Organic Wine in Europe - Part 1

Organic wine - image and consumption in Germany and France

The protected geographical indication (Indication Géographique Protégée = IGP) Pays d'Oc has existed since 1987. It refers to the southern French region of Languedoc-Roussillon and includes the departments of Pyrénées-Orientales, Aude, Hérault and Gard as well as six municipalities in the Lozère department. 65 percent of all French IGP wines and 90 percent of French IGP varietal wines are produced here. 56 white and red grape varieties are permitted for the production of IGP Pays d'Oc wines. The area is the largest French wine exporter in volume and the fifth largest exporter of varietal wines worldwide. Germany is by far the most important export market: 24 per cent of the exported wines go to the neighbouring country, which corresponds to a volume of over 560,000 hectolitres for 2012 at a value of 97.5 million euros.

With around 19,900 hectares, the Languedoc-Roussillon region has the largest organically cultivated vineyard area in France. As early as 2011, the organic wine association of Languedoc-Roussillon (SudVinBio, until 2012 AIVB-LR) commissioned a survey among German and French consumers from the market research institute Ipsos. The survey provided the following insights into the consumption habits and image of organic wine in both countries:

• In France, more wine tends to be consumed than in Germany. 42 percent of the French and 33 percent of the Germans surveyed stated that they had bought conventional wine at least once a month in the last six months. 32 percent of the French and 21 percent of the Germans said they had drunk conventional wine at least once a week in the last six months.
• In both France and Germany, knowledge of organic wine does not automatically lead to purchase or enjoyment. 83 per cent of the French and 63 per cent of the Germans surveyed could make some sense of the term organic wine; they got their information mainly from the media and food markets. But according to the survey, only 17 percent of the French and 22 percent of the Germans buy organic wine at least occasionally. 39 percent of the French and 36 percent of the Germans declared that they drink organically produced wines at least occasionally.
• The food retail trade (LEH) is the main source of supply for wine in both France and Germany, regardless of whether it is produced conventionally or organically. 84 percent of the French and 82 percent of the Germans buy their wine in the consumer or supermarket. In both countries, the origin (country or region) and the price are decisive for the purchase decision for conventional wine. Organic wine is purchased by 48 per cent of French and 41 per cent of Germans in food shops; in Germany, the organic food shop follows (34 per cent), in France the producer directly (37 per cent) as a source of purchase.
• Buying wine is a matter of habit, and consumers in France seem more price-sensitive than those in Germany. As reasons why they do not buy organic wine, 50 percent of the French and 35 percent of the Germans mentioned that they did not have the incentive or the habit; 29 percent of the Germans do not buy organic wine because they lack information about the product, 38 percent of the French find the price of organic wine too high. In fact, the survey also found that 75 percent of French consumers, but only 47 percent of German consumers, consider organic wine more expensive than conventional wine. At 10.60 euros versus 9.60 euros, the French pay on average one euro more per bottle of organic wine than the Germans.

Vineyard of Domaine du Bosc Satge (Source: InterOc)

Ecology, sustainability and CSR

In 2012, the regional development plan "AGIR pour la bio" was launched to further promote organic farming in Languedoc-Roussillon. Ecology is one of the three pillars of sustainability; the other two are economic and social. Accordingly, sustainability means working in an environmentally compatible and resource-saving manner, acting in an economically fair and far-sighted manner and acting in a socially just manner. All three pillars are inextricably linked and influence each other. In ecology - and thus in organic viticulture - environmental protection, closeness to nature, biodiversity as well as eco- and energy efficiency play an important role. In this respect, organic agriculture and viticulture follow the ecological principles of sustainability.

InterOc's approach is to specifically consider the economic and social dimensions in sustainable viticulture in addition to the ecological ones. "With our commitment to the 'VIP (Vineyard in Progress) Pays d'Oc' project, we are showing that we are aware of the need for the wine industry to move to a more responsible way of working. That is why we will work with all stakeholders to develop a sustainability plan tailored to the needs of our growing region, our markets and our ambitions," explains InterOc managing director Florence Barthes.

This plan consists of three stages: a survey of consumers, a survey of producers and the development of a concept of measures based on the ISO 26000 standard, which recommends how organisations should behave in order to be considered socially responsible. It thus refers to corporate social responsibility (CSR), which can be defined as a voluntary contribution by companies to sustainable development.

The Domaine des Ruisseaux (Source: InterOc)

Study: Price and grape variety are more important than sustainability

The first stage of the three-part plan to promote sustainable viticulture in the Pays d'Oc was an international study conducted in nine markets between 2009 and 2012. For this, a total of over 17,800 wine consumers were surveyed in Germany, France, Great Britain, the Anglophone and Francophone parts of Canada as well as in six metropolises in the USA. The aim was to find out whether and how wines from the IGP Pays d'Oc can gain a competitive advantage through a sustainability strategy. For this purpose, it was investigated what relative importance sustainability has for consumers when buying wine, what willingness to pay exists for sustainably produced wines, which consumer segments can be differentiated and how customers with a high affinity for sustainability can be addressed.

In Germany, around 2,000 regular wine drinkers took part in the survey. They were presented with a simulated selection of French wines and asked to make their purchase decision based on eleven criteria. These were different characteristics of the wines, which were varied: Brand (name of the wine), price (oriented towards upscale LEH), grape variety, region of origin, sensory style (fruity, strong, etc.), alcohol level, sustainability seal, bottler information and medal award. To characterise the consumer segments, the parameters of awareness of French wine-growing regions, associations with these regions, wine buying behaviour (where, how expensive, how often), media use and socio-demographic data were collected and evaluated.

In relation to all German wine consumers surveyed, the study revealed that price (47 percent) and grape variety (35 percent) together are the most important decision-making criteria when choosing wine for over four-fifths of the participants. Sustainability - like brand - appears in third place among the decision-making factors with six percent, but in view of the large discrepancy between this value and those of the two main criteria, it has only a clearly subordinate importance overall.

Grape harvest at Domaine Cailhol Gautran (Source: InterOc)

Three consumer groups believe in sustainability

To label wines as sustainable, one of five seals was used in each case: "Organic viticulture", "Protect the planet", "Socially responsible", "Carbon zero" or "10% less glass". These seals were valued very differently by the respondents. Consumers were willing to pay up to 15 percent more for wines with the "Organic Viticulture" label than for a wine that was not labelled. For the labels "Protect the planet" and "Socially responsible" a price premium of up to four percent seemed acceptable to consumers, for wines with the indication of_{CO2 neutrality}("Carbon zero") or lower bottle weight ("10% less glass") there was no willingness to pay more, even the opposite.

Depending on the price sensitivity, eco-awareness and wine type preference of the respondents, seven different consumer segments emerged from the study. Of these, three were considered more relevant in the sense of the objective: the so-called eco-consumers (16 percent of the consumers surveyed), the lovers of upscale red wines (17 percent) and the price-sensitive organic consumers (15 percent). In detail, the observations break down as follows:

• Among organic consumers, sustainability is the most important purchase criterion (27 per cent), followed by region of origin (18 per cent), brand and price (16 per cent each) and grape variety (14 per cent). A healthy lifestyle and proximity to nature are important to this customer group. The average age is at least 40 years, and these consumers have an above-average income, an above-average education and show an above-average media usage. Sustainability has a high credibility and importance for organic consumers, they are the segment most interested in wine, buy more often in specialised shops and directly from the winery and also undertake the highest number of winery visits and trips per year.
• When buying wine, lovers of upscale red wines pay the most attention to the grape variety (58 percent), followed by price (17 percent) and brand (11 percent) as criteria; sustainability and region of origin each account for five percent in the decision mix. In this consumer group, men are slightly overrepresented, but the age profile does not deviate from the total of wine drinkers. An above-average proportion of these consumers have a medium or higher income, and this segment is also characterised by rather higher educational qualifications and intensive internet and media use. The lovers of upscale red wines are increasingly found in Hesse, Rhineland-Palatinate, Saarland and Bavaria. For them, sustainability has a medium to high credibility and a medium importance, the drinking frequency is higher than the professional interest in wine. This customer group also often buys from specialist retailers and from the winery itself and has the lowest share of purchases from discounters of all segments.
• For the price-sensitive organic consumers, price is very much in the foreground when buying wine; this criterion accounts for 94 percent of the decision. This is followed by sustainability with two per cent each and sensory style, followed by grape variety with one per cent. This customer segment is represented in all age groups, with older people of at least 60 years being slightly overrepresented. Consumers of this type predominantly have a medium income and a professional qualification, they are internet-savvy and a large proportion live in the new federal states. Sustainability has a high credibility and a medium importance for them - as it does for the lovers of upscale red wines - and the drinking frequency is higher than the professional wine interest. In the shopping mix, supermarkets and discounters dominate; price-sensitive organic consumers rarely buy from specialist retailers or wineries.

Wine producers are committed to social responsibility

Vines near Carcassonne (Source: InterOc)

In summary, the three consumer segments considered show that sustainability is relatively important to German consumers. Almost half of all wine drinkers surveyed include the aspect of sustainability in their purchase decision, for 16 percent it even plays the most important role. For the majority of German wine buyers, the sustainability aspect is more important than the region of origin. The French regions have so far been rather weakly associated with sustainability, so InterOc sees an opportunity here to make its mark on the German market with sustainably produced wines from the IGP Pays d'Oc, especially since Germany is the most important market for organic products internationally.

The study also showed that many German consumers are willing to spend more money on sustainable wines than on conventional ones. In this context, the "organic winegrowing" seal has the highest awareness and appreciation in Germany as well as worldwide. The wine consumers surveyed in the relevant segments would accept a price premium of between 20 and 30 percent for a wine labelled in this way. Resource-based seals, on the other hand, are held in rather low esteem. The distribution channel for sustainably produced wines is the most competitive, but there is also potential in food retailing and discounters. According to a survey of international trading companies, the world's largest food market operators (SuperValue, Société des Alcools du Québec, Groupe Carrefour and Système U) are also committed to social responsibility and want to include in the future specific CSR clauses in their specifications. Individual wine-growing regions such as California, Australia and South Africa are also already committed to sustainability.

The second stage of InterOc's sustainability plan was a survey of wine producers on ecology and social responsibility. Association President Jacques Gravegeal: "The winegrowing enterprises of the IGP Pays d'Oc were asked about their point of view and their commitment in order to be able to assess the community action potential of our growing region. A total of 129 farms showed interest in these issues and/or reported exemplary measures. Together, these farms with about 10,000 people cultivate about 51,000 hectares of vines." This corresponds to a good half of the vineyard area of the growing region. The vote in favour of sustainability was also clear on the part of the producers: they see social responsibility as a perspective for the future. 39 of them have already had their operations audited for various sustainability aspects, 44 are participating in pilot projects or joint programmes, 38 wineries already have a range of sustainably produced wines in their programme or are planning to do so. Sustainable resource management and waste management are also an issue for many wineries, according to the study.

Applying ISO 26000 to the wine industry

The third stage of the InterOc sustainability concept is an action plan that, according to the association, "meets globally recognised standards". For this, InterOc is working together with the French standardisation authority AFNOR, because the ISO 26000 standard for socially responsible action is to serve as a basis. This was created in 2010 and is recognised by 99 member countries of the International Organisation for Standardisation (ISO).

Three steps are to support the producers of wines of the IGP Pays d'Oc in their social commitment:

• In order to make it easier for wine producers to select suitable suppliers, the first step was to develop a guide for responsible purchasing, which includes exemplary solutions for the wine industry and purchasing recommendations for specific product groups. In addition, InterOc, together with AFNOR, wants to create a dialogue platform based on the ISO 26000 standard, which should encourage all actors of the IGP Pays d'Oc to analyse themselves with regard to CSR aspects and to create a corresponding development plan. In addition, the platform will help to assess the CSR commitment of suppliers in the wine sector and support them in their commitment.
• As a second step, the partners are planning an interpretation aid for certification by the French Association for Quality Assurance (AFAQ), which is specifically geared to the wine sector. This is to enable the winegrowing enterprises of the IGP Pays d'Oc to precisely grasp the ISO 26000 standard as well as its possible areas of application and to translate them into action plans.
• In the third step, the ISO 26000 standard is to be transferred to the wine sector. To this end, InterOc and AFNOR are coordinating the coordination of all participating companies and institutions at national level. According to InterOc president Gravegeal, the goal is "to develop a set of rules together with the actors of the French wine industry that is in line with the challenges of the profession".

Gravegeal sees this action plan as a "regional project with national and international impact". First of all, he emphasises the ecological dimension again. Respect for the environment and well thought-out disease and pest control in the vineyard are the way to sustainability, he says. In this respect, he affirms vineyard treatment, but this must take place "in the sense of the environment and the planet". InterOc's VIP project is a quality concept to "use everything controllable in the treatment for the goal of sustainability".

Jacques Gravegeal% President of InterOc (Source: InterOc)

According to Gravegeal, this involves measuring the "performance" of the vineyard and checking the risk factors. This, he says, means analysing the soil and also taking into account sun and rainfall, because the combination of moisture and heat increases the risk of rot. Treatment against diseases and pests is only carried out if and where risks occur, not prophylactically across the board according to plans of the chemical industry. Fertilisation is also done with as few chemicals as possible. "The grapes must remain healthy until harvest," says Gravegeal. These are all voluntary measures that are carried out according to the will of the producers and the wishes of the consumers.

Interaction of grape variety, soil and climate is part of sustainability

Gravegeal points out that there is open competition worldwide: "In South America or Australia, viticulture knows no borders." The key to quality, he says, also lies in yield regulation. For the wines of the IGP Pays d'Oc, the yield is limited to a maximum of 90 hectolitres per hectare, and on average it is only 72 hectolitres per hectare. In other French regions, it is possible to produce up to 120 hectolitres of wine per hectare of vineyard, Gravegeal explains. "The Pays d'Oc makes six million hectolitres of wine from 110,000 hectares of vines, Australia makes eleven million hectolitres of wine from 130,000 hectares of vines," he illustrates. Half of the wine volume of the IGP Pays d'Oc (that is 53 million hectolitres) is sold as "loose goods" in bag-in-box, he says. "This is exactly the same quality of wine as in bottles, but the packaging is more environmentally friendly because it can be burned, so there is less waste and pollution," Gravegeal explains.

The InterOc president is passionate about his association's sustainability initiative. "The wines of the IGP Pays d'Oc are in global competition with their own grape varieties," he elaborates. Cabernet Sauvignon, Merlot and Syrah, Sauvignon Blanc, Chardonnay and Viognier - the main grape varieties of the Pays d'Oc have long been cultivated all over the world, but they have "their origin and authentic home in France", says Gravegeal. The Mediterranean climate with dry summers and sufficiently humid winters offers the vines the best conditions for the grapes to ripen.

Gravegeal sees the large supply of varietal wines from overseas as an "economic attack on the cradle of viticulture" and again makes the connection to sustainability: this is determined by the "uniqueness of the grape variety, soil and climate", and this is also about "credibility and transparency". Patriotism and cultural pride flash up, but the association's president immediately expands his perspective: the world's population is growing, resources are dwindling, but the planet cannot support more than nine billion people. Therefore, Gravegeal implores his fellow winemakers in the region and in all countries of the world to start sustainable management now, because: "Who, if not farmers and winemakers, is the first to be called to preserve the landscape?"

The currently tasted wines from the Pays d'Oc in the wine guide

To the article "Organic wine in Europe - Part 2: Sealed by choice".

To the article "Eco-wine in Europe - Part 3: Beyond the borders".

To the article "Eco-wine in Europe - Part 4: The floodgates are open".