Spotlight - Fairtrade wine sales gain momentum
The market for fairtrade wine is increasing as more wineries in countries such as Chile, Argentina and South Africa gain fairtrade certification. However, writes Monica Dobie, the market for fairtrade products in other alcoholic drinks categories has been slower to develop.
Ethically conscious consumers are spending more money on certified fairtrade wine, but the market for other alcoholic drinks accredited with fairtrade certification has been slower to develop.
Fairtrade wine volumes have grown considerably, notably in the UK where, according to the London-based Fair Trade Foundation, consumption is the highest. According to the foundation, worldwide sales volumes rose to 1.39m litres in 2005, of which the UK accounted for some 1.12m litres, from 618,000 litres in 2005.
Fairtrade wines currently being marketed include Chile's Los Robles Fairtrade Carmenere and Argentina's Vitivinifruticola de la Rioja. Fairtrade fruit juices and rum are also slowly building a following, such as Sainsbury's So Organic White Rum, Utkins Fair Trade Premium White Rum and Calypso Fairtrade Orange Juice. Westerham Brewery's William Wilberforce Freedom Ale is one of two fairtrade beers currently on the market. Among the spirits sold under the fairtrade banner in the future is Broughton Pastures Fair Trade Organic Chocolate Liqueur, and more could follow.
Certified fairtrade suppliers are supposed to pay disadvantaged workers in developing countries a fair price for their goods, regardless of market fluctuations. This price is generally higher than conventional trade wages in a particular country, with premiums being channelled into social development schemes in the communities for workers and their families, particularly in the areas of healthcare and education.
To gain fairtrade accreditation, working conditions should be sound and the management is supposed to be transparent, from the production of goods throughout the supply chain, to protect the integrity of the certification. Fairtrade schemes also encourage good environmental practice and sustainable production.
Despite the current British domination of fairtrade drinks sales, the international certification of fairtrade goods of all kinds is overseen by the Germany-based umbrella organisation, Fairtrade Labelling Organizations International (FLO). It sets detailed certification standards and approves fairtrade certification for food and drink producers.
One key principle for the wine sector, according to the London-based Fair Trade Foundation is that all fairtrade wine sold today is produced in the country where the grapes originate. However, this is not a fixed rule. Under fairtrade certification rules, a main ingredient of a product can be shipped to other countries to be processed, as long as the supply chain is well run and meets FLO requirements on workers' pay and conditions.
"People think if they're going to enjoy luxury products like wine, they'll enjoy them better knowing that the people who make it are receiving a fair price and that they have access to health and education," said Fair Trade Foundation spokesperson Eileen Maybin, who attributed strong UK sales to the high level of consumer awareness about fairtrade resulting from the numerous campaigns on the issue for other products.
However, Maybin refuted claims that supermarkets charge a premium for fairtrade wine to exploit more money from ethically conscious consumers. "Supermarkets tell us that they treat fairtrade wine in the same way they treat conventional products, (and) that they do not mark them up," she said.
Despite progress in the UK, Maybin doubts fairtrade wine will rival the success of fairtrade coffee because of the large market share of European-produced wine.
At present, most fairtrade wines are mid-priced, with Chilean brands the most acclaimed critically. The minimum price for grapes producing fairtrade- accredited wines in Chile and Argentina is 25 cents per kilo, while in South Africa it is 14 cents. This includes a premium of 5 cents per kilo on all grapes for social or business development.
In response to the suggestion that some companies engage in minimal efforts toward social or environmental responsibility simply to enhance their public image - so-called "green washing" - Maybin is philosophical. She believes this does not have any negative impact on the fairtrade concept as such, because fairtrade products have to meet the necessary criteria. Therefore who is marketing them and why is not the most important consideration. "It doesn't matter who is selling the fairtrade products," says Maybin, "because they have to conform to our rules and standards and there is no way of short circuiting that."
The first country to receive fairtrade certification for wine was South Africa - in 2003. And there are now 20 FLO-certified wine producing estates or farms, which are grouped around five wineries. The total production capacity of the producers amounts to around 18,000 metric tons of wine grapes. Around 1,900 permanent and non-permanent workers are employed to work on these certified estates.
In addition to fair trade benefits, a legally protected participation of at least 25% in these companies is given to workers, under the Black Economic Empowerment Policy, a government initiative aimed at increasing land ownership by blacks.
The FLO began certifying fairtrade Chilean wine in 2004 and there are now five fair trade wine producers in Chile. The overall production capacity of Chilean FLO producers is now 14,000 metric tons of wine grapes.
Roughly 530 wage workers and cooperatives members benefit from fairtrade wine business in Chile. Meanwhile, one Argentine wine producer was granted fairtrade certification in February 2006 in the La Rioja province, while ten more from the Mendoza region are applying for accreditation.
Chris Losh attended three UK wine trade events this week and found that the most interesting and perhaps the most important – a tasting of Fairtrade wines – attracted the poorest turnout, indicating t...
Acquisitions have transformed CL Financial from the owner of one very famous but small-scale bitters brand into a player on the world spirits stage. Having recently shored up two contrasting acquisiti...
The market for fairtrade wine is increasing as more wineries in countries such as Chile, Argentina and South Africa gain fairtrade certification. However, writes Monica Dobie, the market for fairtrade...
The Indian spirits sector has undoubted growth potential, on the back of a growing economy, an expanding middle class and rising disposable income but international companies face many obstacles as th...
Apostrophe Brands' spiced rum Kilo Kai has had a new logo and packaging designed by San Fransisco firm Turner Duckworth....
Pernod Ricard is considering acquisitions to strengthen its position in the US....
Patrón Spirits Company has finalised a distribution deal for the Czech market with Kratochvílovci....
Bacardi USA has launched an addition to its flavoured rums stable....
- Pernod Ricard 's first-half results - Preview
- Pernod Ricard's H1 performance by region - Focus
- Heineken's FY performance by region - Focus
- Carlsberg's full-year performance by region
- Forget Baby Boomers at your peril - Consumer Trend
- Asahi Group lines up Grolsch, Meantime, Peroni buy
- Pernod Ricard targets US through unit, exec switch
- William Grant & Sons' Ailsa Bay - NPD
- SABMiller's Europe chief to join Britvic board
- Asahi Group to buy Grolsch, Peroni from SABMiller
- Global travel retail insights - market forecasts, product innovation and consumer trends
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global Whiskey Market 2016-2020
- Emerging Drinks Industry Trends
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research