Concha y Toro: Sustainability can be a commercial decision

Big companies have a responsibility to lead on boosting sustainability and should see it as a return rather than a cost, the head of Concha y Toro UK has said.

Speaking at Concha y Toro’s recent seminar on sustainability in London, ‘Better Wine, Better Ways’, Simon Doyle, general manager Concha y Toro UK said that sustainability was an enabler to commercial success and growth – and should be viewed as such.

“Many [producers] see it as a cost but we need to see it as a return,” he said. “It is a serious platform for us, and a big part of the company’s future platform that we are committed to long-term.”

The global wine company was outlining recent progress made on its sustainability strategy, demonstrating how this was a commercial choice for the group as well as an ethical one, while also presenting a snapshot of the mature Nordic market’s sustainability expectations and how consumers in these markets engage with it.

Biggest opportunity lies in new tech

According to Concha y Toro’s Chilean-based sustainability manager, Valentina Lira, some of the biggest challenges around sustainability were in finding new technologies to enable wine producers to cut water usage in the vineyard and tackle the emissions involved in packaging.

One of the company’s priorities is to lower its water usage by 10% by 2020, Lira said, even though the company is already using 56% less water than the average of the global industry (around 48L per 125 glass of wine).

Currently around 93% of Concha y Toro’s water usage happens during the growing and harvest process she noted – and although around 50% of that water comes in the form of rain, that still leaves around 46% from irrigation. The remaining 6% of water usage happens through the vinification process, bottling and packaging.

“The priority is to lower it comes from the agriculture,” Lira said, a task she described as a “big challenge”, not least due to the limits of technology.

“We need to make a technological leap forward to bring this down,” she said.

Better Packaging

Valentine Lira, sustainability manager, Concha y Toro

Meanwhile, the biggest opportunity for wine companies to lower their carbon footprint lies in developing better bottling and packaging that includes more sustainable packaging, she said. Currently around 42% of CO2 emissions come through bottling and packaging, with around 20% each produced during distribution and grape growing and harvest, and around 18% during the vinification process.

“The main challenge for innovation is through more sustainable packaging,” she argued.

CYT is aiming to reduce its carbon footprint by 30% by 2020, having already reduced it by 15% since 2014, she added.

This comes as part of the company’s new corporate strategy, which was adopted last year to put sustainability in a more central position, with quantifiable and measurable goals. The aim is to become a benchmark for the industry in environmental practises, Lira noted.

To date the group has already switched to light-weight bottles across 98% of its portfolio, cutting around 14,127 tons of carbon dioxide emissions per year (each bottle uses around 13-15% less glass, totalling around 13,577 tons of glass overall), but it is already working on the next generation of ‘eco-bottles’.

It has also set a goal to reach 100% of renewable energy by 2020, up from 67% in 2018, and this year will see the addition of 9 new solar plants across its vineyards.

In 2015 it aligned its policies to the UN’s sustainability objectives, and  it has now benchmarked where these policies are already being met across all levels of the business.  In order to make it easier to communicate this ethos to the public, it is matching its brands with particular efforts that fit that particular brand, for example communicating to consumers that its Sunrise brand uses 100% solar energy, or focusing the ‘reduce, reuse and recycle’ message around the Trio brand.

“We are still developing it but it’ll be good for consumers as it is simple so they’ll get it,” Lira said.

Nordics leading the way

The company also illustrated how different markets and customers have widely different expectations and concerns through a case study of the mature Nordic market’s sustainability expectations and how their consumers engage with it.

The Nordics, led by Sweden, are leading the way when it comes to promoting sustainability, according to VCT’s sustainability manager for the Nordics Linda Karlsson, primarily due to the influence of the countries’ monopoly systems, Systembolaget in Sweden, Alko in Finland and Vinmonopolet in Norway. These, she pointed out, have the ability to steer the market and big brands as well as influence consumer expectations and concerns.

“If the monopolies decide it’s what they want, they will steer the market,” Karlsson said.

She pointed out that in the last five years, Systembolaget has used the growing consumer interest in organic food to actively promote organic wine, which has more than doubling the original target of 10% of total sales being organic by 2020, to around 22% in 2018 or 45 million Litres.

This was followed by a move towards lightweight bottles in 2014 to cut CO2 emissions, as currently around 35% of wines comes in glass as opposed to Bag-in-box or PET bottles, but accounts for 85% of carbon emissions. Although light-weighting was not compulsory, Karlsson explained that there were advantages for companies to do so, such as earning extra points in tenders.

“There are different ways to push companies to do it without making it absolutely compulsory,” she noted.

All three monopolies wanted to go even further however, she argued, adding that it would be interesting to see how far the monopoly would push the industry in the direction of PET bottles, which currently make up a very small part of volume sales.

Although wine promotion across the monopolies is banned, a logo system is in place on shelf barkers to show consumers where wines are either a good choice for the environment, organic, biodynamic, vegan, natural, and  sustainably packaged, she said, although she said the monopoly realised that having so many logos was potentially confusing.

The impact of a 2016 documentary by a Danish filmmaker investigating the working conditions of farm workers at vineyards in South Africa was wide-ranging, and according to Karlsson, saw Sweden double the number of audits in South Africa – with the intention to work to improve the situation, rather than penalise producers, along with other ‘risk’ countries, Chile and Argentina, although this has since be widened to embracing a wider auditing across all countries of origin.

The last two years has also seen a shift toward more environmental factors, influenced by events such as summer of forest fires in Sweden, Swedish school girl activist Greta Thunberg’s climate change protests and Donald Trump taking the US out of the Paris Agreement on climate change. Around 70-75% of consumers across the three Nordic countries claim sustainability would influence their buying decision, with around 25% of Swedish consumers willing to pay a 25% price premium. As a result, the monopolies now require extensive CO2 mapping for all wine importers, and have launched a more user-friendly web-based tool to facilitate this.

Looking forward, the monopolies are set to develop these policies further, she noted, with the introduction of further CO2 mapping targets and supply chain mapping, the evaluation of suppliers’s environmental parameters and increasing the communication of sustainabilty on pack, as well as extending the term ‘ethical’ beyond the three main labels in the Nordics, Fairtrade, Wieta and Fair for Life.