The North Bay Business Journal published a feature story highlighting the results of our 2016 consumer research done in conjuntion with Wine Intelligence.
‘Sustainable’ Sonoma wine could fetch $7-a-bottle more, survey says
NORTH BAY BUSINESS JOURNAL | January 16, 2017, 8:55AM
U.S. wine consumers are willing to pay more for wine — up to several dollars more per bottle — produced using “sustainable” practices, according to new research presented at a Sonoma County grapegrower seminar in Santa Rosa on Thursday.
Three years into a big push by Sonoma County Winegrowers to have all vineyards in the county deemed sustainable by 2019, the trade group revealed new consumer survey results strongly suggesting there could be more black than red in the return-on-investment calculation.
Karissa Kruse, president of Sonoma County Winegrowers, called the local effort, industry response and consumer acceptance part of a “sustainability revolution.”
“Five years ago, this would not have been on anyone’s radar,” she said to an audience of a couple hundred at the group’s annual Dollars & Sense Seminar and membership meeting. “We’ve created something here.”
Sixty-three percent of consumers who buy $15-plus bottles of wine and drink it more than twice monthly and who know about Sonoma County wines and the Sonoma County Sustainable certification would pay a premium of more than $5 a bottle for that assurance, according to results of the survey, conducted by Wine Intelligence. The average potential premium was $7.28, thanks to the 33 percent willing to pay more than $10 more.
Of Sonoma County-informed “regular” wine consumers, 40 percent of respondents would pay at least a $5 premium.
The United Kingdom-based firm considered a pool of 235 million U.S. adults, 40 percent of which are deemed “regular” wine consumers, consuming it at least once a month, and 16 percent frequent premium-wine drinkers. The online and email surveys were conducted in December with a sample of 2,010 regular U.S. wine drinkers in the Wine Intelligence Vinitrac panel, 804 of which were frequent consumers of fine wine. Survey results were returned to the trade group last week.
ARE THEY BUYING ‘SUSTAINABLE’?
But do consumers actually buy certified-sustainable wines? The new survey and others suggests they do.
More than two-thirds (68 percent) of core-consumer respondents in the Wine Intelligence survey stated that they would be more likely to buy wine certified as sustainable. Over half these consumers (56 percent) purchased bottles labeled with such certification at least in the past month, working out to 21 million of the 235 million U.S. adults, and 27 percent did so in the past week, or 7 million, according to the survey.
So far, 85 percent of the Sonoma County vineyards, or 1,223 sites, have been assessed under the Sonoma County Sustainable program, and 60 percent had undergone the additional step of having a third-party auditor visit. This year, the program started tracking certified wineries, and the list has grown to 43.
Other certification programs are California Sustainable Winegrowing Alliance, Lodi Rules, SIPS Sustainable and Demeter’s Biodynamic. The Wine Intelligence survey found that the California program ranked highest in consumer concern, followed close behind by Sonoma County Sustainable. Biodynamic ranked last.
Interest among consumers and trade buyers such as restaurants and retailers in wines certified as Biodynamic or labeled as “natural” is waning, said Geoff Kruth, president of the 11,000-member Guild of Sommeliers (guildsomm.com), based in Petaluma. He was part of a panel at the seminar on sustainability in the wine business.
“Sometimes, it was an excuse to sell those wines,” Kruth said about “natural wine.” He said such terms have been latched onto by wine-focused media, then seen as less exciting when the next green product adjective enters the spotlight.
Because of that, Kruth said he was initially skeptical of “sustainable” wine, because it wasn’t under the rigors of “organic” certification.
Interestingly, the Wine Intelligence survey core-consumer respondent group skewed young, with the largest group (31 percent) ages 25–34, the millennial generation. Those respondents also tended to be men (53 percent). Even in recent years, “core” consumers have been dominated by baby boomers in market studies.
A 2015 Nielsen survey found that 72 percent of millennials were willing to spend more on sustainable products, and 60 percent of all consumers would do so, noted Corey Beck, president of Francis Ford Coppola Winery, based near the community of Geyserville in northern Sonoma County’s Alexander Valley.
PREMIUM FOR GRAPES
He said 60 percent of the 2016 grapes the winery purchased from about 200 growers were Sonoma County Sustainable-certified. The plan is to reach 80 percent certified this year and all grapes by the 2019 harvest, Beck said.
Coppola, Jackson Family Wines and Bogle Vineyards are among the companies paying premiums for grapes from vineyards with that certification. About $950,000 in such premiums were paid in 2016, Kruse said.
Sonoma wineries plan sustainability center
The wine business has to embrace sustainability, because consumers increasingly are expecting it in preferred products, Kruse said.
“You’re going to be seeing this more than more: sustainability is being connected to quality when it comes to the grapes, when it comes to the wine,” she said.
In a consumer survey the winegrape group commissioned last year, 25 percent connected “sustainability” to the business operations of the wine business, but that proportion jumped to over 40 percent in the latest survey, Kruse said.
“We know when we invest in sustainability, we’re getting tradeoffs,” she said. “We have to make sure it ROIs.”
Consumers are concerned about the environmental impact of the industry, looking to how vintners and growers preserve land, water, soil and habitat, but they’re also concerned about human resources and the business, the survey found. Paying a “fair wage,” investing in training and development, contributing to the local community and providing health care benefits were top five people-related concerns. On the business side, top of mind for consumers were how a wine business was planning long-term, thinking about succession and investing in operations.
“We really do believe that Sonoma County is making headline news and standing up and being leaders, not only in sustainability but really in how we approach our marketing and our strategic thinking and long-term business planning in our county,” Kruse said.
Jeff Quackenbush (email@example.com, 707-521-4256) covers construction, commercial real estate and wine.
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