Thursday, February 8, 2018

Green Wine Insights: An Interview with Eco Wine Survey Author and Sonoma State Wine Business Professor Liz Thach, MW

At the end of 2017, Professor Liz Thach, MW, released the results of a survey on eco-certified wines conducted with her MBA students at the Sonoma State Wine Business program. (I originally published a post about it in late Dec.) 

The survey asked the question: would consumers pay more for eco certified wines? Though it was an informal survey, the results were noteworthy. You can find the results of the survey as well as graphs of the data on her site

I asked Liz if she would discuss more about the survey and sharing some of the background and insights it gave her. Thank you to Liz for agreeing to participate in our phone interview.   

Liz Thach, MW
What led you to conduct a survey on this topic?

I find that a lot of Millenials are really fascinated by the concepts of sustainable, Biodynamic and organic wines as one of the things they like to talk about a lot.

And so we ended up doing this study to try to understand if wine consumers understood eco wine certifications and if they would pay more for them.
We did another study related to this several years ago on this, too, where we analyzed the values of wine consumers - trying to find out what types of consumers were more apt to purchase eco label wines (sustainable, organic or Biodynamic) and we did find that there’s a certain type of consumer that’s really attracted to purchasing these types of wines. 
So this latest survey, we did it in May of 2017 (published Dec. 20, 2018), was an online survey. This was what is called a convenience sample. It’s not a random sample ,so we can’t say that it’s applicable to the whole nation. But it just sort of gives you a taste of what people are thinking. And it does have a large number of Millennials in the sample, if you look at the breakdown.
How were the participants selected?
In a convenience sample, you just reach out to an email list of people that you know. The criteria was they have to be 21 or above and they had to be a wine drinker. So we only wanted to talk to wine drinkers. 
When I do a representative or random sample, I have to hire a survey company and it’s much, much more expensive. So we can only afford to do that sometimes. 
A convenience sample can’t be generalized to a whole population. And we only had 301 respondents, which is enough for a sampling, but, if I could do it again, I would love to do a much larger sample - and across the nation.
What did the students learn from the survey?
Well first of all, I think we were all of us surprised to see that people were willing pay more for a bottle. 
A large percentage, 85 percent or above, were all willing to pay at least a dollar more a bottle, which would definitely work in the wine industry. And then a good number were willing to pay up to $2 a bottle, but then after that it dropped pretty abruptly - except for Biodynamic. 
The Biodynamic category was interesting. The people who wanted the Biodynamic continued to be willing to pay more for that.
Why do you think that might be?
I’d love to do more research to find out why; all we can do without more data is just surmise. 
We gave people definitions of sustainable, organic and Biodynamic. So part of what we were trying to do - sometimes a survey does this - is education. Sometimes you educate people just by doing a survey. And so we wanted to make sure that people participating in the survey understood the differences. 
And I think if you look at Biodynamics, it’s about the earth, it’s about bringing systems back into balance, and I think that’s pretty motivational to a certain segment of the population.

And how did you come up with these definitions?

We used them out of published definitions on the topic.

I think the definitions were really the crux of the survey. Did the students think that they had gained insights? 
I’ve been teaching for more than 20 years and I find that this generation is much more interested in this topic than I’ve found 15 years ago in my classes. They were very excited about the survey. I mean this is important to them. 
If you look at the values of Millenials, you know that responsibly produced products - organically produced, environmentally friendly, socially responsible - are important to them, and so they were thrilled with this survey.

What aspects of the survey do you think the industry should pay attention to in terms of retailers or wineries?
Our study focused on consumers and what was the consumer perception is. And what we find in this most recent study of consumers is consumers are willing to pay a small premium.
How did you decide to focus on a price premium as the data point for the survey?
Well, our program focuses on the business side of wine. We don’t teach enology or viticulture, and we focus mainly on marketing and finance, and we wanted to take a look at that piece. 
We couldn’t find anybody else who had actually done that type of survey before - asking consumers are you willing to pay more for an organic or biodynamic or sustainable wine.
(Note re consumer price premium in the marketplace today: currently there is no price premium in the market place for organic or Biodynamic wines - i.e. a Bonterra table wine sells for the same price as wines of similar quality.)

(Note re farming costs: whether it costs more to farm organically or Biodynamically after the initial three year conversion is a debatable issue with strong arguments from producers on both sides of the fence. Current data from U.C. suggests that Biodynamic vineyards are competitive in terms of costs. Find the full report here.) 

Have you taken a look at some of the studies on consumer preference for organic wines in Europe? And, if so, how does it compare with your survey data?

Yes, in my earlier study (2010; link here) - we did a comprehensive review of organics around the world, and yes, we found that in Europe, in certain parts of Europe, especially that there’s a larger percentage of consumers that are interested in buying organic products.
What do you see on the horizon?
In the U.S. now we’re seeing that the younger people - not just the Millennials but this new generation - which has two names (Gen Z or the I Generation) - is even more interested in food source. And they’re almost getting fanatic about it. 
They read ingredient labels, they’re wanting to know how the food was prepared, where it was sourced from, how the animals are’s become even more important with the younger generation. I think there’s definitely more growth in this area

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