Over the past 6-7 weeks, we've had many guests talk about organic or even biodynamic wine being one of the top global wine trends currently. We heard Courtney Kingston share how they've started the process of shifting to organic grape production at Kingston Vineyards to drive differentiation and higher revenue yield. In addition, multiple mid-term project groups talked about how the adoption of organic wine production was one of the thrust areas for their respective 'emerging' wine regions (South Africa FTW! 🙃).
I decided to look into the numbers and see the extent of which the organic wine trend is here to stay.
By 2022, organic wine consumption is forecast to hit 87.5 million nine-liter cases annually. This figure amounts to 3.6% share of the projected total still wine consumption (2.43 billion nine-liter cases), and would represent compound growth of 9.2% for the organic category since 2017. This is substantially more than the near flat (~0.5%) compound growth of the overall still wine market expected through 2022.
The Old World was first to latch onto the organic trend, with a focus on producing wine without the use of chemicals or GMOs, using only natural fertilizers or restricting the use of certain additives (e.g. sulfites). Given this, majority of the organic wine production and consumption is confined to Europe as of now. Three countries (Spain, Italy and France) account for 70%+ of the organic vineyard in the world. In terms of consumption, Germany and Northern Europe have traditionally led organic wine consumption.
While counties have different regulations in terms of maximum use of SO₂ during vinification that classifies a wine as organic, none is more stringent than the US, where the use of SO₂ is forbidden to be classified as "USDA Organic". This probably explains the slightly slow growth of organic wines in the US. That said, organic wines are expected to growth ~14x faster than the overall table wine market in the US through 2022. The US organic wine market is currently dominated by in-country products (70%), and the bulk of US organic wine consumers are female, Millennials, live in cities and are in higher income brackets.
Last week, Michael Preis highlighted the growing trend of premiumization in wines in the US. This bodes well for the fortunes of organic wine in the country. In addition, as Millennials are embracing organics and Americans across the board worry about harmful ingredients, organic wines stand to continue their strong growth trajectory. Broader than the organic category, many wineries jumping on the bandwagon of 'low intervention' wines and organic wines could be well served by capitalizing on those tailwinds from a marketing/branding standpoint.
Organic wine has a lot of parallels with the organic food category - the health benefits of avoiding harmful chemicals, the fundamental business philosophy for the longevity of the land and enterprise, the price-quality relationship, the use of authenticity as a differentiator, etc. One could argue if organic wines are a fad, similar to how organic food has tried to become mainstream for the past ~20 years. However, one has to realize that organic wine production has a really high ceiling and is starting from a very low baseline. With the strong consumer trends and the fact that vineyards take 3-4 years to convert to organic, one can expect that organic wines will continue to rise in the coming years.
I decided to look into the numbers and see the extent of which the organic wine trend is here to stay.
By 2022, organic wine consumption is forecast to hit 87.5 million nine-liter cases annually. This figure amounts to 3.6% share of the projected total still wine consumption (2.43 billion nine-liter cases), and would represent compound growth of 9.2% for the organic category since 2017. This is substantially more than the near flat (~0.5%) compound growth of the overall still wine market expected through 2022.
The Old World was first to latch onto the organic trend, with a focus on producing wine without the use of chemicals or GMOs, using only natural fertilizers or restricting the use of certain additives (e.g. sulfites). Given this, majority of the organic wine production and consumption is confined to Europe as of now. Three countries (Spain, Italy and France) account for 70%+ of the organic vineyard in the world. In terms of consumption, Germany and Northern Europe have traditionally led organic wine consumption.
While counties have different regulations in terms of maximum use of SO₂ during vinification that classifies a wine as organic, none is more stringent than the US, where the use of SO₂ is forbidden to be classified as "USDA Organic". This probably explains the slightly slow growth of organic wines in the US. That said, organic wines are expected to growth ~14x faster than the overall table wine market in the US through 2022. The US organic wine market is currently dominated by in-country products (70%), and the bulk of US organic wine consumers are female, Millennials, live in cities and are in higher income brackets.
Last week, Michael Preis highlighted the growing trend of premiumization in wines in the US. This bodes well for the fortunes of organic wine in the country. In addition, as Millennials are embracing organics and Americans across the board worry about harmful ingredients, organic wines stand to continue their strong growth trajectory. Broader than the organic category, many wineries jumping on the bandwagon of 'low intervention' wines and organic wines could be well served by capitalizing on those tailwinds from a marketing/branding standpoint.
Organic wine has a lot of parallels with the organic food category - the health benefits of avoiding harmful chemicals, the fundamental business philosophy for the longevity of the land and enterprise, the price-quality relationship, the use of authenticity as a differentiator, etc. One could argue if organic wines are a fad, similar to how organic food has tried to become mainstream for the past ~20 years. However, one has to realize that organic wine production has a really high ceiling and is starting from a very low baseline. With the strong consumer trends and the fact that vineyards take 3-4 years to convert to organic, one can expect that organic wines will continue to rise in the coming years.
--------------
Sources:
https://divawine.com/overview-organic-market/
https://www.forbes.com/sites/thomaspellechia/2019/04/16/a-recent-report-takes-a-look-at-the-global-future-for-organic-wine/#5a5de1133b47
https://www.vitisphere.com/news-88957-Where-will-future-growth-of-organic-wine-come-from.htm
https://www.beveragedaily.com/Article/2019/02/08/Organic-wine-market-continues-to-grow
https://www.marthastewart.com/7528179/wine-trends-2020-what-drink-low-abv-natural-wine
https://www.prowein.com/en/Magazine/Organic_wine_boom_continues
https://www.deccanherald.com/features/living/organic-food-just-fad-665637.html
https://divawine.com/overview-organic-market/
https://www.forbes.com/sites/thomaspellechia/2019/04/16/a-recent-report-takes-a-look-at-the-global-future-for-organic-wine/#5a5de1133b47
https://www.vitisphere.com/news-88957-Where-will-future-growth-of-organic-wine-come-from.htm
https://www.beveragedaily.com/Article/2019/02/08/Organic-wine-market-continues-to-grow
https://www.marthastewart.com/7528179/wine-trends-2020-what-drink-low-abv-natural-wine
https://www.prowein.com/en/Magazine/Organic_wine_boom_continues
https://www.deccanherald.com/features/living/organic-food-just-fad-665637.html
Thank you Karan for the well researched post! One question that comes to mind for me is the percentage of consumers who value and prioritize the taste, experience and storytelling aspects of wine that would also value organic. It seems there's probably high overlap given the correlation between socioeconomic status and identification with an organic lifestyle. A counter perspective though, would be the prolific growth of white label organic products through bulk or discount groceries. There may be both a high and low spend approach to introducing organic wine.
ReplyDelete