At the Press Conference: Unified's State of the Industry Panel Sees "Continued Growth" of the $1.4 Billion Organic Sector

L to R: Mike Veseth, wine economist; Danny Brager, Nielsen, Melissa Lange, Lange Twins; Jeff Bitter, Allied Grape Growers and Glenn Proctor, Ciatti

While organic vineyard acreage is expected to surge by nearly 6,000 acres this year, it barely got a nod from speakers on the podium at the industry's annual State of the Industry panel session, a popular gathering that is part of Unified Wine Grape Symposium in Sacramento this week, attended by an estimated 14,000 participants.

The organic sector's revenues (2 percent of U.S. off premise sales) are growing at 10 percent annually, according to Nielsen figures (from June 2017 to 2018). Two percent of California's vineyards are certified organic, and if the wine industry overall is valued at $70 billion (according to bw166 estimated from tax receipts data), the organic sector's net worth - at 2 percent of $70 billion - would be $1.4 billion annually (including both domestic and imported wines).

At the press conference after the session, speakers briefly touched on their perceptions of this market.

"We will continue to see growth in that segment," said Danny Brager, SVP of Alcohol Beverages for Nielsen, which collects the bulk of available wine industry scan data on sales revenue and volume. "I don't have the exact numbers, but it's certainly growing."

Looking to softer data culled from social media sources, Brager said, "at the messaging level, I think there's a receptive audience. In social media conversations, younger people - or people when they're talking about health stuff - the other topic that comes up is about the environment and sustainability. Organic pops up pretty heavily in terms of those conversations, which are largely younger people."

Mike Veseth, wine economist, said he was watching Shaw Organic, Bronco's new label, which launched in 2018. "They are making an effort to produce about a four or five dollar wine in Trader Joe's...a Trader Joe's buyer is likely to be interested in the organic designation. I'm keeping an eye on that."

Jeff Bitter of Allied Grape Growers said growth is moderate in terms of grape buying for those already in the organic sector. "We see the same organic buyers in the marketplace and we see moderate growth within those same groups of people. I don't have a lot of experience with new entrants coming into the market to buy a lot of grapes for an organic program."

"I think some of the growth is either the big guys that already exist - the Fetzer's [Bonterra's] of the world, Winery Exchange [WX, whose brand Daily Red, is also sold at Trader Joe's] - people that are kind of have these brands that are already established.

"Franzia is probably going to expand internally, but in terms of new entrants into the market, I don't get a whole lot of buyers call me looking for organic grapes that are not currently in that business."

Currently Bonterra produces about 500,000 cases of "Made with Organic Grapes" wine, making it the top selling wine in that category according to Nielsen data. However Nielsen does not include Costco or Trader Joe's sales nor sales in most natural food stores throughout the country.

While Bonterra dominates U.S. sales in this category, with a 25 percent market share, seven of the top ten bestselling wines in the Made with Organic Grapes category are from foreign producers.

Frey Vineyards sales on revenue growth

Nielsen data shows that "Made with Organic Grape" wines are 80% of the wines sold with organic labeling in the U.S.; the remaining 20 percent is split between the other two categories: "USDA Organic" and "Ingredients: Organic Grapes."

However, no added sulfite wine producers' "USDA Organic" wines are often sold in Costco and natural foods stores not covered by Nielsen's scans.

No added sulfite wine producers at the Organic Growers Summit said sales are increasing more than 10 percent a year. Frey Vineyards' production was 270,000 cases, according to Katrina Frey, who spoke at the December summit in Monterey.

In a followup interview, WX Brands said sales of Our Daily Red, another no added sulfite organic wine, were up 8 percent in 2018.

The Mendocino winery's Frey Vineyards wines are featured in Costco in Nevada and California. Frey says the winery can't keep up with demand and has recently started importing organic grapes from Argentina. "We don't have enough wine to fill all the potential Costco markets, but with our new winery (which is expected to be completed in May 2019), we are looking at approaching a few other regions now."

Argentina's Domaine Bousquet, which makes a line of more than 10 "Made with Organic Grapes" wines also reports that its U.S. sales are also up 10% a year.

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