Fairtrade wine may have some way to go to catch up with flagship Fairtrade categories like coffee, tea and bananas, but it is showing growth across a number of markets, and strategists believe that as the sector scales up reservations raised by some wine critics over the quality of the wines will diminish. Ben Cooper reports.

The growth in sales of Fairtrade goods across a range of developed markets is one of the most tangible manifestations of the rise in ethical consumerism. So far, however, truly significant progress has only been observed in a few sectors, such as tea, coffee and bananas.

Fairtrade wine remains at a comparatively early stage, but there are signs that this sector is gathering momentum, and there are strong indications that wine could prove an ideal product for Fairtrade development.

The progress in the UK, a seminal market for the Fairtrade sector generally, is particularly encouraging. The Fairtrade Foundation, which certifies the Fairtrade mark in the UK, reports that volumes of Fairtrade wine rose by 47% in 2007 to 3.5m litres. According to Nielsen data, the Fairtrade wine category was worth around GBP19m in 2007, representing a little less than 1% of the market.

The Fairtrade Foundation is affiliated to Fairtrade Labelling Organizations International (FLO), along with some 20 other national certification schemes. FLO collates data from all its member organisations to give a clear guide of the progress of the Fairtrade sector globally. According to FLO, estimated retail sales of Fairtrade-certified products across all its markets rose by 47% in 2007 to EUR2.3bn. While FLO's is not the only ethically-sourced labelling scheme, it is by some way the largest, and this is certainly the case for wine.

The significance of the UK in the global Fairtrade market - the UK accounts for just under a third of the total market with estimated retail sales of GBP493m in 2007 - is underlined in the wine category with the UK representing around 61% of wine sales in FLO network.

However, the growth trend for FLO as a whole is running ahead of the UK as other countries increase their wine sales, albeit from low bases. Fairtrade wine volumes across the FLO network rose by around 80% to 5.74m litres in 2007.

Volumes in Germany increased by 36% in 2007 to 323,000 litres, while volumes in the Netherlands reached 445,000 litres last year. The Fairtrade certification scheme in Finland, meanwhile, predicts that volumes of Fairtrade wine could increase by as much as 80% in 2008 from the 2007 figure of 124,926 litres.

The success already seen and the optimistic forecasts are borne out of a belief that wine makes an ideal product for the Fairtrade model. First and foremost this is because of the wine consumer's interest in where a product comes from, how it is made and who has made it. The 'terroir' concept in French wine is based on both geographical and human characteristics, such as the heritage and traditions of a winemaking region.

The marketing of Fairtrade products is often built around how buying the products at a fair minimum price has affected the lives of the producers, and the proposition is very much based on bringing the consumers closer to the producers. The contention is that among wine consumers there is already a keenness to understand more about where the product has come from, making it very well suited to Fairtrade marketing.

As Patricio Angonoa, UK commercial manager for Argentinean cooperative La Riojana, puts it: "Having a story makes wine particularly adapted to the Fairtrade concept. In general, wine consumers seem to like to be informed as much as possible about the product they are purchasing, and as Fairtrade gives the consumer a story that they can relate to it makes it an attractive and interesting element to the product being purchased."

The growth of wine exports from New World countries, such as Argentina, also increases the relevance of Fairtrade in this sector, as grape growers in countries like Argentina, Chile and South Africa are in many cases the kind of subsistence farmers that the Fairtrade movement is designed to help.

La Riojana was the first Fairtrade-accredited winery in Argentina, achieving this status in 2006, and has already seen rapid growth. Angonoa reports that sales in 2007 reached 3m litres, and anticipates pushing annual sales of Fairtrade wines to 4m litres over the next couple of years. Fairtrade wine now represents 10% of the cooperative's total production, and in addition to selling in the UK, the company also exports Fairtrade wine to Sweden, Norway, the Netherlands, Germany and Italy.
Emma Sundt, business development manager at the Fairtrade Foundation in the UK, agrees that the wine consumer's interest in product details helps support the Fairtrade proposition, while in the UK the generally heightened consumer interest in product provenance is also significant.

"I think wine consumers are very interested in where a wine has come from," Sundt tells just-drinks. "Wine is one of those products that you actively read the label both front and back and if that label triggers in the consumer's mind that people who grow these grapes are in the Fairtrade system, that is going to be a link to the consumer. Fairtrade is all about connecting the producers to the consumer."
However, some wine pundits in the UK have expressed reservations about the quality of Fairtrade wines. The Fairtrade movement is no stranger to such comments. In the early days, Fairtrade coffee was often criticised for being of inferior quality to its mainstream counterparts. Today, however, Fairtrade coffee has silenced those critics and Sundt believes that such reservations about Fairtrade wine will also diminish as the sector scales up.

"I think for me it is all about variety," Sundt says. "If you go back 15 years, taking coffee as a comparison, there was a stage when there were only a few. Today we have hundreds and hundreds of coffees. It's all about range, diversity and choice and with wine we're still at an early stage. But we are getting there with wine. There is an ever wider range of Fairtrade wines available.  We are getting more producers into the Fairtrade system all the time and we are seeing more diverse price points for wine." 

Sundt adds that "people won't repeat their purchases if the product is of a poor quality", but wine critics tend to make judgments in terms of price/quality ratio. Some Fairtrade wines may therefore have been poorly received because they did not compare well with similarly priced non-Fairtrade wines. Sundt points out that while some Fairtrade products have achieved price parity with their mainstream competitors, some will have a price premium.

"Consumers are happy with this," Sundt says. "The consumer sees true value in this [Fairtrade] mark. UK consumers are becoming aware of provenance and the sustainability of the supply chain. They are ever more using their values to influence their purchasing patterns. They are still looking at the price/quality balance but they also have to make sure their purchases are compatible with their values. The enthusiastic Fairtrade wine consumer is seeing the price/quality ratio in Fairtrade terms."

For Angonoa, the sales growth itself suggests quality is improving. "The fact that sales of Fairtrade wine have been growing seems to indicate that the public opinion towards the quality of Fairtrade wine is changing," he says.

One other facet of wine which makes it attractive to the Fairtrade movement is the fact that producers are effectively exporting a finished product rather than a commodity. One of the challenges for the Fairtrade sector is to return the highest proportion of the retail sale price to the producers but increasing the "value-added" element in some commodity crops is not at all easy.

As Rebecca Bond of UK Fairtrade marketing company Traidcraft, points out: "One of the things about Fairtrade wines is that they nearly all tend to be bottled in the country, so you're not just talking about the wine farmers who are benefiting from Fairtrade but also the people who work in the winery and the bottling plants. So the impact is being maximised in the producer country."