to justify and support growing organic grapes and making organic wines, what is much more difficult, is to get an understanding of the consumers rationale or acceptance for buying organic wines. 

We all need a sustainable business model and understanding, who buys organic wines and why they make that choice helps inform our decisions around marketing and selling our wines.

The organic movement grew from a concern with the environment, a concern that included unease around the use of pesticides and herbicides in agriculture and just where they may finish up – in the food we eat as well as the potential long term effects on us, our children and the world in which we live. 

So… it is well documented that the interest and market for organic market for food is growing. Some of the insights gained in this market can act as a background and be helpful in looking at the market for organic wine. 

A research study (in the US) identified key groups involved in buying organic products.

Two shopper key groups account for about half of organic sales. 

There are the ‘true believers’- the “whole food people” if you like. They earn good money, are well educated and buy organic produce because they believe it is better, and more healthy for them and their children. 

The other key shopper group is the ‘enlightened environmentalists’. While this segment will include some of the ‘true believers’ they are driven by a belief that organic products are better for the environment, more sustainable and that they should buy organic because of that. Organic wine buyers probably fit into this group.

Organics can appeal to other groups– “the strapped seekers or the careful buyers” – who are always looking to try new products to compliment a healthy lifestyle. This group may always buy some products such as organic baby food but because they don’t, unfortunately, have a high discretionary income they are willing to compromise on other products.  

Then there are the healthy realists who aren’t committed to organic products but will purchase them if they see them as a reasonable option. 

And there are the indifferent traditionalists – don’t expect them to seek out organic products but they will buy if they like the product. They might even remain loyal if you capture them. This group may be important to us in the wine business because they are likely to be the group that understands wine, have a discerning palate and are likely to be enduring supporters if they like a wine. 

And who won’t buy organics? Well they’re called the resistant non- believers. Don’t spend your marketing dollar on them.

Another trend that helps us understand the appeal of organics is that there is an explosion of interest in craft or authentic food products.  The slow food movement, craft beer and artisan wines are illustrations of this. These are products or choices that speak clearly of their origins, place and their makers. There is an element of scarcity and difference. These products are desirable and are sought after by people who have the ability to support and pay for their wishes. At the other end of the same  market there is also an explosion in the cheaper private labels, the Pams, Signature labels of the super market world -“food for less,”and the ubiquitous, generic wine labels often to be found in the specials bin of the super market 

The UK Financial Times recently reported on how different groups of consumers are moving to both extremities of the market, one group supporting the Pams labels the other (more well heeled, better educated  group) supporting these craft or artisan products.  This is an important group for organic wine producers to target as organic wines clearly fit within the parameters of the craft or authentic food products, 

Let’s now talk about marketing organic wines. What is the understanding and acceptance of organics in the wine market? Who buys organic wine, why, and how important is it that the product is organic in the wine purchasers decision making?

Research tells us that the main driver of the majority of buyer decisions is price.  After price comes a variety of reasons – country and regionality are  high as is the grape variety. Brand awareness is important and the attractiveness of the label. The closure counts, as does apparently the bottle shape (and weight), and the name of the wine.

So where does this put our bottle of Kiwi organic wine? 

On the face of it well down the totem pole.

Or is it?

Let’s segment the wine market. We’re not in the price driven space. We never will be. But neither is much of the New Zealand offering. New Zealand is the highest priced country category in the UK, second in USA, second in Australia. And our varietals are pretty well respected - be they Pinot Noir, Sauvignon Blanc, Syrah or Chardonnay. And screw caps (if they’re associated with a New Zealand brand) have international acceptance – and consumers like them.

So we organic producers are at the high end of the market and while there are advantages there are responsibilities To start with, organic wines need to be more than just organic. They must be wines of quality, organic adds another dimension. 

Quality gives us a great start, but we need to clearly demonstrate that organic wine is great wine, we need to present it in such a manner that is smart, desirable and authentic.

And the buyers at that end of the market are informed, they know a bit about wine. We are probably skewed towards on premise, and the buyers there know a lot about wine. All to our advantage.

The next market segment to consider concerns consumer age. Young people are far more likely to be interested in organic wine. A step further – 65% of 21 -34 year olds have indicated an interest in natural wines according to a January survey of wine drinkers conducted by Nielson. 

Why are young people interested in organic and natural wines? And why are they important to us? 

Well they start off as strapped seekers – want the healthy lifestyle but don’t have the income. They are also concerned about their environment – those enlightened environmentalists. Again they don’t necessarily have the income to support the purchases that they would like to make but they will if they can and …..they are young, their economic circumstances will change, and they are our future market. We produce an authentic  product that suits their aspirations and beliefs and we need to engage with them to ensure they understand what we do and what we have to offer.

The final market segment that I want to discuss is location. Buyer location. 

In Cuisine an article noted that anecdotally consumers buying in wine shops in New Zealand did not primarily buy on organics. If you have the ability to tell your story through your web site or cellar door and can sell directly to the public you may have a more positive experience.These are probably important  routes to market for organic producers. 

In Canada, we learned last year from the LCBO, that there is growing interest in organic wine and wine made with sustainable practices. Sweden has called specifically for organic wine and in New Zealand we are seeing growing interest in organic wine from restaurants and informed consumers. From our experience at Carrick, we are now making sales because our wines are organic.

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