Wednesday 11April 2018 24 BUSINESS DAY Leadership SHAPING PEOPLE INTO A TEAM How organic wine finally caught on GEOFFREY JONES If you can’t remember the last time you had a glass of organic wine, you are hardly alone. Overall, less than 5% of the world’s vineyards are organic. In the United States, the world’s largest consumer of wine, only 1% of wine sold by volume is organic. The paltry market for organic wine around the world belies the fact that over the past half-century, countless organic winegrowers and vintners have dedicated great effort to creating a larger market for the category, without much success. Meanwhile, plenty of other organic products, including vegetables, milk and tea, have become widely consumed. Why the difference? We set out to understand how and why the category of organic wine has largely failed to emerge, even as demand for other organic goods has soared. Through historical research and many interviews, we found several ways in which early stumbles in the organic wine market created marketing problems that the industry still struggles to overcome. However, we also found that the recent success of a related category — biodynamic wines — shows a possible way forward. EARLY STRUGGLES Since the advent of agricultural chemicals in the 19th century, a variety of people have warned of the risks to public health and the environment that could result from their use. However, these critics largely struggled to attract an audience until the late 1960s, when organic farming, natural food stores and organic food startups started to gain traction. The organic wine industry first achieved significant scale a decade later, motivated by the prospect of creating a product that was environmentally friendly and possessed a clear “terroir,” or the flavor and aroma associated with the environmental conditions of a particular vineyard. Early organic wine was not well received in the marketplace, for a number of reasons. First, the conventional wine industry saw it as a threat. They refused to recognize the industry associations of organic winegrowers, and cast doubt on the marketing claims they were making — that organic wine was of higher quality and free of potentially harmful chemicals. Organic wine was not strongly embraced by distributors and retailers, either. The product was perceived as more prone to spoilage since it typically lacked added sulfites. As a result, many distributors and retailers were hesitant to sell it. Even as organic supermarkets grew in popularity, they were reluctant to stock organic wine. Organic wine also needed to overcome a persistent reputation for poor quality. Early organic (and no-addedsulfite) winemaking experiments had resulted in some wines turning vinegarlike. These wines garnered bad reviews, but puzzlingly, the reputation for poor taste continued even as organic wines began winning prestigious awards. Consumers appeared to imagine a trade-off between wine quality and doing good for the environment. This trade-off was not present in, say, organic vegetables, because there was a widespread belief that products grown without pesticides had personal health benefits. However, wine was more associated with pleasure than health. A 2014 study showed that adding the word “organic” to the label of a wine bottle was associated with a 20% reduction in price, even though other organic goods routinely sell at a price premium. This perceived lower quality — and the lower price that organic wine usually commanded — squeezed organic wine producers, as organic wine was typically more expensive to make than conventional wine. Adding further problems, there were few common standards for the definition of “organic” wine, which was also variously called “natural,” “raw” or “sustainable.” As organic wine standards were being developed in Europe and the U.S., heated debates arose regarding the use of sulfites. European legislation finally emerged for organic wine in 2012, allowing producers to add sulfites up to a certain maximum level. However, in the United States, the Department of Agriculture disallowed the use of added sulfites in organic wine. THE TURNAROUND By the 2010s, organic wine had become popular in fine-dining restaurants in major cities like Paris and New York. The celebrated, Copenhagen-based restaurant Noma featured a wine menu made up entirely of organic wines. And retailers like Sweden’s Systembolaget, the state-owned alcohol monopoly, aggressively expanded the sale of organic wine by prominently displaying bottles in shops. While 6% of the wine sold at Systembolaget in 2011 was organic, by 2016 it was over 20%. What changed? The “purity” in taste and the charm of local winemaking traditions often associated with organic wine proved to be powerful marketing tools that helped turn the category around. The product was increasingly in demand by individuals who sought artisan-made wines with clear terroir, and who desired to consume products with as few added chemicals as possible. In an increasingly globalized 21st-century world, organic wine has become a potent symbol of localized culture strongly tied to the past century. Biodynamic wines, in particular, have secured a special reputation for quality. These were organic wines grown in a distinctive way. Controversial Austrian philosopher Rudolf Steiner had established the principles of biodynamic farming in the early 1920s. Following Steiner’s belief that the universe is interconnected, planting and other activities are coordinated with the movements of celestial bodies like the moon and the planets, and special compost preparations are buried in the soil and sprayed on the plants. Biodynamic agriculture started gaining broad traction in the 1970s, especially in Europe, where followers created some large businesses, such as the German natural foods retailer Alnatura. No one knows exactly how these methods work. The story seems to be about more than simply relabeling the product (and so escaping the unwanted associations of organic wine). Some wine experts say that biodynamic techniques support the health of the plant, while others believe the key advantage is simply that biodynamic winegrowing is extremely demanding, and so requires greater attention to the vines. What is known is that some of the world’s most sought-after, awardwinning and expensive bottles of wine are biodynamic. New category creation is not easy. The development of common norms, agreed definitions and cognitive legitimacy are contested processes. The case of organic wine provides important lessons about what to avoid when starting down this path. One is that it’s important to achieve quality early on, as negative reputations linger. A second lesson, for products traded across geographies, is to do everything possible to avoid multiple, conflicting standards. A third lesson, for categories based on claims of sustainability, is that consumers might want in theory to help the environment, but they will not sacrifice quality to support the cause. (Geoffrey Jones is the Isidor Straus professor of business history at Harvard Business School and the faculty chair of the school’s Business History Initiative. Emily Grandjean is a research associate at Harvard Business School.) c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate
BUSINESS DAY C002D5556 Wednesday 04 April 2018 25 Isaka-Kigali electrification feasibility study proposed Page 27 Lagos-Badagry rail project idles as gridlock persists World rail freight news round-up Page 27 Page 27 CCECC, Access Bank, FBN biggest Toyota buyers ...As BusinessDay’s reporter wins ‘2017 Best Motoring Journalist Of The Year’ back-to-back Stories by MIKE OCHONMA Construction giant; Chinese Civil Engineering & Construction Company (CCECC), Access Bank and First Bank of Nigeria plc have emerged as the three corporate institutions that purchased the highest number of Toyota brand of vehicles in Nigeria between January 1 and December 31, 2017. This was one of the major highlights of the last 2017 Toyota Nigeria Limited customer and motoring journalists awards nite held last week Thursday at the Civic Centre, Victoria Island, Lagos. Although the specific number of vehicles purchased by both CCECC, Access and First Banks were not disclosed during the night of glitz and razzmatazz, checks by our motoring reporter revealed that in 2017, some Toyota Nigeria dealers smiled to the banks with delivery of huge number of Hilux pick-up vehicles units to CCECC for its site construction solutions needs across the country. Similarly, there are very strong indications that both Access Bankand First Bank of Nigeria which came second and third respectively in the 2017 vehicle purchase ranking may have bought majorly a very large number of passenegr vehicles to meet their staf needs. While this is the first time the Chinese construction giant emerged the highest suitor for the Toyota brand since the inception of the award in 2005, the same may not be said of the two financial institutions which have in the past Toyota Awards won the different prices in the customer category. In the motoring journalists’ category, Mike Ochonma, motoring editor of BusinessDay Newspapers emerged as the ‘2017 Best Motoring Journalists’. Also adjudged past winner in some of the past editions of the award, the most travelld motoring journalist in the country also clinched the award in the 2016 edition. Theodore Opara of Vanguard Newspapers came second while Rasheed Bisiriyu finished third. Addressing the guests that gathered at the venue of the event, Kunle Ade-Ojo, managing director, Toyota Nigeria Limited, he stated that the awards nite has become a tradition for the franchisee to celebrate its customers and our key stakeholders on annual basis. This is just a modest way of showing our appreciation to them for the tremendous support we have enjoyed, and still enjoying from them. The loyalty of our customers through thick and thin is an eloquent testimony of their love for the Toyota brand and of course for us as a company. In his submisission, ‘’At Toyota (Nigeria) Limited, we cherish our relationship with our customers. This relationship has stood the test of time and has endured over the years. Our customers have demonstrated on several occasions that they are not only ardent lovers and patrons of the Toyota brand but passionate advocates as well. The least we could do therefore is to set aside a day like this to celebrate them and showcase our token of appreciation’’. The managing director expressed delight with the Toyota dealers in particular for their passion, loyalty and the ‘know how’ for the promotion of the brand in Nigeria, adding that other stakeholders have remained partners in progress over the years. Ade-Ojo pointed out that, the dealers have also worked assiduously to deliver superior quality products and services in terms of safe, comfortable, and affordable automobile experience to our teeming customers in the country. ‘’We cannot overlook the dedication and commitment of the members of the Toyota family in the implementation of the strategic imperative of meeting our customers expectations and sustaining the number one position of Toyota in Nigeria’’. He stated. While commending the board of directors whom he described as been fantastic in their unwavering support to TNL, Kunle Ade-Ojo noted that the staff has been fabulous in their contributions to the success and survival of the company in the face of unprecedented harsh operating environment. The Toyota Awards he told the audience has come a long way and dating back to 2005. It has become one of the strategic tools of bonding with Toyota Nigeria and its partners and has helped in growing the rank of its customers and the company said, it is proud to say that Toyota has the highest number of valuable customers in Nigeria. There were raffle draws during the night where lucky winners went home with juicy prizes like laptop, phones while many others won consolation prizes. L-R: Kunle Ade-Ojo, managing director, Toyota Nigeria Limited with Mike Ochonma, motoring editor, BusinessDay, receiving award as the (Best Motoring Journalist of The Year 2017) in Nigeria from Toyota Nigeria Limited, and Henry Ojuoko, head, dealer development and special projects during the company’s annual award nite last Thursday in Lagos. Pic by Pius Okeosisi New Ikeja bus terminal to move 200,000 passengers daily The Lagos state government has declared that it is committed to bringing sanity and orderliness in the transport system of the metropolitan city with with an estimated population of 20 million people. Ladi Lawanson, the State Commissioner for Transpotation re-echoed this determination last week while conducting transport journalists round the Ikeja Bus Terminal that was recently commissioned by President Muhammadu Buhari. The Lagos State Commissioner for Transportation, Ladi Lawanson said that the 13 bus terminals will checkmate the menace of “one chance” kidnapping and accidents associated with the current commercial bus regime in the State. According to Lawanson, “constructions are ongoing in Governor Ambode 13 different bus terminals across the state to leverage their various operations. “We have Alapere bus shelter, Ilupeju bus depot, Yaba bus terminal, Anthony bus depot, Maryland bus terminal, Agege bus terminal, Ojota bus terminal, Oyingbo bus terminal, Tafawa Balewa Square Bus Terminal and other proposed corridors. Conceptualised and built by Planet Projects Limited, the ultra-modern Ikeja Terminal is a key transport infrastructure constructed to improve efficiency in system connections, reduce traffic congestion caused by ongoing street loading and dropping off of passengers, reduce environmental pollution and improve security and safety of the commuting public. Describing the Ikeja Bus Terminal as a small component of the big picture of multimodal transport system planned by the government, the Transportation commissioner added that contrary to negative insinuations in some quarters that the new facility is a bus stop, the new bus terminal comes with all the facilities and amenities obtainable in any part of the world. Some of the facilities he said include a
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