Sustainability and the value of customer knowledge

In a perfect world, this would be the illustration of sustainability — environment, economics, and community (including workers) equally balanced. As recent surveys show, however, the environmental aspects get the most play. And even then, it’s mostly higher-spending and more wine-aware customers who are willing to spend more on wine with a sustainability certification.

I was thinking that perhaps y’all were getting tired of my blogging on sustainability.  But in the two weeks since my last sustainability post, a whole bunch of people have downloaded the back label I posted.  So there must be some of you out there who want to know more.  Luckily, I can go on and on about it!

Seriously, though, the topic needs to be better understood.  As I mentioned in the previous two sustainability posts, two surveys done in the last couple of months have started, in a rudimentary but necessary way, to examine sustainability beyond whether people think it’s a good thing or not.  This post — most probably my last on the topic for a while (don’t want to push my luck, after all) — looks at two issues:  non-environmental aspects of sustainability, and the additional cost that consumers claim they’ll pay for wines from producers that are certified sustainable.

Whatever my qualms about the real environmental benefits of sustainability, it’s understandable that wineries and sustainability organizations would play up that aspect.  Pretty much everyone wants maximum environmental protection in winemaking – providing it doesn’t cost so much that the wineries can’t stay in business.  And clearly, that is the message out there.  Every environmental factor listed in California Sustainable Winegrowers’ survey of people in the wine trade was ranked as necessary for sustainability by nearly two-thirds of respondents, and some factors went as high as 85 percent.   Virtually all the rest of the respondents thought the environmental factors were important if not necessary, and less than six percent thought that any of the environmental factors was unimportant or unnecessary for sustainability.  ***

This wasn’t true about non-environmental attributes, however.  Less than one-quarter of the respondents thought that greater benefits for employees and the surrounding communities were necessary components.  On the one hand, I wasn’t surprised to learn that people in the wine trade weren’t aware that this was a requirement of sustainability certification.  But I was surprised to see how few (47 percent) thought it was important even if it wasn’t necessary.  And that a quarter of respondents thought it was neither important nor necessary for sustainability.

What should we make of this?  People in the wine trade certainly don’t want winery workers to be poorly-treated and subject to greater health and safety risks.  Nor do they think that wineries should be bad corporate citizens.  But do they think that worker protections and good neighbor relations just happen as a matter of course?  As someone who has sat in on many meetings between representatives of chemical companies and the people who live around their plants, I can assure you that those relationships don’t come without a lot of work.  Of course, in many wineries, especially small ones, the winemakers/owners live on the property and try to be good neighbors because they want good neighbors in return.  You can’t say the same of the CEO of XYZ Chemical.  But it’s not a given that an on-site owner makes for good community relations, either.

I’m not sure that California Sustainable Winegrowers’ criteria for certification in these areas represent actual best practices.  And, as I’ve said before, economic viability figures into all aspects of sustainability certification, so wineries may not have to achieve best practices if they don’t think they can afford them.  Even certification doesn’t mean that a winery is doing the best it can.  But the fact that a winery owner is willing to submit to a non-legally-mandated third-party inspection of his or her labor practices and corporate citizenry is something that should be encouraged.  The value ought to be understood in the industry beyond the owners submitting to certification, too.

Finally, on to the dollar value of sustainability.  Sustainable Sonoma’s survey led them to conclude that many customers are willing to pay between $5 and $10 more for a wine that’s certified sustainable.  A closer look at the survey itself is more revealing, though.  The $5 to $10 figure is for customers who were also willing to pay more for wine in general, and showed more knowledge about winegrowing and winemaking.  Almost two-thirds of those customers were willing to spend more money for the certification on the label.  Among less aware and lower-spending consumers, only 40 percent would pay $5 more a bottle for a wine labeled certified sustainable.  So, I guess the takeaway is that if you are more aware about winegrowing and winemaking techniques and already spend more on wine, you’re more willing to spend still more for the certification.  I imagine that’s true for organic and biodynamic certifications, too.  (And, as I’ve said before, both of those certifications are better-known than sustainability.)

But what does it mean for the winery?  Taking the $5 more that the customer pays back through the standard markup on wines in the production chain means that the producer gets $1.48 more per bottle.  That’s not an insignificant amount of money.  Of course, the winery owners will have to balance that return against the costs of the improvements necessary for getting and maintaining certification.  But it’s nice to have a dollar figure to look toward.  Adding the more qualitative benefits of being a certified good employer and good neighbor might tip the balance further if the winery owner is on the fence about getting certified.

Clearly, more information on sustainability needs to be out there, though.  It’s a heavy ask for wineries to change their operations significantly if increased revenue depends on a highly knowledgeable customer base.  Or on customers who already pay more for wine and are willing to pay still more.  More information about the worker and community protection aspects of sustainability could be helpful here — especially since that message hasn’t made it out to the wine trade or the public.

Cheers!

Tom

*** Respondents marked whether particular elements were “necessary” for sustainability, “important but not necessary,” “neither necessary nor important,” or “no opinion.”  In theory, this should add up to 100% for each element.  All of the environmental factors were much more likely to be ranked as “necessary” than the non-environmental ones.  And if you add the “necessary” and “important” percentages, every one of the environmental factors totaled at least 93%.

Advertisements
This entry was posted in Sustainability, Sustainable farming, Uncategorized and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

One Response to Sustainability and the value of customer knowledge

  1. Pingback: Terroirist: A Daily Wine Blog » Daily Wine News: Bordeaux Awakening

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s