The only way is ethics
With ethics in winemaking becoming increasingly important, producers are faced with deciding whether to become Fairtrade certified, or to tell their consumers about their ethical practices via another method. Arabella Mileham reports
Ethical wine production is increasingly attractive to the trade, with the fall-out of a TV documentary last year only serving to highlight its importance.
The controversial documentary by Danish journalist Tom Heinemann, Bitter Grapes – Slavery in the Vineyards, which was aired in Denmark, Sweden and Norway in October, depicted a dark side of South African wine production. It was one that included alleged violations of labour laws, workers exposed to toxic pesticides without protection, squalid living conditions and an illegal apartheid-era system of payment in alcohol. The industry argued that the “selective” examples were deliberately picked to be sensationalist, and that film failed to recognise reforms made by South Africa’s wider wine industry over the past 20 years, or producers who were working to high ethical standards. Still, the coverage served as a reminder of the increasingly high standing of ethical production in the eyes of wine retailers and consumers.
After the documentary was aired, Danish supermarket chain Dagrofa pulled wines from one of the wineries featured. The Swedish government-owned chain of off-licences, Systembolaget, looked into worker abuse, according to African news site The Zimbabwean, and five farms were served notices by the Western Cape Department of Labour.
This reaction shows that ethical production matters – to retailers and to consumers. Indeed, it is on the rise, according to the Fairtrade Foundation, the UK arm of Fairtrade International. Consumers are increasingly aware of – and interested in – the way their wine is made. That includes provenance, organic production and environmentally friendly practices in the vineyard, ethical treatment of vineyard workers and the need to pay them a fair price.
Growing demand in a flat market is no mean feat, so the concept of fair trade is clearly persuading enough retailers and consumers of its merits to provide an extra fillip to producers. It’s a complex issue, but producers are not simply jumping on the bandwagon to avoid being damaged by negative publicity.
Fairtrade International is the largest global organisation promoting an ethical supply chain, with good visibility in the UK and Europe, but it is not the only body seeking to promote and certify ethical practices. Some producers say they can champion ethical values without the Fairtrade brand, that it only focuses on the social side rather than all aspects of ethical supply, such as concern for the environment and sustainable practices. Others argue the system encourages commoditisation of wine grapes, pushing quality into second place. While that might be OK for products such as sugar, bananas or coffee, it’s an ethos that runs counter to the aspirations of the wine trade, which strives to secure the best quality. With this in mind, are many ethically minded producers losing out by not going down the Fairtrade route?
Growing demand
According to Kate Willis of the Fairtrade Foundation, global demand for Fairtrade wine has continued to rise. The volume of Fairtrade wines in 2015 stood at 24.7 million litres, up from approximately 22m litres in 2014, with the UK accounting for nearly half (49%) of global sales.
Although the rate of UK growth has slowed since 2014, from 9% in 2014 to 3% in 2015, Fairtrade wines rose from 10.8m litres in 2014 to 12.13m litres in 2015 – good progress in a year when global consumption of still wine was in decline.
Other markets have also seen growth, notably the Nordic monopoly countries, where governmental directives dictate that imports are ethically sourced, whether through Fairtrade or Europe’s Business Sociale Compliance Initiative.
“It’s been a huge boon to Fairtrade wine,” Willis admits. Germany, the Netherlands and Belgium are also active, albeit with a smaller base, and Canada, another monopoly, sees strong sales of ethical wines (although not through Fairtrade). Nick Day of Argentinian Fairtrade producer La Riojana is also hopeful that this will spread to the US in due course.
“Over the coming years I also expect to see the US becoming more ethically, aware with opportunities available to those wineries that have the ability to access the market,“ he says.
Millennial demand
Miguel Torres Maczassek, general manager of Torres, points to the rising influence of the millennial generation to account for this demand.
“For the first time in many years, we have a generation of consumers that are not only interested in having a great quality product, they are most interested in knowing how it has been produced, and if it’s been fair through the chain of production, right from the ground to the table,” he says.
“In recent years we have also seen that there are shops and restaurants that are becoming interested in showing their own values that they want to communicate to the consumer. The reason for having Fairtrade or organic viticulture is a way to communicate about yourself, your shop, restaurant or company – I think this will increasingly happen.”
Some big brands clearly think that certification is the way forward – there has been an increase in big-name producers becoming Fairtrade certified. Willis lists First Cape, Journey’s End, Kleine Zalze and Accolade’s Kumala among those, many in collaboration with The Co-op, the UK’s largest retailer of Fairtrade wines, which has around a 66% share of the UK market (equivalent to around a third of global Fairtrade volumes).
“That’s been an interesting journey,” The Co-op’s BWS boss Simon Cairns muses. “It involves a brand owner using our expertise in terms of dealing with Fairtrade to allow it to convert those brands, so it’s an interesting synergy.”
La Riojana’s Nick Day puts the attractions of certifying with Fairtrade succinctly. “Being Fairtrade certified and having the blue-and-green Fairtrade Mark has brought our company recognition and distinction on the shelves.
“Without it our wine might go unnoticed and most probably would put us at a disadvantage against powerful multinational groups. It is likely that our wine would be condemned to the bulk business, limiting possibilities for us a company and for our growers.“
Part of that attraction lies in the wide recognition of the brand. A survey by The Co-op last year found recognition of Fairtrade in the UK at 95% – but consumers are less used to seeing Fairtrade wines than other products, such as bananas or coffee. A Fairtrade GlobesScan Report last year found that while nearly a third of UK consumers showed a preference for buying Fairtrade wines (27%), the visibility remained “stubbornly low” at 7%, compared with 69% for coffee.
But Torres Maczassek does not see this as a problem. “Fairtrade is still quite new in the wine scene; it is more known in other foods, but it is starting to happen in wine as it did with organic viticulture wines. In the beginning these were not so known or understood, but there are more now because winegrowers are getting certified. It helps to improve conditions, especially in the countryside,” he says.
Corlea Fourie, head of wine and viticulture at Bosman Family Wines in South Africa, whose wines are Fairtrade-accredited and who has been at the forefront of the movement to see workers on the family farm empowered, agrees.
“Fairtrade is a recognisable trademark and its goals are clear to the consumer. However, it is an accreditation, whereas ethical wine embodies more than just the commercials of selling wine.”
As such, the Fairtrade mark isn’t a necessity, some producers claim, arguing that the industry has a challenge to educate consumers about what an ethical wine is, rather than rely on particular labels.
“Although Fairtrade certification does help – especially in countries with weak social practices – it is not essential to be Fairtrade to be ethical,” Pedro Herane of VSPT Wine Group argues. “For example, at VSPT we strive to build our values based on integrity, and this value is reflected not only in our daily actions, but also in the guidelines of our businesses.”
It was this, he states, that saw VSPT named Ethical Company of the Year at the Drinks Business Awards 2014 – despite not having Fairtrade certification for its Chilean operations.
More than relying on a certification, people expect the company that endorses the brand to have outstanding social practices and commitment to be transparent and a good example to society,” he explains.
An ethical approach
For Torres Maczassek, an ethical approach has three strands: the price paid should be better than the market; a percentage of that price paid needs to used for social projects in the community; and the working conditions in the vineyard need to be ‘ethical’, which involves a long list, from the right tools to clothes to good health and safety practices.
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“In Europe it seems very logical, but when you go to other places, sometimes it is not so common,” he admits. The most important thing for viticulture to be sustainable, he argues, is growers getting a good price for the grapes. For example, when Torres started producing wine in Chile, it focused on País, a forgotten variety that commanded low prices of around 60 peso/kg, and raised the price paid to 200 peso/kg.
This price premium is linked to the pride producers take, bringing additional benefits in terms of quality, he argues. “When people in the vineyards are better paid, they put more care into the vineyard, and focus on making better-quality wine, rather than just having more quantity,” he adds.
“When you look from the outside, they may think it is complicated but it brings a flow to work that is a positive motivation to the company, and you achieve suppliers that are happier making better grapes without compromise. So it’s a win-win situation.”
Some producers say the price of licensing individual products (rather than being recognised for an overall ethos) acts as a barrier, but the organisation’s Kate Willis disagrees, saying help is at hand should producers need additional funding. “Cost shouldn’t be a barrier. If they make adequate representation they can apply for grants.”
She also points out that last year the organisation changed its licence fee for wine. “Before, it was based on a wholesale value, so licensees were paying more against a quality wine than for bulk, but now the licence fee will be the same if its bottled or bulk wine, so it’s a much fairer system and one that doesn’t discriminate against quality wine,” she explains.
But price isn’t the only problem some producers have with Fairtrade certification, claiming that while good in a limited scope, it does not go far enough. Torres Maczassek argues that Fairtrade needs to develop a more sophisticated, differentiated system for wine.
Commoditisation
“Grapes are not a commodity – there are different-quality grapes coming from different vineyards at different prices,” he says. “So the amount of money paid for the grapes needs to be higher depending on the quality of the grapes and this is key. If a winegrower decides to reduce production to get better grapes to focus on quality, he should be better rewarded than those who increase production volume but produce worse grapes.”
For Elena Carretero Gómez, director of corporate affairs and sustainability at Chilean producer Santa Rita Estates, this still doesn’t address the crux of the problem. She argues that certifications such as Fairtrade only relate to the social side of ethical production, and fails to address aspects such as sustainability and green initiatives. “Ethics are very important but they are only one part of where we have to work to be ethical,” she explains.
“Fairtrade is not the approach we take because we want to cover the other aspects, such as environmental and economic too.”
Carretero Gómez argues that the market is littered with certifications that are limited in scope, unable to satisfy customers’ full concerns, and have varying degrees of recognition throughout the world.
What suits some markets do not suit others – which is particularly difficult for producers that export to lots of international markets. Santa Rita uses the Certified Sustainable Wines of Chile certification, because it covers environmental and ethical practices, but she admits it is less well-known and sometimes is not enough.
“Each market is different,” says Carretero Gómez. “We export to 76 countries, and Fairtrade doesn’t always apply – in the US or in France, for example. Obviously I want to sell to the consumer, but they’re asking me different things in different countries,” she sighs.
“It’s very complicated for a business. How do you tell the consumer that you are ethical?” She argues that producers need a certification that is more broadly applicable to reflect their work across the board, but also a common sense approach that encourages collaboration between certifying bodies to raise awareness and arrange reciprocal-recognition arrangements in different markets.
Clearly, as ethical trade remains uppermost in the minds of consumers and retailers, the issues of certification and recognition for the ethical practices of producers won’t solve themselves. As Wines of South Africa and South African industry body VinPro pointed out in the furore after the Bitter Grapes documentary, collaboration between governments, trade unions, civil society, local and international partners and wine consumers, who expect progress, is key to helping the industry improve conditions – but maybe the certifying bodies themselves also need to widen their remit to better recognise the unique nature of the wine trade.
Trade Talks: Does Fairtrade do a good job in raising the profile of ethical wine, and how should non-Fairtrade businesses gain recognition for their ethical approach?
Pedro Herane, CEO, VSPT, Chile
“We have a challenge in educating our consumers about what an ethical wine is. Although Fairtrade certification helps, especially in countries with weak social practices, it is not essential to be Fairtrade to be ethical. As an example, at VSPT Wine Group we strive to build our values based on integrity, and this value is reflected not only in our daily actions, but also in the guidelines of our businesses, which as a result, gave us the honour of being recognised as Ethical Company of the Year by the drinks business in 2014, without having Fairtrade certification in our Chilean operations.”
Nick Day, Europe sales director, La Riojana co-operative, Argentina
“I would love to say that Fairtrade is not necessary today, but unfortunately, it is. It is not a charity; there is much more to it than that. It is about balance, sustainability and helping build a more harmonious future for our members, workers and their families. The Fairtrade mark does a great job in raising the profile of ethical wine in markets all over Europe but it needs proactive support from retailers to generate the sales and social premium necessary to really make a difference. We have been lucky to work with great partners where this has been possible, raising over $2.5m (£1.93m) in the past 10 years which has helped to really make a real impact in our region.”
Elena Carretero Gómez, director of corporate affairs and sustainability, Santa Rita Estates, Chile
“Fairtrade certification is a useful tool for consumers to verify the ethical traceability. Nevertheless, sustainability is more than the ethical aspects – it is the convergence between being environmentally friendly, socially equitable and economically viable. Fairtrade is only related to the ethical aspects of sustainability and not to environmental aspects. In addition, it is a certification for one single product and not for process. For Santa Rita, the Chilean wine industry and New World wine countries, sustainability includes three pillars – environment, social and economic – so we face the problem of every market demanding a different certification for each.”
Katie Jackson, Jackson Family Wines, USA
“We believe certification is incredibly important when it comes to being able to demonstrate to our customers that we practice what we are talking about. We currently participate in three major sustainability certification programs. In California, these are Sustainability in Practice (SIP) and Certified California Sustainable Winegrowing (CCSW), and up in Oregon, we participate in Low Input Viticulture and Enology (LIVE). Our certification programs are all sustainable programs, which means that they consider social equity a key component of their requirements. To that end, although each varies, they all require participants to meet rigorous standards around worker safety, health, and benefits, competitive wages, medical insurance, training and education.”
Corlea Fourie, head of wine and viticulture, Bosman Wines, South Africa
“Fairtrade is a recognizable trademark of which the goals are clear to the consumer. It is however an accreditation -whereas ethical wine embodies more than just the commercials of selling wine. I have found that Fairtrade works when the company sees Fairtrade as an integrated sustainable approach.”
Valérie Vincent, head of communication and marketing, Gabriel Meffre, France
“Yes, Fairtrade does a good job, but as the label is dedicated to improving the living standards in emerging countries, we have chosen to gain recognition through the assessment programme AFAQ 26000. Based on the ISO 26000 norm, this recognises the level of maturity of a winery/company on environmental, social and economic issues. We chose it because it better corresponds to our activity while being very global. Each employee in each part of the winery is engaged in doing better socially, economically and environmentally.”
Carlos de Jesus, marketing and communications director, Amorim
“Consumers with a defined social conscience will obviously be re-assured by Fairtrade activity and promotion. However, there are many more for whom the question of ethically produced wine is not as important because they buy on price. But the choice of closure is vital when considering ethically produced wine. We work with more than 15,000 wineries across the world to get across the message of cork being 100% natural, 100% renewable and recyclable. No other type of closure can make that claim.”
