Sustainability in Wine - Part I: Why Wine is Different
The wine category is, to put it tactfully, different in many ways. No more so than when it comes to its relationship with the environment. Part one of this month's four-part briefing on environmental sustainability in the wine sector puts that relationship into context.
When examining how the different beverage categories have approached the environmental sustainability challenge, the difference between wine and beer, spirits and water/soft drinks is immediately apparent.
As has been often reflected in the investment strategies of the major beverage corporations, wine is something of a case apart and, interestingly, some of the factors that made it a more problematic investment also have a bearing on why the approach to environmental sustainability is different.
Wine has a far more fragmented production base and the sector has seen markedly less concentration than beer or spirits. While all beverages are produced using agricultural raw materials, the wine market can certainly be said to have the closest links with its agricultural supply chain of all the drinks categories.
Not only are the links between those who grow the grapes and those who produce the wine extremely close, they are often one and the same entities. Even the very largest wine conglomerates own vineyards, and owning and cultivating vineyards is extremely common among the SMEs involved in wine production.
Large companies in the beer and spirits sectors recognise the importance of their agricultural supply chains and, particularly as environmental sustainability has risen up the agenda, seek to assist the development of their agricultural suppliers to mutual advantage. However, the links are nowhere near as strong as in wine, where agricultural origins can be said to be a defining characteristic of the product, pervading every aspect of the market, including the consumer consciousness and how wine is marketed.
Nothing embodies this more than the concept of "terroir", a tricky term which has often defied precise definition. It has been used much in the French wine industry but is a notion that is applicable to any wine region.
While terroir has human as well as environmental aspects, the term clearly embodies the idea that a wine owes its existence - and any marketable properties it may have - to the land it is born from. The idea that wine and any entity that seeks to profit from wine must safeguard the natural environment that makes its production possible could not be more clearly articulated.
Olivia Tyler, group manager corporate social responsibility and vintrepreneur at Treasury Wine Estates (TWE), had worked at two other beverage companies before taking up her current position and says the close links with agriculture are the "biggest difference" between wine and the other categories. "The connection with the agriculture and the land is actually the strongest I see," Tyler adds.
Michael Othites, senior VP production management at Constellation Brands, says the pervading sense that wine is a product "from the earth" was the first thing that struck him when moving from food and beverage into the wine sector 17 years ago. Environmental sustainability, he says is "so intrinsic to the wine itself, it's just paramount". Others working in the sustainability field in the wine sector have made similar observations.
The sustainability challenge for the food and beverage sectors can be seen as a combination of optimising resource efficiency in the production process with minimising environmental impacts in the value chain through partnership and collaboration with suppliers and other contractors. To do this, a company may use its influence and expertise to assist commercial partners along that value chain in mitigating environmental impacts.
However, the work has typically begun 'within the four walls' of production units and developed to encompass the supply chain.
Often, the task of improving resource efficiency in the production unit is simply good business with a coincidental environmental benefit. Making best use of water or energy resources or reducing waste provides a cost efficiency benefit. In cases where this is purely derived from better management systems, this is what is often termed the "low-hanging fruit" among environmental challenges. Even where substantial capital investment is required to improve efficiency - for example, with the installation of plant - a strong business case can easily be made.
The supply chain piece - both the quantification and then the reduction of environmental impacts - represents a greater challenge. Some companies and industries are further along in this process than others, but today almost all would acknowledge this is where increasing effort has to be focused.
By dint of its generally shorter primary agricultural supply chain, and the historically close cultural and physical links between what could be termed the 'agricultural' and the 'processing' elements of the industry, the approach for wine has been a holistic one, extending from grape cultivation all the way through to the end consumer, from the outset.
Many would say this actually puts the wine industry "ahead of the curve". Michael Othites suggests the wine industry has had "a better starting place" in terms of sustainability, but observes the same pattern of expanding from areas under companies' immediate control into the broader value chain. He says wine consumers "are asking the same questions" about sustainability as those in other sectors.
What it certainly means is that the wine sector's drive for greater environmental sustainability has a slightly different look from the other sectors, following a distinct model of its own. In particular, it has meant that generic trade associations are playing a critical role in the industry's overall sustainability mission, a facet of the industry examined in detail later in this management briefing.
Quantifying water and carbon impacts in the wine industry
According to BIER's report, Water Use Benchmarking in the Beverage Industry, water-use efficiency varies widely across different winery facilities, from 1.77 litres per litre of wine to 18.60 l/l.
Average water use across the sample of wineries was 3.00 l/l in 2008, 3.63 l/l in 2009 and 3.93 l/l in 2010. This compares with a 2010 average water use ratio of 21.86 l/l for its sample of distilleries and 4.28 l/l for breweries.
Interestingly, wine was the only one of the beverage sectors that did not show an improvement in water efficiency over the review period. This was not water footprinting research, but focused instead on water used in the winery, principally in the crushing and pressing of grapes, fermentation, storage/ageing and bottling of wine.
As will be discussed later in this briefing, the BIER membership comprises primarily spirits, beer and soft drinks producers. Wine production is only represented because some of the spirits groups have wine production among their assets. For this reason, wine represented the smallest dataset of all the water benchmarking studies that BIER has conducted.
Nevertheless, BIER director Tod Christenson believes the study, which covered some 35 facilities across a three-year period, would not be "too far from being representative of the industry".
BIER has also conducted carbon footprinting research into the wine sector. It found the overall carbon footprint for a bottle of wine in Europe to be 1,286.3 grams of CO2 per 75cl bottle. In Europe, the breakdown in the carbon footprint was:
- 45% for the bottle
- 10% from grape growing
- 24% in bottling, maturation and crushing
- 9% in cardboard packaging
- 5% in transportation, and
- 4% in fermentation.
In BIER's North American production model, the footprint was estimated to be 1,783.3g of CO2 per 75cl bottle:
- 33% for the bottle
- 17% from grape growing
- 12% from energy use in bottling, maturation and crushing, and 28% from energy use in fermentation.
The Conseil Interprofessionnel du Vin de Bordeaux (CIVB), which represents France's largest wine region with a total growing area of 100,200 hectares, conducted a carbon footprint study in 2008. This research revealed the region's total carbon footprint to be around 223,000 equivalent carbon tonnes. For a full breakdown of that figure, see Part Four of this briefing.
After nearly 20 years of working in the beer and spirits categories, Andrew Carter pitched up at Treasury Wine Estates (TWE) last year charged with leading the group's Europe, Middle East and Asia reg...
Alcoholic Drinks in Canada industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). Th...
Whether global warming is fact or fantasy, the wine world is hit hard whenever temperatures don't behave themselves. To mitigate such circumstances, some producers are looking to lesser-known regions ...
Earlier this week, brand valuation consultancy Intangible Business released the results of its latest survey of the world's spirits brands. Here's a look at the top ten, along with the methodology use...
- Why Chinese beverages won't conquer the world
- Can Coca-Cola fuel SABMiller's soft drinks story?
- Is “Craft” the Next Big Thing for Soft Drinks?
- Petropolis Finally Moving into SABMiller's View?
- Gin: Plymouth's from Plymouth, London's from...?
- Diageo confirms Australia abv drops
- Pernod launches online Ballantine's "experiment"
- Global vodka sales slip in 2013 - research
- SABMiller returns to Brazil with Petropolis tie-up
- Smirnoff tops UK shopping list - figures
- Global vodka insights - market forecasts, product innovation and consumer trends research
- Early Signals: future scenarios that will drive consumption and product innovation over the next five years
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- The IWSR Forecast Report - 2014-2019 Global Review
- Global Tequila Market 2014-2018