Consumer interest in wines that are certified organic, vegan friendly, biodynamic, preservative free or carbon neutral is growing, but this isn’t translating into sales.
While demand and knowledge is growing, this market remains niche and according to Wine Intelligence’s recent Sustainable, Organic and Lower Alcohol Wine 2019 (SOLA) report, consumer awareness is not yet translating into fundamental changes in purchasing behaviour. There also remains some confusion around the definitions of these wine categories.
Exports and domestic consumption
There has been considerable growth in exports of Australian certified organic wines. In the year ending March 2019, certified organic and biodynamic wine exports from Australia combined were worth $17 million. This is a 34 per cent increase on the $12 million reported in 2016 in issue 55 of our Market Bulletin.
Export volume also increased, up 23 per cent in the past three years to 311,000 9-litre case equivalents. The number of export markets also grew (up 21 per cent to 64), along with the number of exporters, up 64 per cent to 97).
For organic wine, which made up 93 per cent of Australian organic and biodynamic wine exports in year ending March 2019, volume grew by 51 per cent to 288,300 9-litre case equivalents compared with the year ending March 2016 and value grew 78 per cent to $14.3 million FOB (free-on-board). Exports of biodynamic wine increased in volume by 58 per cent while value increased by 70 per cent.
It is important to note that Wine Australia can monitor these results only when exporters report that the product is ‘organic’ or ‘biodynamic’ during registration and when certification is provided. However, exporters can opt to not indicate on the label if the wine is actually organic, so it is possible that volumes are under-reported.
Sweden is Australia’s largest export market for certified organic wines making up half (49 per cent) of all organic exports. Organic wines account for a relatively high share of Australia’s exports to Sweden at 19 per cent in the year ending March 2019. Organic exports to Sweden have also experienced strong growth over the past 5 years, with an average annual growth rate of 55 per cent since 2014. The second and third largest export markets, Canada and the United Kingdom, have also experienced strong compound annual average growth over the past 5 years up 55 per cent and 32 per cent respectively.
Table 1: Australian wine export dashboard
Within Australia, the International Wine and Spirits Record (IWSR) reported that 680,000 9-litre case equivalents of organic wine were consumed in 2018, which was up on the previous year by 28 per cent.
Even though there has been growth in both Australian wine exports and domestic consumption, organic wine remains a niche segment, with exports making up 0.5 per cent of all bottled exports and 1.3 per cent of still wine consumption in Australia.
Opportunities for organic wine
There may be further growth opportunities for organic wine, with the organic food culture trend growing with increased interest in ethical consumerism. This organic trend also presents the biggest opportunities in Nordic countries, such as Sweden where the government alcohol monopoly Systembolaget drives consumption trends with strong retail objectives to increase the availability of organic wine. More information on Australian exports to Nordic countries can be found in issue 78 of our Market Bulletin published in September 2017.
In Australia, organic wine presents the largest opportunity compared to other alternative wines such as lower alcohol wine, preservative free wine or vegan/vegetarian wine according to Wine Intelligence (see Table 2).
Wine Intelligence also noted in its previous SOLA report 2018 that the strongest opportunity for lower-alcohol wine was among women rather than men and that younger wine drinkers were considerably more open to alternative wine styles. Younger consumers in Australia were also more aware of vegan wine and had a higher intent on purchasing wines with both sustainable and organic credentials.
On the other hand, its Australian research also found that ‘organic’ on a wine label was actually a deterrent to purchase, with males in particular less likely to purchase wine if it had ‘organic’ on the label than if it didn’t (all other things being equal).
Table 2: Global SOLA wine opportunity index 2019
Source: Wine Intelligence
When it comes to purchasing organic wines, the percentage of Australians who ‘sought to purchase any organic wine in the past six months’ was estimated at 20 per cent. This is despite a high level of ‘awareness’ (50 per cent), ‘future purchase consideration’ (50 per cent) and ‘affinity’ (43 per cent). The tendency to have a lower intent to purchase is consistent across each of the markets measured.
Education and certification
Consumers are now being faced with numerous options when it comes to making their health or environmentally conscious wine purchasing decision. Wine Intelligence reports on 13 different types of wine that fall under its SOLA banner (see Table 2).
Further to this, it was reported that consumers often confuse organic wine with other alternative wines and believe that wine is naturally organic as it ‘comes from the ground’. There can also be confusion around the terms ‘natural’ and ‘skin contact’ for wine and many do not understand the concept of biodynamic wine.
In an article published in November 2018, IWSR consultant Giles Gough said that while there is confusion, the association with the umbrella term can be enough to encourage sales of these wine categories. Despite this, the challenge remains for producers to help educate consumers by helping them understand the specific approach taken to produce the wine. Furthermore, winemaking practices, such as organic, can vary between markets and some markets like China do not officially recognise foreign organic certification.
More information on organic certification for each export market can be found in our Export Market Guides. Wines labelled as organic or biodynamic are also treated slightly differently when it comes to export. More information on things you need to know about wines with organic claims can be found in our article ‘Exporting organic wine?’.
An educator guide on organic and biodynamic wine is also available through the Australian Wine Discovered Education Program.