Friday, May 6, 2016

What's Good about Gallo?

What's Good about Gallo?

This is the second post in a short series examining consumer motivation to engage in environmental stewardship that is shared with producers. The last post considered the failure of the sustainability ethic to motivate proenvironmental behavior in both developed and emerging markets. To summarize recent research into consumer green behavior: 1) The good green-intentions of most consumers rarely result in green purchasing or behaviors; 2) More information disseminated on environmental issues does not correlate with more proenvironmental behavior; 3) Recycling and recyclable bags are the two most common behaviors under the rubric of sustainability practices, largely because of the ease of disposing in blue containers and widespread disapproval of and punishment for littering, but recycling is just a bandaid for the malady of overconsumption and recyclable bags another item to buy and eventually recycle;  4) The term sustainable development, popularized by the 1987 Bruntland Report, Our Common Future, is oxymoronic and demotivating; 5) Consumers do not trust sustainability claims made by companies; 6) Consumers do not understand what sustainability actually implies, i.e., reduced consumption is the only way to change the rate at which resources are being depleted and polluted; and 7) While a corporate catchphrase, sustainability under scrutiny fails most tests as a positive engine for green behavior. 
While exploring green purchase behaviour, many studies have reported a discrepancy or “gap” between consumers’ expressed favourable attitudes and actual purchasing practices (Tanner and Wölfing Kast, 2003, Vermeir and Verbeke, 2006 and Vermeir and Verbeke, 2008). Hughner (2007) found that while many consumers showed a positive attitude towards purchases of organic food products (67%), only a small number of consumers (4%) actually purchased those products. Similarly, Defra (2006) found that 30% of the consumers in UK have reported their concern towards the environment, but rarely translated their concern into a green purchase. It is thus clear that there exists a gap between consumers’ thinking and actual actions (Chen and Chai, 2010 and Wheale and Hinton, 2007).

Gallo Gets It


This egret was photographed flying over  the Laguna de Santa Rosa wetlands, one of 27  US sites designated of international importance for providing  habitat for diverse species, cushion for storm surges, nursery for migrating species, and recreational site for humans. Gallo supports this project through restoration and maintenance of  wetlands in Sonoma County on their ranch. Egrets might become the symbol of new world emerging markets, just  as the polar bear is of industrialized losses to the natural world., aka sustained development. The egret could also become a symbol of restored habitat, biodiversity, a deconstruction and reconstruction of everything related to sustainability, overall,   a re-evaluation of consumerism, economic development, and population growth. Gallo is now and will continue to be a part of this overhaul. A quick look at Gallo as a model of effective marketing is revealing of trends in both consumer and producer wine behaviors.

 Gallo Gets It

Consumer behavior is driven by producers who understand markets and marketing. The largest producer of wine by volume in the world, (321.8 million 9-liter cases in 2014), iconic of coming-of- age jug wine, Gallo has successfully addressed most wine market price segments, with a growing involvement in luxury-wine-producing vineyards and markets (e.g., recent purchases in Napa and Santa Barbara County) and emerging markets (China, India, Brazil). This iconic winery clearly gets marketing and how to explore, fan, and encourage consumer purchasing. What might we learn from Gallo?

Most of the serious corporate players in global alcoholic beverages industries put the word sustainability in a strapline on their website or catchphrase in promo documents, both of which telegraph to consumers a link between key marketing concepts and basic global business ethics concepts and  producer practices and products. These companies tend to detail their environmental practices in annual corporate environmental reports that are designed primarily for shareholder audiences (distinct from stakeholders ) as well as corporate reputation. Such publications, many actually accessible to interested stakeholders, are one outcome of the Brundtland Commission's1987 report Our Common Future, also known as the Brundtland Report, a document which coined, and defined the meaning of the term Sustainable Development

On the Gallo website landing page, there is no mention of sustainability. Environmental practices are, however, published in detail as part of their environmental profile, accessed through the web path OUR FAMILY>Environment/Environmental Stewardship, and sustainability is given its due in pages linked. What could account for Gallo's positioning of environmental information under the OUR FAMILY link?

Our Family. Our Common Future

In both traditional developed markets as well as emerging markets, most consumers claim that family and community/peers are their most important values. The fact that this claim does not translate into green  behaviors suggests that there is a fatal disconnect between we say matters most and what we actually do. Things get in the way. Strategizing this disconnect,  Gallo positions disclosure of environmental practices under the supercategory of family, the uber value for all consumers. Family in 2016 is more than biology. For Gallo, family comprises wine communities worldwide, a  DNA network created by producers and consumers of wine.

The Gallo family of wine includes 90 brands, from jug wines to luxury brands, with products available in more than 90 countries. For bottled wine exports, Gallo controls 60% of the market share in U.S. wine.  As the number one producer of wine in the world, Gallo can maintain revenues by  multiple carefully articulated strategies: expanding into unsaturated markets,  such as premium wines and also, by capturing  new emerging wine  markets in China and India, where both luxury and value wines are promising. China is currently the world's largest consumer of red wines,  importing 1.87 billion bottles annually, with Rossi one of the most popular Califonia wines.

The wine business is global: vineyards and production facilities, consumers, distributors, transportation, labeling, and marketing all take this into account.Gallo is number one because this company excels in understanding, influencing, and integrating all aspects of wine as a global industry. Its website, promotional materials, business strategies and partnerships, certifications, relationships to regulators and policy-makers, foresight and insights, all reflect that Gallo gets it.

  Motivations and Obstacles

 Gallo insightfully places sustainability information under the category of family. While their purpose might be motivated by disclosure and substantiation as suits the Corporate Social Responsibility ethic rather than to proactively engage consumers in better ecological practices, consumers across almost all categories claim that family values are the most important.  Sustainability could be construed as a family value that has been biologically coded into our DNA, along with striving for the best quality of life. We care about our offspring and their quality of life.

Research on green purchasing behavior indicates that company communications, whether website or advertisements, are the least trusted source of information about sustainability for almost all consumers surveyed.  Product labels claiming sustainability are confusing and suspect. Claims that a product has been produced sustainably lack credibility and persuasiveness because consumers do not understand exactly what that entails in this instance. Websites and promotional materials are opportunities for companies to educate and engage those consumers who actively seek out information about environmental behavior (according to the BBMG study, possibly 2 billion people). Substantiated data with metrics wherever possible give credence to company claims and indicators allowing consumers to evaluate, monitor, and compare performance throughout the industry.

The most trusted sources of company environmental practices are certifications. Over 40 % of consumers consider certifications from well-respected world organizations such as the ISO 14000 Environmental Management family of standards as the most trusted source of information regarding a company's environmental performance. Gallo has focucsed on certification processes and labeling:  the best known certifying agency in California, the California Sustainable Winegrowers Alliance, has been substantially funded by Gallo, as well as Constellation. also a leader in world markets for alcoholic beverages.)  E. & J. Gallo Winery publicizes their participation in the drafting of the Code of Sustainable Wine Growing Practices as part of a collaborative effort with the Wine Institute and the California Association of Winegrape Growers and claims to be the first winery in the U.S. to receive the International Organization of Standards ISO 14001 certification, the world's premier environmental management system.

Most purchases are not affected by what is known about environmental performance:  increasing information does not correlate with an increase in green behavior. All research indicates that consumers are generally confused by labels, whether biodynamic, organically farmed, organic, etc.  and although they respect certifications as the most reliable information source, they tend to ignore certifications when making decisions regarding which wine to buy. Consumers in emerging markets rely more on expert ratings and friends and peer reports

Gallo seems to get that family values and sustainability are both idealizations of our actual lifestyles and must not only be acknowledged in marketing strategies, but sustainability must be framed as a core family value. Gallo positions their environmental practices under the category of family as Environmental Stewardship, which skirts all the controversy over sustainable development and in general has a positive aura.  Gallo transformed a violation of  the Federal Clean Water Act when planting vineyards in Sonoma, for which they were fined $95,000, into one of their admirable stewardship practices:  restoration of important  habitat for endangered species.

 Low Hanging Fruit

 If sustainability implies keeping on, and the path leads to a precipice, we need a new pathfinder. Since human behavior is complexly motivated and highly influenced by situational and contextual factors, radical change for the 7 billion plus population probably requires 7 billion plus solutions. Keeping that in mind, a less daunting task would be to identify what is called low hanging fruit and start plucking.

The gap between consumer green intentions and actual behavior can be explained under two overarching categories: lack of sufficient motivation and too many obstacles at the point of purchase or other action. Committed ecological stewards can address both, which might ultimately lead to a change in some of the current motivations to consume more.We can increase motivation and reduce obstacles to stewardship.

Emerging Markets Offer the Most Likely Persuadables to-Buy-and-Act-Green

The BBMG study referred to in the previous post categorized consumers into four market segments, the largest (2 billion) of which they designated Aspirationals, also the most likely to become green consumers and most located in China. In their 2013 Aspirational Consumer Index, BBMG identified more than one-third of consumers globally (36.4%)  as a group they call Aspirationals, who are defined by their love of shopping (78%), desire for responsible consumption (92%) and  influence by community of peers via social media. The study draws from a telephone and in-person survey of 21,492 consumers across 21 international markets conducted in April 2013.

“Aspirationals are materialists who define themselves in part through brands and yet they believe they have a responsibility to purchase products that are good for the environment and society,” according to Eric Whan, Sustainability Director at GlobeScan.  Most research indicates that a common claim by consumers is that they would be more likely to choose environmental products and engage proenvironmental behavior if 1) company claims were more credible and their information more trustworthy; and 2) they understood what sustainable behavior actually entailed.

  Aspirationals believe their buying decisions do affect producers, hence Aspirationals are considered empowered consumers; 53% state they would buy more green products if this connected them to a community of peers, arguably, a family value;  90 % of Aspirational consumers say “I believe we need to consume less to preserve the environment for future generations” (92%), compared to 75% of all consumers, and that they are “willing to pay more for products produced in a socially and environmentally responsible way” (91%) compared to 64% of all consumers.
"Aspirationals want something to believe in and they want brands to stand for something bigger than a product or service. Give them an inspiring ethos. Bring a strong point of view. Build partnerships that enrich your brand experience and advance the positive impact you want to cultivate.

This goes beyond traditional brand visioning, if you will. What’s new here is that Aspirationals don’t want flat, empty statements conveyed in slick ad campaigns. They want brands to embody a deeper purpose."
This group also states that they believe that responsible environmental behaviors are very important, and feel they should actively search out information on theInternet, but they think that the companies themselves are responsible for convincing them that their products are produced by best ecological practices and would foster a vibrant ecological future. They also await guidance on how to continue to enjoy shopping while actually consuming less.

At first blush, this market group appears to be a runaway consumer group. Upon consideration, however, a carefully researched, standardized, and articulated ecological profile published online at a company website designed to appeal to a consumer group motivated by image, peer connection, and the right "cool" cause could provide tipping-point information that educates, motivates and reinforces this group towards sharing stewardship responsibilities for the earth as well as its privileges.

For consumers in developing markets such as China and India, credibility of claims for a company's sustainability performance as well as a lack of understanding about what actually makes products environmentally and/or socially responsible are the two principal deterrents to green purchasing.
On the producer side, information needs to be true, comprehensive, presented using easily understood and credible, globally standardized indicators for water use efficiency, carbon footprint, amount of recyclable energy used to produce a bottle of wine or other product, and other indicators of Best Practices (renewable energy use, water efficiency use and capture, waste reduction and on-site recycling, greenhouse gas emissions, biodiversity, and community engagement.) Indicators should be as metrical as possible and appropriate, since everyone understands numbers from 1-100. and increasingly, people understand the meaning of more complex indicators such as a water footprint of 550 gal per 750 ml bottle of wine or 5 kg of CO2 per bottle of wine over its life cycle from cradle to landfill. producers need to be open to input from their target audience, they need to communicate regularly, transparently,  and openly.

The Trend towards Better and Less

Gallo has a finger on the wine trend towards less and better, as evidenced by aggressive incursions into the premium wine market, e.g.,  buying premium vineyards both in Central and Northern California. The Aspirationals' belief that we need to consume less, to be defined by style, and desire to become integrated into a peer community could all be integrated into realization that responsible ecological practices and purchases can foster a vibrant ecosystem as well as a committed global community well-connected through common practices, ideology and social media.. Fine wines tend to be created  with respect for the soil, the vines, the idiosyncracies of terroir, dry farming or sensitive irrigation practices, low or no chemicals, cover crops, natural predators, minimal chemicals, skillful winemaking, and other holistic, ecological sound practices that could be shared online to model for an attentive community looking for leadership.Frequent reinforcements would be a necessary part of such an innovative project.

The current global population of over 7 billion consumers and producers all are biologically driven to strive for the best possible quality of life and lifestyle. While the classical trifecta of decision-making values traded off in purchasing (price, product performance or value, and credibility) continues to operate, consumers in developed markets are highly affected by relatively new motivators such as convenience, shopping habits, brand loyalty, and ratings. Consumers in emerging markets are also affected by additional motivators: family, community and peers, information acquired through social media, style and status, and a respect for and identification with nature and the unbuilt environment.

China is now the world's leader of red wine consumption as well as the country with the largest number of Aspirationals, who are seeking inspiration, status, and connection. A  fine-wine project tailored to this group would be ground-breaking. The purchasing decision drivers identified for consumers in emerging markets may be significant because in developing countries the consumer-oriented capitalistic/individualistic biases have yet to replace all the old values, and those characteristic of collective societies persist albeit attenuating rapidly. There are fewer cars and people are used to walking to pick up food and drink, so driving less, producing less CO2 per capita per meal consumed, is still possible. Transportation of every bottle of wine from the winery to the table by vehicles can add  another 3-6 kg of CO2. Consumers in emerging markets have not been separated form birthplace and family by as many generations as those in developed markets, so ties to place and people may operate more effectively as motivators for routine actions.

As an overarching framework, above all, consumers are influenced by how well their purchases embody their lifestyle, which includes income, resources, shopping habits, convenience, loyalties and other in-the-moment influences.

Fine-Wine Communities as Leaders

When individuals lack credible information to motivate their actions, whether because of time or other factors such as trust, they will often follow a trusted leader. When Angelina Jolie had a precautionary double mastectomy, many more women followed. Consumers pay attention to what celebrities and other leading figures do and in many cases, follow their leadership. For numerous species, this phenomenon has been studied under swarm intelligence, wherein the emergent behavior outstrips the added smart behavior of each individual in the group.

The sustainability movement, for reasons presented above, lacks high-performance followers, and inferably, sustainability also lacks high performance leaders.We propose fine-wine makers as one group of de facto leaders who understand and embody how Best Practices in are fundamental to Best Quality out.So far, the winemakers who produce the best wine--as a generality--have not published their practices and have not engaged consumers in practices that ultimately will affect terroir and the vines, the soul of wine quality .

Quadfectas and beyond

In the consumer culture dominating the United States and elsewhere, people express themselves through what they buy. Shopping for deals  is a pleasurable, often social activity. This culture of consumerism drives people to make purchasing decisions that not only make them feel good, but also portray a particular image to others, summarized as lifestyle. Better than anyone, Gallo understands their role as influential player in the global wine market. How they execute this role could affect the future of all producers and consumers.

Sunday, May 1, 2016

Sustainability 's no Akaba!

Sustainability's No Akaba

Akaba was an effective rallying cry for Lawrence of Arabia and his supporters. It symbolized an unorthodox attack by an unlikely force the British intelligence officer T.E. Lawrence and the Howeitat, led by Auda abu Tavi with an improbable approach from the  desert side on the port of Akaba, which is now in Jordan. Then, Arabs were fighting for freedom from the Turkish Ottomon Empire, which during World War I was a common enemy for Arabs and the British. Both British and Arabs had been stalemated until Lawrence led the Arabs to victory on July 6, 1917. Once Lawrence brought word of the capture of Akaba to British headquarters in Egypt, the British Navy supported the Arab Army through Akaba as a port of entry.
“For months Akaba had been the horizon of our minds, the goal.” —T.E. Lawrence

The Inhospitable Landscape of Sustainable Development

Like the trek to Akaba, the journey to sustainable development requires traversing a very inhospitable  landscape, but victory has yet to be won and  and the tribes remain unengaged. The call to action has been answered primarily by a host of researchers exploring the gap between what people say they want and would like to do and what they actually do.

The sustainability concept emerged from the The Bruntland Report in 1987 as one outcome of a drive to encourage countries to pursue what was called sustainable development, which was intended to mitigate the widespread ongoing environmental degradation that seemed to accompany economic development. Since then, sustainability has been considered not only a rallying cry and a goal, much as Akaba was for Lawrence and the Arabs, but also a business agenda, a methodology, a philosophy, an ethic with organizing principles for economies in the 21st century, as well as the source of major controversy and soul searching.

The Bruntland Report provided a working definition of sustainable development that made development the topic noun and sustainable a modifier, creating an oxymoronic engine that thought it could but never will:  "development which meets the needs of current generations without compromising the ability of future generations to meet their own needs."

As is infer able from runaway consumerism--in which the end of shopping is the pleasure of shopping--the concept of needs turns out to be highly malleable, the lovechild of advertising. For consumers in developed economies, needs have little to do with basic survival. Development for the past five hundred years has been about growing GDP and not humanitarianism or stewardship of the earth.

Succinctly put in the sustainability blog post by KC Bell, the first director of SFU's Sustainability at Simon Fraser,

"When we talk about sustainable development, we are really yoking together two ideas that may be irreconcilable: our established notions of development and our emergent awareness of sustainability.

Our economic model for development is wholly predicated on growth: growth in demand met by growth in supply ad infinitum. We in the developed market economies consume resources with unequalled voraciousness. Our marketing machines then relay images of our appealing consumables and their associated “lifestyles” around the world in hope of creating larger markets and more active consumers. They succeed, and so we export consumerism to those who are now competing with us more successfully for access to resources. The BRICS countries are the prime examples: Brazil, Russia, India, China and South Africa, although rising middle classes defined by their ability to consume are a global phenomenon.

Gross consumption of resources is our culture’s dominant, almost exclusive, way of understanding “development.” Linking it with “sustainable” simply misdirects us to believe that somehow we can continue to rely on “growing” our economies as we have until now and still magically achieve a sustainable society."

 Very few people understand what environmental sustainability really implies for day to day living: reduced consumerism, which implies a change in life styles and radical transformation of the producer-consumer models, which would reflect a change in what we value and how we act.
Sustainability's Fatal Framing

Intuitively, sustainability suggests keeping on. As a concept, the term sustainability refers to a balance between the rate at which a particular resource is depleted and the rate at which it is replenished. Development using current models refers implies economic development, which as it currently exists depletes resources faster than they can be restored. Keeping on, therefore, means reducing future resources and reducing opportunities for the better quality of life that might be bestowed by those resources. Keeping on the current development path means a trek towards a precipice.

For different individuals, populations, industries and countries, including the world's biggest producers as well as developing nations, keeping on rarely means sustaining either vibrant ecosystems or the highest imaginable quality of life. The top 1% of the population in California make over $438,000 a year, an income that conceivably could support a high quality of health, home, lifestyle, community, stimulation, adventure, and possibly even work. For 99% of the world, however, sustainability makes no sense, as the most desirable quality of life imaginable is yet to be achieved.
While projections about the number of people the earth can support vary, most scientific studies show that  the 7 billion people living the consumptive lifestyle so widespread in industrialized nations like the United States, Western Europe and  Japan  is unsustainable, but this consumptive lifestyle is the prevailing model for all developing countries. The reality is that continued consumption habits (shopping for the joy of shopping as a pleasure without measure of what is bought and consumption as expression of self) are at the heart of consumerism, resource depletion, and Climate Change. In short, the number one motivator of pleasure in two of the most important segments of consumers by numbers in both developing and developed nations is unavoidably the root of catastrophic failure of ecosystem vibrancy and the quality of life we all are biologically driven to strive for.

Research on the Gap 

Research indicates that eco-labels confuse consumers and exacerbate distrust sustainability claims.

Previous studies have clearly shown that even though individuals say that they understand the gravity of environmental issues, most fail to follow through with green purchases or significantly green practices. Information about environmental problems and how to avoid them does not lead to engagement in more green practices.  Even consumers with high levels of environmental concern and awareness do not always purchase green products or engage in best ecological practices.

While consumers claim to trust certifications as the most reliable information sources regarding company environmental behavior, they also tend to disregard this knowledge when purchasing.  Consumers state that  they would buy more green goods if they believed company claims, but these same consumers indicate that company claims on websites or promotional materials are the least trusted sources of sustainability. Further, when making purchases, consumers increasingly consult peers and social media rather than company websites.

Most people cannot explain what sustainability implies for the behaviors of either producers or consumers. Recycling is the most common proenvironmental behavior, but what is recycled is a good that was consumed and most probably was not a basic need. The recycling infrastructure is well-established, with blue cans everywhere and social disapproval for littering, but nowhere are there signs promoting reduced consumption. While there are many explanations for the gap between intentions and behavior, in short, most people are insufficiently motivated and encounter too many obstacles to do what they know is the right thing to promote a high quality ecological future.

the BBMG Study of Emerging and Developed Market Consumers

The most interesting study for this post, with its underlying mission of engaging consumers and producers alike in fostering vibrant ecological systems, is a cross-national study of consumer attitudes, values, motivations and behaviors developed by BBMG, GlobeScan and Sustainability using advanced statistical modeling. Their findings indicate that across all populations surveyed, social relationships--family, friends, community, peer groups--are the most highly valued, at least as stated by consumers.

In traditional markets the canonical trifecta of price, performance and credibility has remained the matrix driver, with relatively new factors such as overwhelm, lifestyle, ratings and reports, and appearance/style increasingly affecting purchasing. According to most recent studies on consumer purchasing in developed economies, key motivating factors for consumers today are the best quality (product performance) for the price, the lifestyles suggested by specific purchases to both purchaser and influential groups, convenience factors such as habit and accessibility, and the joys of shopping as an activity, which suggests deeper motivations. Relatively recent research into emerging markets suggests that the canons of price, performance, and credibility no longer accurately predict buying behavior.

Most studies tend to classify their study populations into categories, as does the BBMG Regeneration Consumer study, jointly developed by BBMG, GlobeScan and SustainAbility study. It identified four consumer groups from 6224  online respondents from Brazil, China, Germany, the UK, and the US along a sustainability spectrum starting with already committed environmental Advocates, who make up about 14%of the surveyed population;  Aspirationals 37%, Practicals 34%, and Indifferents, 16%. The segment the investigators felt most likely to develop new proenvironmental behaviors were the Aspirationals, with a key motivator of Style and core value of product efficacy

The New Persuadables

Consumers fail to behave according to what they say they value most for many reasons, most of which fall into the categories of 1) situational obstacles affecting the purchasing such as time, money, convenience,  and 2) insufficient motivation to make a specific purchase, which includes habitual purchasing patterns, special deals on products, recents ads, peer pressure, lack of belief in making a difference, lack of knowledge of how to best address Climate Change and ecological degradation with limited personal resources, and a desire to express themselves with specific product purchasing (style, peer and celebrity values).

Two of the groups identified by the BBMG study stand out as test cases for removing obstacles and providing sufficient motivation: Aspirationals and Advocates, both found in already developed markets as well as emerging markets. Aspirationals in developing markets are conisdered by the reseachers to be the most persuadable, possibly in part because their collective cultural values are more recent and more affecting than for the Aspirationals in developed countries such as the US, where individualistic values and processes dominate.

The largest group, found with the largest populations in India and China, is the Aspirationals.  More than half of this group indicated that they would buy more sustainable products if this behavior were to connect them to a community of peers with shared values. Their key motivator is style, and most important lever their community of peers. Consumer reviews and ratings, friends, and family provide the source of most trusted information (in addition to certifications) regarding company environmental practices, and 82% indicated that they would buy more sustainable products if they performed as well or better than their current brands. Shopping is their signature behavior, and they enjoy new products and experiences.Aspirationals actively search out information on the Internet. They expect companies to convince them that their products are produced using proenvironmental processes and  to persuade them that practicing green behaviors is the right thing to do.They state that they feel responsible for the environment and would become more proenvironmental if company claims were more believable. This group could be influenced with strategically provided information in social media and marketing.

The second group of possible persuadables are advocates who already have de facto leadership in identifiable groups. The leadership-followership phenomenon is a social fact of life, withtwo recent remarkable examples; the increase in double mastectomies after Angelina Jolie's well-publicized precautionary surgery and the increase in sales of Lincolns following McConaughey's film and Lincoln ads.

The next post in this two-post series on engaging consumers in sharing stewardship responsibilities looks at the fine-wine community as promising models and leaders for Aspirationals in both developed and developing economies. Gallo winery, the largest producer of wine by volume in the world, is considered as a  model of savvy consumer marketing.

While sustainability's no Akaba, the fine-wine community could be stewardship's Lawrence of Arabia.