09/05/2024

Organic, natural and other alternative wines offer growth in a challenging landscape

IWSR analyses the outlook for alternatives wines

As the wine industry battles long-term structural decline in a number of markets, alternative wines – encompassing natural, organic, sustainable and Fairtrade – offer opportunities for growth in some markets.

While climate concerns are not enough in themselves to justify the purchase of these products, alternative wines continue to buck broader industry trends thanks to a strong perceived association with higher quality and ‘better for you’ attributes, according to IWSR consumer tracking data.

“Alternative wines – in a pessimistic wine landscape and under growing economic pressure – continue to offer opportunities for growth. The typical consumer audience is younger legal-drinking aged wine drinkers who have positive associations with the segment and are willing to pay for products that align with their needs and values,” says Richard Halstead, COO Consumer Research, IWSR.

“While sustainability and climate concerns remain factors driving purchase for these categories, the alternative wine audience is now more focused on quality and suitability for their personal needs. Combining this factor with the growing trend for purchasing less but better, spending on alternative wines is easier for consumers to justify.”

Opportunities for organics

Organic wines enjoy the highest awareness levels among alternative wines, and the segment is continuing to grow around the world, although consumption is concentrated in Germany, France and the UK, which account for nearly 60% of total volumes across reported markets, according to IWSR data.

Germany and Sweden are the most mature organic wine markets, while Australia and South Korea have experienced the biggest growth in recent years, albeit off a small base.

“Looking ahead, Sweden and Germany remain the key markets in which organic wine has now entered the mainstream,” says Halstead. “Meanwhile, growth opportunities are evident in newer alternative wines markets such as Hong Kong, Brazil and New Zealand. This is driven by an increase in awareness and consideration of the category, and an increase in purchasing in New Zealand.”

Quality associations are vital

While sustainability remains a core value for most wine drinkers, climate concerns in themselves are insufficient to justify spending more on alternative wine products – especially at a time of economic pressure. In this context, quality is paramount.

In the US, 30% of both LDA Gen Z and Millennial regular wine drinkers associate organic wines with high quality, compared to 12% of Boomers, according to IWSR data; similar trends are exhibited in the UK and Australia, and also for natural wines.

“Younger age cohorts – the most engaged buyers of alternative wines – show stronger positive associations for organic and natural wine, especially in the UK, US and Australia,” explains Halstead.

“On the other hand, fewer Boomers – the age group engaged the least with alternative wines – associate them with high quality.”

Millennials drive growth

Millennials are the chief age cohort driving growth in alternative wines, accounting for 69% of consumers in China who claim to buy more than two alternative wine types, according to IWSR research, noting that Chinese consumer perceptions are often misaligned with the technical status of the products they buy. Broadly similar trends – but with slightly lower percentages – are present in Australia, Canada, the UK and the US.

“Millennials have the widest alternative wine repertoires,” says Halstead. “Older age cohorts show established habits, purchasing mainly organic wine across markets, as well as Fairtrade in the UK.

“A combination of climate concern and a stronger perception of higher quality make Millennials the most engaged with alternative wines.”

Sentiment shift in the US

Regular wine drinkers in the US have a strong connection to sustainability and alternative wines, but both of these measures have fallen significantly in the past 12 months, with a similar trend evident in terms of consumers being willing to purchase sustainable wine, and to pay more for it when they do.

As a result, the proportion of sustainable-minded consumers in the US has fallen back to 2021 levels, impacting their purchasing and spend priorities – although the market for organic and natural wines has remained stable, thanks to the support of the crucial Millennial demographic.

“The US remains the market in which the most wine drinkers purchase more types of alternative wines, despite the fact that fewer American wine drinkers were highly engaged with sustainability and alternative wines this year,” says Halstead.

“This decline in engagement could be attributed to increasing economic pressure, and to the fact that some brands positioned towards health and wellness have replaced those positioned as being sustainable.”

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