ETHICS: A force for good

Criticised on all counts, seemingly by all sides, the positive contributions made by the drinks industry often go unnoticed. Alan Lodge highlights the work done by firms with a strong social conscience to make the world a greener and fairer place.

Judging by recent press coverage, political discussion and general lamenting of the “breakdown of society”, it would be easy to conclude that the alcohol industry is the Darth Vader of the business world, causing chaos, pain and suffering for all in its relentless quest for galactic domination.

Hardly anybody outside the trade seems willing to look beyond the drunken teenagers rampaging through town centres or the problem drinkers taking up hospital beds and eating into government health money. If they did, they would find an industry that more than does its bit for the well-being of the world and the people in it, as well as one that is constantly striving to be at the forefront of ethical, sustainable business practices.

The potential for the drinks industry to cause damage to the environment, as well as consumers, is perhaps just as large as any other in the world. Billions of tonnes of glass bottles, used cork and other packaging materials are gobbled up and spat back out by the industry every year, but for many years now one of the key focuses of many businesses in the trade has been to reduce their environmental impact and continue to innovate and explore alternatives that can help alleviate this problem.

Then there are the workers in far-off lands, many of whom live just around or below the poverty line, who see their harvests snapped up by producers eager to get their latest products onto the shelves as quickly as possible. Increasingly receptive to the Fairtrade initiative, drinks companies are doing their utmost to ensure the lives of their workers, and the communities they operate in, are as pleasant and rewarded as possible.

Welfare state

Argentine winery La Riojana puts the welfare of its workers and their communities at the very heart of its philosophy and received the industry’s first Fairtrade certificate in the country in 2006. Walter Carol, export director, explains why the scheme was viewed as being so important to the winery.

“We see good ethical practice as one of our core values at La Riojana,” he says. “Since the formation of La Riojana cooperative in 1940, we have remained committed to our cooperative principles, by providing integral support to our individual members, producing and commercialising their production, and allowing them an adequate return for their raw material.

“La Riojana is situated in a poor, remote part of Argentina and it is vital that we do what we can to help improve the quality of life for our workers and growers. Our Fairtrade certification not only offers our growers a minimum Fairtrade price for their grapes, it also provides them with a Fairtrade premium to invest in social projects which will benefit the local communities.

“Since receiving accreditation in 2006, we have implemented two major projects, including the construction of a new water facility which has provided clean drinking water for the small isolated village of Tilimuqui. This was a joint project with The Co-operative that we began in April 2008.

“The next major project we have planned is the construction of a community hospital. These are substantial projects in anyone’s book and it is just fantastic that we have the opportunity and funds to implement them.”

The need to be seen as a socially responsible organisation is paramount in today’s world, with many consumers feeling more strongly than ever before about the welfare of those in poorer communities whose hard work goes into their glass of wine. Indeed, recent research commissioned by the Fairtrade Foundation shows more UK consumers than ever before – 70% of the population – recognise the Fairtrade Mark, up from 57% in 2007.

The TNS CAPI OmniBus findings also show understanding of the concept behind the Mark has increased, with 64% of the population linking the Mark to a better deal for producers in the developing world. Clearly, the message of Fairtrade is getting through.

The research shows it is also influencing everyday purchases throughout the country, with one in four UK shoppers now regularly buying products carrying the Fairtrade Mark.

“This research shows that the balance of public opinion is tipping in favour of Fairtrade where Fairtrade is seen as an integral part of a sustainable global future,” says Harriet Lamb, executive director of the Fairtrade Foundation. “More and more UK shoppers see Fairtrade as a simple, highly effective way to enable producers in the developing world to work their way out of poverty with dignity, receiving a decent return for their great produce and hard work.”

Communication nation

According to the Fairtrade Foundation, sales of Fairtrade wine are on the up. Last year the category grew by 37% from 4,500 tonnes to 6,000 tonnes of wine grapes.

So the evidence is there to suggest consumers are growing increasingly receptive to Fairtrade and other ethical issues. The biggest problem then facing drinks companies is how to capitalise on this increase in interest and ensure their message is clearly communicated to their customers.

There are many ways in which this is being done, but the most popular and seemingly effective method is probably the most simple of the lot.

“All of our mainstream bottles, such as Viña Sol and Sangre de Toro, now carry stickers promoting our environmental stance and our appearance on The Drinks Business Green List last year as a leading winery,” says Rob Buckhaven, UK brand manager for Torres at JE Fells. “We have also communicated our Drinks Business Green Company of the Year award via our signage at tasting events and wine fairs.”

Others, who perhaps do not have such accessibility to the consumer, rely on other traditional forms of communication to get their message across.

“We are proudly committed to being environmentally and socially responsible and we equip our customers with the ability and knowledge to pass on these ethical resolutions to consumers,” says Henry John, marketing manager at ViVAS, the joint venture between Bibendum Wine and 3663 First for Foodservice.

“As suppliers we are fully aware of the importance of monitoring carbon emissions as a business and we continually strive to reduce our carbon footprint. Due to the nature of our business we don’t engage directly with the consumers and so aren’t able to inform them in person of our ethical activities.

“For this, we rely on our professional sales force who conduct one-to-one consultations with our customers. ViVAS Sustain is our ongoing pledge to reduce the environmental impact of our business in all areas, whether that is in vineyards, more efficient logistics to transport the wine to the UK or simply by using a reduced weight bottle.

La Riojana’s Carol says that wine companies must embrace all forms of communication, both old and new, to ensure that the company is seen to be moving with the times.

“We realise the importance of communicating our ethical practices to the consumer, in particular showing the consumer the long-term benefits that the different Fairtrade projects are bringing our local communities where many of our workers live with their families.

“One of the best tools for communication is the internet, and for that reason we have designed a new international website which will give the consumer easy access to information, photos and videos taken of our social projects.”

At Mont Tauch, which places a Winegrowers for Sustainable Development logo on every bottle of wine made by its own growers, communicating to customers is viewed as essential to growing a brand’s reputation.

UK sales director Antoine Leray says: “The idea of brands being ethical or being made by ethical organisations is something that is becoming increasingly important to consumers and this has been reflected in their buying habits in a variety of sectors, particularly food, and as a consequence it is now also something that is becoming important to some consumers when
buying wine.

“Through their ongoing and daily commitment to sustainable development and the high visibility of the V-DD logo on every bottle of their wines, Mont Tauch is helping these consumers make informed purchase decisions according to their values when deciding which wines to buy.”

The French winery is committed to the long-term improvement of the ethical side of its business, but feels others need to do a little more to support their growers.

“More can be done to help the people who actually grow the grapes in the industry as it is increasingly at this level that people are losing out financially,” says Leray. “Being a cooperative, Mont Tauch’s growers are at the very heart of the co-op’s ongoing success.

“Our three dedicated vineyard technicians work alongside the growers all year to offer them technical advice and guidance on sustainable agriculture in order to help them achieve the best quality grapes they can and so receive not only fair, but the maximum remuneration possible, provided they meet the agreed criteria.”

Reaching closure

It’s not just the wineries that are aware of their responsibilities to the planet and its inhabitants. The cork industry has come under heavy fire in some quarters for its apparent disregard for forestry and the amount of wastage the industry is responsible for once consumers throw their used corks away.

It’s a battle of perception that the industry is facing head on. Victor Ribeiro, CEO of the stopper division at Amorim, says that ethics have always been at the heart of the cork industry.

He says: “Amorim has a leading role to play in the preservation of this threatened forest, and plant and animal, habitat – as well as the way of sealing wine that has worked for centuries.

“Cork is a 100% natural material – not chemically manufactured or mined – and it is important to preserve this important resource. The Portuguese cork forests alone absorb almost five million tonnes of Europe’s waste CO2 a year.

“Our initiatives range from the employees’ Natural Choice production programme, to the encouragement of sustainable farming practices, in association with the Portuguese government, and the Forestry Stewardship Council, the retention of a traditional way of life for almost 100,000 cork oak farmers and harvesters; and the replanting of many hundreds of hectares of cork oaks – ready for future generations.”

Carlos de Jesus, operational director at generic industry campaign APCOR, adds: “The original foundations of the natural cork industry are based around the triple-bottom-line approach – people, planet, profit – so ethics have always been high on the agenda; for example, the first piece of legislation to prevent the felling of trees was introduced in the 13th century.

“So we’ve been ethical for hundreds of years and are even more so today.

“We, as an industry, recognise the importance of the environment as a tool to shape social structure in Portugal and in other parts of the world. APCOR members are recognised as leaders in their fields when it comes to their sustainability and ethical practices – for example, some of our associates are the first in the world to obtain FSC accreditation for their cork oak forests.

De Jesus is of the opinion that an ethical approach to cork is not solely the responsibility of the company that produces it. Rather, it’s a collaborative approach spanning the entire supply chain and he feels this message needs to be communicated to more links in the chain.

“Everyone in the supply chain needs to commit to an ethical approach and a better understanding of how natural cork can help issues throughout it,” he says.

“You can’t just consider half of the supply chain, it needs to be an all-encompassing approach, so R&D needs to start at the source and look at the positive and negative impact of the different closure types.” De Jesus is also of the opinion that, rather than planning to overcome today’s issues, companies must use their skills and experience to safeguard the future of the industry.

“You have to take a long-term outlook, you can’t have a sustainable approach for the short term,” he says. “Look at the cork oak forests and how long they’ve been around, that’s proof in itself.

“Cork oak trees are harvested for the first time when the tree is 25 years old and, as the trees can then live for approximately 250 years, it has to be a long-term view for us.“

Responsible retailing

Many major retailers are now making steps to ensure they are meeting the ethical demands of wine producers and consumers. Sainsbury’s recently announced that at least six million of its cork and plastic closed bottles will switch to Amorim’s Forestry Stewardship Council-certified closures, while The Co-op is also developing a programme of own-label and Fairtrade wines to be closed by FSC natural corks.

Paul Bastard, head wine buyer at The Co-op, says the move into ethical wines is part of the retailer’s strategy to attract a new breed of customer as the store tries to reinvent itself.

“Our wine strategy is to try to have the most interesting and diverse range for the size of our stores,” he says.

“We have brought in more wines from Argentina, more Fairtrade wines, and our shoppers are a very loyal bunch. We have 3.5m members who regularly shop with us, so it’s a great market to be selling to.

“The younger generation, in particular, is keen to see companies doing their bit for the planet and we do as much as we can to emphasise our stance on this by putting clearly labelled Fairtrade wines on prominent display in stores. We have seen a major uplift in sales of these wines in recent times.”

The decision by Sainsbury’s to move to FSC-certified cork makes the supermarket the largest user of FSC corks in the world.
Sainsbury’s winemaker Barry Dick says: “The type of closure we use is based on a number of factors including quality, style and appellation laws which stipulate the stopper that best suits each individual wine.

“Where we use cork, it is important to us to make sure that the harvesting of that cork makes a positive contribution to the wildlife in the area, while at the same time managing traceability, consistency and quality to ensure our wines taste their best.

“Our shift to FSC-certified corks will make a huge difference, particularly when you consider that we sell over six million bottles sealed with cork closures every year. We’re aiming to bottle all six million using FSC certified cork by the end of 2010, and we’re starting straight away by producing the first bottle at the end of January.”

Ribeiro adds: “The UK wine trade makes a vital contribution to the maintenance of this unique triple-bottom-line balance between environmental, social and economic issues.

“Because 70% of the value-added income created by natural cork comes from its wine and Champagne stopper application, the kind of leadership demonstrated by Sainsbury’s goes a long way to help support a more sustainable trade.”

Rewarding progress

Companies are increasingly gaining recognition for their efforts in sustainability and ethics all over the world. In Australia, both Diageo and Foster’s were recognised as leaders in sustainability practice, with both companies receiving a gold rating in the St James Ethics Centre 2009 Corporate  Responsibility Index.

It was the third year Diageo had taken part in the initiative, improving on its silver medal from 2008. Diageo Australia managing director Tim Salt says: “This is something we are very proud of and demonstrates our commitment to developing and growing our sustainability practices year on year.

Foster’s CEO Ian Johnston, meanwhile, praised the CRI for its role in helping companies take a closer look at the impact their operations have on the people and planet around them.

“The CRI Survey is now an important component in our sustainability management strategy and as an advisory and benchmarking tool,” he says. “The annual process to complete the CRI Survey is now run hand in hand with other strategic sustainability initiatives and will contribute to our fifth Sustainability Report to be released later this year.”

The three Rs

Diageo is also winning recognition for its work closer to home in the UK, having taken one of the top prizes at this year’s Business Commitment to the Environment (BCE) Environmental Leadership Awards for its energy and waste efficient operations at its new whisky bottling plant near Glasgow.

Diageo won the Management for Resource Efficiency Premier Award with the judges praising the “exceptional” input and innovation from staff into the Shieldhall plant’s “Reduce, Reuse, Recycle” project. The initiative has led to reductions of nearly a third in the amount of energy used, nearly 40% in the amount of waste going to landfill, and 4% in water use.

Diageo Shieldhall operations manager Les Aitken said: “Diageo is committed to ensuring we operate our business in
a responsible and sustainable manner. We have set ourselves stretching targets to reduce our impacts on the environment, our communities and our business. The BCE Award for Environmental Leadership is great recognition for Shieldhall demonstrating our journey towards achieving our ambitious targets.”

Alan Lodge, July 2010