The wine industry is grappling with a long-term structural decline in numerous markets.
In this challenging environment, alternative wines—including natural, organic, sustainable, and Fairtrade options—present promising growth opportunities. IWSR consumer tracking data shows that these alternative wines are defying broader industry trends.
This is largely due to their strong perceived association with higher quality and "better for you" attributes, even though climate concerns alone are not sufficient to drive purchases.
Rising Demand for Alternative Wines
"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 at IWSR.
While sustainability and climate concerns drive purchases in these categories, the focus has shifted towards quality and personal suitability. The trend of buying less but better has made it easier for consumers to justify spending on alternative wines.
Organic Wines: Leading the Way
Among alternative wines, organic wines enjoy the highest awareness levels and continue to grow globally. Germany, France, and the UK account for nearly 60% of total volumes across reported markets. Germany and Sweden are the most mature organic wine markets, while Australia and South Korea have seen significant growth in recent years, albeit from a small base.
"Looking ahead, Sweden and Germany remain the key markets where organic wine has now entered the mainstream," says Halstead. "Meanwhile, growth opportunities are evident in newer markets such as Hong Kong, Brazil, and New Zealand, driven by increased awareness and consideration of the category."
Quality Associations Are Key
Quality remains paramount as sustainability alone does not justify higher spending on alternative wines, especially during economic pressure. In the US, 30% of both LDA Gen Z and Millennial regular wine drinkers associate organic wines with high quality, compared to only 12% of Boomers. Similar trends are observed in the UK and Australia for both organic and 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. "Fewer Boomers associate them with high quality, indicating a generational divide in perceptions."
Millennials Driving Growth
Millennials are the primary demographic driving growth in alternative wines, accounting for 69% of consumers in China who claim to buy more than two alternative wine types. This trend, though with slightly lower percentages, is also 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 and Fairtrade in the UK. A combination of climate concern and a stronger perception of higher quality makes Millennials the most engaged with alternative wines."
Sentiment Shift in the US
In the US, regular wine drinkers' connection to sustainability and alternative wines has declined significantly in the past 12 months, with fewer consumers willing to purchase sustainable wine or pay more for it. As a result, the proportion of sustainable-minded consumers has reverted to 2021 levels, impacting their purchasing and spending priorities. However, the market for organic and natural wines has remained stable, supported by the crucial Millennial demographic.
"The US remains the market where the most wine drinkers purchase more types of alternative wines, despite a decline in engagement with sustainability and alternative wines this year," says Halstead. "This decline could be attributed to increasing economic pressure and the rise of brands positioned towards health and wellness over sustainability."
Conclusion
The analysis by IWSR highlights the growth potential for alternative wines in a challenging market environment. While economic pressures and shifting consumer priorities pose challenges, the strong quality associations and engagement from younger demographics, particularly Millennials, indicate a promising future for alternative wines. As these segments continue to mature and awareness grows in emerging markets, alternative wines are set to play a pivotal role in the global wine industry's evolution.