Doing what comes naturally

Fetzer leads organic change in the wine industry

When Fetzer Vineyards began growing organic grapes during the 1980s, it had no intention of leading a consumer trend toward organic products — in fact, most wine consumers would be surprised to know the company is the largest grower of organic grapes in the country. But given today's growth in natural and organic products, it seems Fetzer might have known it was on to something from the start.
Fetzer's organic practices grew from a belief that organic grapes produced more flavorful, higher quality wine. The move prompted a series of other changes within the company toward sustainable business practices, but they have, for the most part, been quiet changes. Until now, that is.
The company, based in Hopland, Calif., is starting to be more vocal about its message of organics and sustainability. Last year, it announced a goal of using 100 percent organic grapes by 2010, which means it has asked the 250 other growers from which it buys grapes to make at least part of their operations organic.
Fetzer President Paul Dolan also recently penned a book titled "True to our Roots: Fermenting a Business Revolution", in which he shares the company's environmental philosophy and the key principles of creating a sustainable business.
"For the longest time, I thought it was more important for us to walk the walk than talk the talk. When you get caught up in talking about it, it distracts you from actually doing the work," he says. "I knew there would be a time to say something, and that came with the book. We have a commitment to sharing this, not just providing leadership, but also giving [our knowledge] away so that others can take it on."
To most of the world, Fetzer will look as it always has — for one thing, the wines still will not be organic wines, even after 2010 (Organic wines cannot contain added sulfites, which Fetzer considers essential to quality winemaking). As it has been from the start, the company is focused on sustainability as a business practice rather than as a consumer message.
Regardless, the company picked a good time to do it. Retail chains such as Whole Foods, Wild Oats and Trader Joe's have grown by leaps and bounds, and organic foods and beverages are more mainstream than ever before, growing 20 percent per year, according to the Organic Trade Association. The trend also is becoming more prevalent in the wine business, with 2 percent of California wineries now certified organic, according to the California Certified Organic Farmers. While that might not seem like a lot, it's twice as much as a decade ago.
The power of three
Fetzer has been making wines since 1968, and is one of the leading producers of varietal wines in the world. Dolan says the decision to farm organically began with a "lightbulb" moment when he tasted a grape grown organically and then one grown with more conventional methods. He immediately noticed more flavor and positive attributes in the organically grown grape.
"We converted that vineyard to organic, and three years later that wound up going into our best wine," he says.
Organic farming prohibits the use of chemical fertilizers, pesticides and fungicides. Instead, the company relies on natural methods, including cover crops and other non-grape plants to attract beneficial insects that feed on the destructive insects.
The conversion to organic farming led the company to consider more sustainable practices in other aspects of its business as well. Over time, Fetzer has come to believe that "being good" can be good for business.
"I started to see that there was another way to run the business, and we started to look at everything," Dolan says. "We organized around a 'triple bottom line' as opposed to a single financial bottom line as most businesses are organized around."
Pat Voss, senior vice president and general manager at Fetzer Vineyards, explains that the theory of a triple bottom line calls for several factors to enter into decision-making.
"It's about being profitable — no margin, no mission," she says. "It's about being environmental, and it's about treating people in a just and equitable way. We know that sometimes we're going to fail at one or more of those, but at least we're asking ourselves the questions — we're not just making decisions based on one of those."
Asking the questions has inspired creativity that is evident everywhere at the company's Valley Oaks headquarters in Mendocino County. Its office building was created with 18-inch thick earthen walls, the ceilings made from wood recycled from old California barns, the 100-year-old doors were recycled from an old utility company and the offices run on green power.
"Each step of the way, we've found so many things. We can't take them all on, but we take on as many as we financially and physically can," says Dolan.
In 1992, Fetzer became part of Brown-Forman Corp., which also sells brands such as Sonoma Cutrer and Korbel along with several imports. The association is a boon to the company's marketing efforts as it can draw on the full sales and educational programs allowed by the Brown-Forman portfolio. And Brown-Forman has pulled some of Fetzer's philosophies into the larger company as well.
"In the beginning, when people from Fetzer were talking about the environmental position, and Paul was very passionate about it, you saw a lot of skepticism. It was like 'this is a California thing'," Voss says. "This year, Brown-Forman convened the first Brown-Forman conference on sustainability. They had 200 of the top executives and managers in the company in the room and said 'We are in a sustainable business. We are going to manage and run this company using sustainable business practices.'
All eyes on 2010
The decision to use only organic grapes in its products was an idea proposed by company employees, according to Doug Wilson, Fetzer's head of grower relations.
"Every two years we get together and start identifying big goals," he says. "The original goal was to do it in 2020, but we decided that wasn't much of a commitment. I proposed that we do it by 2010."
Not sure if he had walked into a grower-relations minefield with that proposal, Wilson says, "We thought it would be interesting to see who bailed immediately. I waited for the phone to ring, and it never rang," he says.
Part of Fetzer's education mission is to help other wineries understand the possibilities of organic farming, both for its own grower partners and others in the industry. The company has begun a series of educational seminars at Valley Oaks, and it brought onboard Ann Thrupp, a former U.S. Environmental Protection Agency life scientist and director of sustainable agriculture at the World Resources Institute in Washington, D.C., as manager of organic development.
"We're having a profound effect over the wine industry, not just in California, but across the country," says Hoke Harden, manager of global wine education at Brown-Forman. "There are people who are, for the first time, understanding that this is not a screwball concept. This is attainable, it's doable. It's farming responsibly, but still with an eye toward the financial implications."
It takes three years of organic farming to gain certification, so Fetzer began by asking its growers to spend a little time finding out if they were willing to go that direction.
"We said, 'We want you to think about it. We want you to take five acres of your best vineyard, not your worst vineyard, your best, because you're going to be most successful in the best part of your vineyard. We want you to think about weed control and pesticide control and fungicides'," Wilson says.
"It's nerve-wracking to watch flies in your vineyard and wait for these beneficial insects to build up enough of a population to attack them, but it's the most powerful thing," he says. "It's much better than any sort of pesticide. Pesticides are non-selective, so they kill good bugs and bad bugs. But with beneficials, they attack the food source and then move on."
A more global business
Organic farming is a new way of looking at the business for many wineries, but it's not the only variable the U.S. wine industry has had to examine during the past several years.
Competition is increasing, with a growing number of domestic and import brands entering the market. And while popular bargain-priced wines have appealed to new wine consumers, they also have put even more pressure on already competitive pricing.
Dolan, who serves on the board of the Wine Institute, says the challenges have forced the industry to consider things it's never had to think about before. "We've talked global for a long time, but the wine business is just now experiencing what global means," he says. "We're going through a bit of a retooling period, and we haven't had to do that in this industry. It has just kind of grown simply."
Expanding wine consumption is one of the most important industry goals, he says.
"The biggest potential opportunity we have right now is to make wine available to more consumers," he says. "Ten percent of the population drinks 86 percent of the wine. If that's the case, maybe we could increase consumption by reaching out to those consumers who are now drinking beer or ready-to-drinks and introduce them to wine."
To target specific consumers, Fetzer has developed a consumer profile that goes beyond the general wine consumer, which is thought to be 35 to 50 years old, fairly affluent, and socially and physically active.
"The problem at that level of granularity is that there's not much you can do to differentiate your promotions from anybody else's," says Doug Gillespie, U.S. brand director at Fetzer. As a result, the company has added lifestyle pursuits such as cooking and gardening to its consumer profile.
"We can tailor our promotions and our promotional partners and even our packaging toward those types of cues. It's a more sophisticated way of looking at the target," says Gillespie.
Kicking it up a notch
The food/wine connection is an especially strong tool for Fetzer. The company's own chef, John Ash, has written books and appeared on numerous television programs, Fetzer has hosted a bevy of prestigious chefs at Valley Oaks, it holds an annual red wine and chocolate festival, and it has a partner in chef and restaurant owner Emeril Lagasse.
"I think the best part about wine is its relation to food, the way it complements food and fits naturally on the table," says Dolan. "Emeril is great because he makes food fun, and the other chefs, the Charlie Trotters of the world, go to depths to make food special and unique." The company's partnership with Lagasse includes two lines of wine, Emeril's Classics, which are sold at retail, and Emeril's Reserve, which are exclusive to Lagasse's nine restaurants. Fetzer also hosts the Emeril Under the Stars and Emeril in the Harvest Sun festivals at Valley Oaks to raise money for the Emeril Lagasse Foundation, which funds educational programs for at-risk kids.
"The great thing is that while we have a contract with Emeril, most of the stuff you see is well outside the contract because it's a win-win for both of us," says Gillespie. "We're raising money for his foundation and we're doing great things for the winery. It's a tremendous event for us."
In addition to consumer marketing, Fetzer has special educational programs for professionals in the trade. The company's ties to Brown-Forman are especially helpful in this effort. The Brown-Forman Center for Wine Education is based at Valley Oaks and hosts in-depth seminars for its distributors, wholesalers, restaurants and hospitality partners.
The three-day program takes attendees into the vineyards, through tastings and aroma training, helps them understand food pairings, and helps them make wine more understandable and accessible to consumers. That's an endeavor that Dolan thinks is important.
"What we haven't been willing to do as an industry is notice that we are an elitest beverage. We tend to talk down to consumers and make it difficult to understand wine," he says.
In addition to Fetzer wines, the program includes Brown-Forman's other wines and brands from other companies. "We go out there and taste competitors' wines along with our products because that gives the total global viewpoint of wine," says Harden, who leads the trade education effort. "We want you to know about our wines, but we also want you to know the basics of wine in general so you can be informative to [consumers]." In the field, the company also works with its customers to develop wine lists and even develop menus.
A sense of place
With the onslaught of competitive brands in the wine market, Fetzer has decided that its heritage and the uniqueness of its home at Valley Oaks could be a message that appeals to consumers. It is getting set to roll out new labels for its Fetzer branded products that communicate those things, and it hopes the new packaging will help set it apart from the sea of brands that are not connected to a specific place.
To emphasize the Valley Oaks connection, the company also will fold its current brand designations such as Sundial, Eagle Peak and Echo Ridge under a single Fetzer Valley Oaks name, while maintaining the current Barrel Select and Reserve tiers. The new look will hit the market later this year.
"With the competition increasing and getting more severe, it's increasingly important for us to stand out in the wine category and among our tighter competitive set, and more difficult too, because there are more wine brands," says Gillespie. "For us, this is not simply an evolutionary package. It's speaking more to who we are."
"There are so many wines out there that are just labels," he says. "Fetzer comes from a special place and because of that, it's a special wine." BI