Executive Summary
If you can’t remember the last time you had a glass of organic wine, you are hardly alone. Worldwide, less than 5% of vineyards are organic, and in the U.S., the world’s largest consumer of wine, organic wine accounts for less than 1% of sales by volume. But plenty of other organic products, including vegetables, milk, and tea, have become widely consumed. Why the difference? A look at the history of this failure in category creation shows that early stumbles in the organic wine market created marketing problems that the industry still struggles to overcome. However, the recent success of a related category — biodynamic wines — shows a possible way forward. The case of organic wine provides important lessons of what to avoid when starting down this path. One is that it is important to achieve quality early on, as negative reputations linger. A second lesson is to do everything possible to avoid multiple, conflicting standards. And third, consumers might want to help the environment, but they will not sacrifice quality to support the cause.
Kroeger/Gross/Getty ImagesIf you cannot remember the last time you had a glass of organic wine, you are hardly alone. Overall, less than 5% of the world’s vineyards are organic. In the United States, the world’s largest consumer of wine, only 1% of wine sold by volume was organic. The paltry market for organic wine around the world belies the fact that over the past half century, countless organic winegrowers and vintners have dedicated great effort to creating a larger market for the category, without much success. Meanwhile, plenty of other organic products, including vegetables, milk, and tea, have become widely consumed, at least by affluent, health-conscious city dwellers. Why the difference?
We set out to understand how and why the category of organic wine failed to emerge, even as demand for other organic goods soared. Through historical research and many interviews, we found several ways in which early stumbles in the organic wine market created marketing problems that the industry still struggles to overcome. However, we also found that the recent success of a related category — biodynamic wines — shows a possible way forward.
Early Struggles
Since the advent of agricultural chemicals in the nineteenth century, a variety of people have warned of risks to public health and the environment, but these people largely struggled to attract an audience until the late 1960s, when organic farming, natural food stores and organic food start-ups started to gain traction. The organic wine industry first achieved significant scale a decade later, motivated by the prospect of creating a product that was environmentally-friendly and possessed clear terroir, or the flavor and aroma associated with the environmental conditions of the vineyard, as well as the sociohistorical traditions employed throughout the winemaking process.
Early organic wine was not well received in the marketplace, for a number of reasons. First, the conventional wine industry saw it as a threat. They refused to recognize organic winegrowers’ new industry associations, and cast doubt on the marketing claims they were making — that organic wine was of higher quality and free of potentially harmful chemicals. As organic wine pioneer Jonathan Frey remarked in an interview, “These large companies would finance scientific studies to prove that organic was a joke and didn’t have any health benefits.”
Organic wine was not strongly embraced by distributors and retailers, either. The product was perceived as more prone to spoilage since it typically lacked added sulfites. As a result, many distributors and retailers were hesitant to add it sell it. Even as organic supermarkets grew in scale and popularity, they were reluctant to stock organic wine. Whole Foods Market, which by 2010 accounted for over one half of organic food sales in the United States, did little to promote organic wines.
Organic wine also needed to overcome a persistent reputation for poor quality. Early organic (and no-added-sulfite) winemaking experiments had resulted in some wines turning vinegar-like. These wines garnered bad reviews, but puzzlingly, the reputation for poor taste continued even as organic wines began winning prestigious awards. Consumers appeared to imagine a trade-off between wine quality and doing good for the environment. This trade-off was not present in, say, organic vegetables, because there was a widespread belief that products grown without pesticides had personal health benefits. However wine was more associated with pleasure than health. A 2014 study showed that adding the word “organic” to the label of a wine bottle was associated with a 20% reduction in price, even though other organic goods routinely sell at a price premium. This perceived lower quality — and the lower price that organic wine usually commanded — squeezed organic wine producers, as organic wine was typically more expensive to make than conventional wine, as it was more labor-intensive.
Adding further problems, there were few common standards for the definition of “organic” wine, which was also variously called “natural,” “raw,” or “sustainable” wine. As organic wine standards were being developed in Europe and the U.S., heated debate arose regarding the use of sulfites, and the debates were resolved in differing ways. European legislation finally emerged for organic wine in 2012, allowing producers to add sulfites up to a certain maximum level. However, in the United States, the USDA disallowed the use of added sulfites in organic wine.
The Turnaround
Yet by the 2010s, organic wine had become popular in fine-dining restaurants in major cosmopolitan cities like Paris and New York. The celebrated, Copenhagen-based restaurant Noma featured a wine menu made up entirely of organic wines. Some traditional wine industry associations have dropped their opposition to organic wines. And retailers like Sweden’s Systembolaget, the state-owned alcohol monopoly, aggressively expanded the sale of bottles of organic wine by prominently displaying them in shops. While 6% of the wine sold at Systembolaget in 2011 was organic, by 2016 it was over 20%.
What changed? The “purity” in taste and the charm of local winemaking tradition often associated with organic wine proved to be powerful marketing tools that helped turn the category around. The product was increasingly in demand by individuals who sought artisan-made wines with clear terroir, and who desired to consume products with as few added chemicals as possible. In an increasingly globalized 21st century world, organic wine had become a potent symbol of localized place and culture strongly tied to the past century. While organic wine missed the out on the rising tide of interest in organic products in the late 20th century, it seems to have a better chance of catching successfully caught the wave of enthusiasm in the early 21st century for local, artisanal foods and goods.
In particular, biodynamic wines have secured a special reputation for quality. These were organic wines grown in a distinctive way. Controversial Austrian philosopher Rudolf Steiner had established the principles of biodynamic farming in the early 1920s. Following Steiner’s belief that universe is interconnected, planting and other activities are coordinated with the movements of celestial bodies like the moon and the planets, and special compost preparations are buried in the soil and sprayed on the plants. Biodynamic agriculture as a whole remained wholly niche until the 1970s, but thereafter gained traction, especially in Europe, where followers created some large businesses, such as the German natural foods retailer Alnatura. No one knows how these methods work. The story seems to be more than simply relabeling (and so escaping the unwanted associations of organic wine). Some wine experts say these techniques help the vitality and health of the plant, while others believe the key advantage is simply that biodynamic wine-growing is extremely demanding, and so requires greater attention to the vines. What is known is that some of the world’s most sought-after, awarded, and expensive bottles of wine are biodynamic.
New category creation is not easy. The development of common norms, agreed definitions, clear boundaries and cognitive legitimacy are contested processes. The case of organic wine provides important lessons of what to avoid when starting down this path. One is that it is important to achieve quality early on, as negative reputations linger. A second lesson, for products traded across geographies, is to do everything possible to avoid multiple, conflicting standards. A third lesson, for categories based on claims of sustainability, is that consumers might want in theory to help the environment, but they will not sacrifice quality to support the cause.
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