MM110 Assignment 1
Market anaylsis of organic wines in australia xiangyun Dai, SID:220113354
MM110 Assignment 1
Market anaylsis of organic wines in australia xiangyun Dai, SID:220113354
2013
2013
Unit coordinator: Fredy-Roberto

Organic Wines
Organic wines are made from wine grapes produced under organic agricultural practices, as defined by the International Federation of Organic Agriculture movements as the ‘production system that sustains the health of soils, ecosystems and people. It relies on ecological processes, biodiversity and cycles adapted to local conditions’ with its core principle in achieving high yields without artificial fertilizers and pesticides (IFOAM, 2008). With over 11 million certified hectares of land, the Organic agricultural industry in Australia has received rapid growth in the recent years due to the trend to a more ‘healthy, and environmentally responsible’ consumer culture and a willingness to pay more for their values (Remaud, 2008). In the following years the industry is expect to continue to receive respectable double digit growth. The recent growth in organic produces has translated well into the growing market for organic wine (107% growth during 2010-2012) and it is expected to continue into the future (Mascitelli, 2012). While the average consumer are not so willing to pay the premium for the ‘organic’ label on their wine, research have found that a significant cluster (~14%) of Australians are willing to pay up to a 9% premium for organic wine (Chvyl, 2008).
A swot analysis on the market of organic wines is summarised below. Strength | Opportunity | * Strong Growth in organic agriculture * Local product provide a sense community to consumers * Wine is more popular with higher income families who can afford the premium on organic products (Callinan, 2012) | * Organic agriculture continues to become more efficient. * Educate consumers to become more focused on health and the environment. * Major trend towards eco-friendly products * Establish a sustainable product | Weakness | Threats | * High costs relative to traditional methods * Customer confusion about the definition of organic * Sale of Wine have recently declined (Australian Bureau of Statistics, 2013) * General association of ‘organic’ to food and not wine | * Some negative stereotypes of ‘organic’ food culture (Raab, 2005) * International Competitors with access to better resource * Government funding is largely focused on advanced technologies that are not applicable in organic farming. |

Market environment
An analysis of the marketing environment of organic wines can be broken down by looking at the micro and macro environmental factors separately
Microenviromental
The organic wines industry is heavily dependent on the suppliers as the product relies on wine grapes to be produced under government certified organic processes to be able to label itself as ‘organic’. The recent growth of organic certified wine grapes means that companies can take advantage of an increase in supply to produce new products. By purchasing the grapes rather than growing them in house minimizes the risks of supply shortages in the event of crop failure by allowing flexibility of sourcing resources.
The main micro environmental challenges faced by Organic Wines are its competitors from the non-organic wine who are at an advantage of having lower production cost. It must make itself distinctive enough to increase its costumer’s willingness to purchase. To drive growth they should also specifically promote organic wine to compete against premium non-organic wine. There are two key types of consumers for the organic produces. ‘Traditional’ consumers who more actively conscious about the goods they purchase and often shop from local markets and green grocers. They lead the way for a more conservative type of consumer who have a preference for ‘organic’ but still shop at major supermarkets and retailers (Mascitelli, 2012). To be fully engaged with customers, both types of Market intermediaries must be utilized to achieve the best outcome and reach all possible customers. Those who prefer organic produce are likely to also be those who prefer locally produced products, to target these customers the local media can be used promote organic wines to the Local Publics.
Macroenviromental
Large government funding agricultural technologies poses as a direct threat to the competitiveness of organic wine. These advancements in technology are largely incompatible to the principals of organic farming and thus increase the discrepancies between the yield of conventional farms and organic farms and therefore the production costs (Seufert, 2012). . It should be noted that the average Australian are not so particularly willing to pay a large premium on organic wine, so the targeting the right cluster of the population is very important in maintaining competitiveness against other organic winemakers (Chvyl, 2008). In general, the growth in sale of organic wine is driven culturally through an emergence of a preference for eco-friendly farming practices and a more ‘healthy’ life style. This movement will continue to benefit the market for organic wines as long as the ‘green’ values reflect by the organic process are clearly promoted with the products (Mascitelli, 2012). A problem faced by organic wines is this area comes from the lack of understanding towards the term ‘organic’. It is shown that consumers react better to terms such as ‘environmental’ which shows the way that the values are conveyed by the product effects the consumers’ willingness to pay. Since the consumer of organic wines are likely to be from a higher income bracket due their preference of wine and their ability to afford the large price difference. Companies would be wise to market their product to target this demographic (Callinan, 2012).
The sustainable practises involved in organic farming will also benefit from policies regarding environmental sustainability in the future should the government continues to become increasingly scrutinized about the issues facing the environment. Organic wine may also receive a boost in popularity in the event of Australia receiving a food crisis which may shift the consumers’ confidence away from conventional farming techniques as they did in Europe (Chvyl, 2008).
Conclusion
The current organic wine industry is currently small with about 5 million dollars of wine grape being grown in Australia. As Australian shift towards a ‘greener’ lifestyle and sustainability and environmental factors become more important. The potential for growth mean that there is significant role for marketing in this particular product to expand and secure consumers from non-organic competitors.

Bibliography
Australian Bureau of Statistics. (2013). Shipments of Wine and Brandy in Australia by Australian Winemakers and Importers. Retrieved from http://www.abs.gov.au/ausstats/abs@.nsf/mf/8504.0
Callinan, S. (2012). What do Australian's Drink | Foundation for Alchol Research and Education. Retrieved from http://www.fare.org.au/wp-content/uploads/2012/09/What-Australians-Drink.pdf
Chvyl, P. (2008). How much is organic wine valued. Retrieved from Australian Organic: http://www.bfa.com.au/portals/0/BFAFiles/PDFs/ACOM%20Autumn%2008_How%20much%20is%20organic%20wine%20valued%20by%20drinkers.pdf
DAFF. (2004). The Australian Organic Industry, A Summery. Retrieved from Department of Agriculture, Fisheries and Forestries: http://www.daff.gov.au/__data/assets/pdf_file/0006/183192/australian_organic_industry_summary.pdf
IFOAM. (2008). Retrieved from http://www.ifoam.org/en/organic-landmarks/definition-organic-agriculture
Mascitelli, B. (2012). Austrlian Organic Market report. Retrieved from Biological Farmers Australia: http://www.bfa.com.au/Portals/0/Organic%20market%20report%202012-web.pdf
Raab, C. (2005). Consumer Knowledge and Perceptions About Organic Food. Retrieved from http://www.joe.org/joe/2005august/rb3.php
Remaud, H. (2008). DO AUSTRALIAN WINE CONSUMERS VALUE ORGANIC WINE? Retrieved from http://academyofwinebusiness.com/wp-content/uploads/2010/04/Do-Australian-wine-consumers-value-organic-wine_paper.pdf
Seufert, V. (2012). Comparing the yields of organic and conventional agriculture. Retrieved from http://www.nature.com/nature/journal/v485/n7397/full/nature11069.html