It’s A Fair Co-op

06 May 2005 By db staff writer

d=”standfirst”>The Co-op has long been regarded as the supermarket with a conscience. Now it is raising the ethical bar  even higher with its Fairtrade wines, says Robyn Lewis

To say it’s all change at the Co-op would be an exaggeration but there is certainly an air of revival about the retailer these days. When I meet its wine development manager, Paul Bastard, and his team at their spring tasting there is much talk about the new store-wide licensing being put in place, which will allow for cross-merchandising through the store. There are also the new store designs, with lower shelving and better signposting, and the move to a coherent, single, national brand that should be gradually introduced (currently the store works across several different fascias, including Welcome Stores and Alldays). 

“Everyone knows the Co-op and everyone has preconceptions of what a Co-op store is like,” Bastard says, “but actually when they come into the stores and see that the offer is good, the prices are nowhere near as bad as maybe they thought and with the new Welcome and Market Town formats they are really nice to shop in, they are surprised. In the past the Co-op was considered a very nice organisation, which may have been rather backward-looking and not necessarily successful but our new mantra is to be a successful cooperative business, with each of those three elements given equal weight. So, at one point for example, in the late 1950s and early 1960s we had 25% of the grocery trade in the UK, we were more or less the Tesco of our day. But perhaps over time we forgot to be successful, and if you aren’t successful you can’t put into practice all these ethical policies we have anyway. So we have a renewed focus on getting that part back into the balance.” 

By “ethical policies” he is referring not only to the organisation’s history as a community-owned resource but also to the Co-op’s stance on ethical investing via its Cooperative banking arm, its innovations such as Braille on labels, pushing organic foods, and (something the wine department has been particularly involved with) the link with Fairtrade products.

“We’ve been selling Fairtrade wines for four or five years now, which was an initiative that extended from the whole Co-op ethos, really,” Bastard says. “It was difficult to start with, and there were mistakes made early on. Even before Fairtrade, we were selling a wine that we had been told was from the first black-controlled winery in South Africa, which was something we were very excited about. When I went out there, though, it became patently obvious that this was not the case, the place was run by a white lawyer with just one black employee who would say, ‘Yeah, I like that wine’ and that was the extent of it. I felt like a total idiot really but we did it in good faith and until relatively recently that was the sort of thing we came up against, the problem being that until now the Fairtrade mark has not been allowed on wine. So, we could sell wine that had been fairly traded but it couldn’t carry an accreditation mark. Thankfully that has changed now and I think we are coming to quite an exciting juncture whereby Fairtrade for us is really going to take off.” 

There are currently 10 Fairtrade wines in the range but Bastard and his team are looking to increase that, as opportunities crop up in other countries over the next year. He says: “Right now our Fairtrade wines are from either South Africa or Chile but we are looking at some developments in Argentina, which are very exciting and we’re looking to change the South African wines as more chances to become more involved in projects crop up. We are looking to get moreinvolved in the projects to which the money goes, so that we can report that to our customers. This is something that definitely appeals to Co-op customers, who are people who know that all our own-label chocolate and coffee is Fairtrade and who have sought that out. And beyond our core consumers it has an appeal too. At the BBC Good Food show, for example, most of the people who came up to our stand did so specifically to taste the Fairtrade wines.”

Cyprus avenue

By its own admission the Co-op is not “a company that jumps up and down and shouts about what we have achieved” but there have been other interesting projects aside from the Fairtrade initiatives. Bastard says: “We really do want to keep the wine range as interesting as we can, which isn’t always easy in a smallish range of 400-odd wines and a working range of 200 but we do try and we have had some success and that’s because we won’t be hidebound by what everyone else is doing. No one has followed us down the Cyprus route, for example, where we got involved in a project over there, put in an Australian winemaker and built it up to a 60,000 to 70,000case brand. We obviously keep abreast of market trends and we do gap analysis, and so on, but I always think if you accidentally find a magnificent wine and you’ve got it at the right price and it looks great and you can sell it then it doesn’t really matter what country it comes from.”

“I’ve always felt that what we’ve tried to offer is almost a multiple grocer experience within the limits of a convenience range. That’s the differentiation we have along with the Co-op brand, the Fairtrade and also some of the exclusive labels we’ve got. That’s different from just the usual big brands that you’ll find, especially within the impulse sector because I do see us as up against the impulse sector as well as the multiples.”

Because of this attitude the Co-op’s wine sales split does not tally exactly with the market average stats. For example, while Australia still holds top position, it is at a slightly lower 24% of sales – Bastard quotes Australian share in the multiples at nearer 28% – and California is in second place, which as Bastard points out, it isn’t everywhere else.

He says: “We are very strong in South Africa, very strong in California, very strong in Argentina – well above market figures – and that means we are relatively lower in Australia, relatively lower in France and slightly lower in Italy. So the immediate challenge for us is to take a long hard look at the Old World over the next year and ongoing. Our sales ratio now is 64% New World and 36% Old. In the past we’d have been delighted but now we are saying, ‘Yes, great but we could be getting a better ratio’. 

“Perhaps the range from the Old World has reduced over the years because there just haven’t been the concepts jostling for space that have come out of the New World. There just aren’t any really great brands from France or Italy in particular and that is a problem. On the other hand, we can sell a £9.99 wine just because it is called Chateauneuf du Pape, whereas we can’t sell an Argentinian reserve at that price; we can sell a French white at £8.99 because it is called Chablis and that is significant.

Funny animals

“We are a funny animal really, we are between the sectors and so I always measure us against both the multiples and impulse when I look at the stats. Though in my opinion you should always measure yourself against the best, so in terms of range and interest we still look at Oddbins. I know they aren’t quite the acme of wine retailing that they were once considered to be but they are still pretty good. For price I always look to the multiples. We don’t say, ‘right we are a convenience store and perhaps we are involved in top-up shopping so we can get 40p more for this’. As far as I’m concerned we put in a £3.99 wine because it is worth £3.99. 

“Now, when certain factors come up, like price rises or duty increases then we have to do exactly as all the other retailers do and take a stance. My view is always, right we need a £3.99 wine and so we re-source or re-negotiate, we don’t just put prices up because we are a convenience retailer. We expect to negotiate as toughly as any of our competitors.” 

With a renewed focus on the Old World, the Fairtrade push and that stance on maintaining prices, producers should be expecting some of that tough negotiating over the next year. The retailer with a conscience looks to be back in business. Thank goodness some things do change – or revive at the very least.