Corporate social responsibility is becoming one of the buzzwords that we’ll be hearing a lot more about in the wine industry.
Producers and retailers are now feeling the pressure to improve their environmental and ethical credentials, and thus help customers be greener and healthier.
With the major multiples selling eight out of every 10 bottles of wine in the UK, the grocery sector is thus expected to lead the wine industry’s adoption of corporate social responsibility.
Today, the Co-operative Group launched a three-year Ethical Operating Plan, which sets a new benchmark for other retailers. It has reduced its own operational carbon emissions by 20% since 2006, the target will now increase to 35% by 2017. In addition to a 15% weight reduction achieved in packaging, it will reduce this by a further 10% by 2012 and increase its carrier bag reduction target to 75% by 2013.
It also aims to increase its Fairtrade range as well as make its healthier option range the same price as its ‘normal’ range.
Challenges to corporate social responsibility
What difference will you make if you buy a Fairtrade wine or a lightweight bottle? Isn’t it a drop in the ocean when you consider BP’s Gulf of Mexico leak and China’s profusion of coal-fired power stations?
Producers and retailers have to make consumers think that they can make a difference buying ethically and/or environmentally. That choice must not be more expensive than a less ethical option. And customers who shop on price or promotional offer need to be given an incentive to shop ethically or environmentally, through reward points, which we have seen when reusing carrier bags.
Without consumer support, corporate social responsbility will fail before it even gets going.
Bordeaux producer Chateau Bauduc looks set to dump corks in favour of screwcaps for its white and rose wines.
After consulting more than 1000 of its customers in an online survey, 65% of respondents voted in favour of screwcaps for white wines and pinks.
For Bordeaux reds, screwcaps were not the flavour of the day with 77% voting for cork or saying they didn’t mind; just 23% were pro screwcap for reds. While it seems a little hypocritical not to be consistent with your closures across your range, the survey feedback found consumers still enjoyed pulling the cork and believed it was more suitable for wines destined for ageing.
10,000 cases of Bauduc are due to be bottled this month destined for outlets including Gordon Ramsay and Rick Stein restaurants. If it decides to do what its consumers say they want it to do, it looks like it’s hello to aluminium for Bauduc. The corks have been granted a reprieve by the red drinkers and manage to hang on for a while longer.
(It’s worth remembering that Bauduc has a strong presence in the UK where screwcaps have a high level of acceptance. If the US and Asian markets were surveyed, the results would likely be very different…)
When the google wine alert dropped into my inbox on Christmas Eve, I wasn’t expecting anything significant to happen. Then came news that Constellation, one of the world’s biggest beverage companies, has sold off its Australian and UK division.
There’s nothing quite like announcing an AU $290 million deal when everyone’s left the office for a week or two and have mince pies rather than pie charts on their mind. Of course, you can’t brush this one under the carpet but it has happened without too much fuss.
An Australian private equity fund, CHAMP, has bought the businesses and the deal is expected to be complete by the end of January. It includes the transfer of Constellation’s Australian, UK, and South African brands, wineries, facilities, vineyards, and the company’s 50% interest in Matthew Clark, the UK wholesaler. All CWAE employees will transfer with the business but there is uncertainty for those staff who will be unsure as to the future holds in 2011.
Constellation’s CEO Rob Sands said Australian wine no longer offered the profit margins it expected as part of its premiumisation strategy. “Constellation has implemented a strategy focused on driving profitable organic growth through premiumizing its world class brand portfolio and improving margins, return on invested capital and free cash flow,” he said. “The CWAE business sells quality wines from the important Australian appellation and has significant scale, but continues to be faced with challenging market conditions. Therefore, the business is no longer consistent with Constellation’s strategy.”
How did Constellation get into this sticky wicket? It paid US$1.1 billion for BRL Hardy in 2003. It was part of an acquisition trail, which included buying Zinfandel producer Ravenswood for close to $150m and Mondavi for more than $1bn. The debt soon piled up, the global economic crisis hit, Australian wine slumped and other wine producing countries got their act together. Not a recipe for success.
So, Hardy’s is off to pastures new at a fraction of the price paid in 2003 and Constellation has thrown plenty of extras in as part of the deal. They must have been feeling in the Christmas spirit.
Following the demise of Sauternes property Chateau Broustet and its sale to an Italian buyer in late September, it’s all guns blazing for the family’s other property Chateau Saint-Marc.
Export and marketing manager, Guillaume Forcade had fought valiantly to save his family’s chateau with savvy marketing and sales. He had packaged some of the estate’s wines in test tubes and the brand had become involved in Vogue and Mercedes parties but it was too little too late and he is now concentrating his efforts on Saint-Marc.
The wine will be available in tubes during French Tuesdays in San Francisco. Whether you drink it “from the tube or slipped inside a handbag”, it’s certainly a different approach for a very traditional appellation. No glass; no foie gras? God forbid, the wrinklies won’t like it.
However, the whole sweet wine market faces an uphill battle with sales in freefall. The French have cut their Sauternes consumption from 83,536hl in 1999/2000, to 54,477hl in 2008/09. The appellation’s vineyard area has fallen from 4139ha to 3773ha in the same period. At the very least, it’s going to take young blood with new ideas to stem the tide. Good luck to them, they are going to need it.
Phil Laffer is retiring after 50 years in the wine biz and handing over the Jacob’s Creek reins to Bernard Hickin (this episode’s cameraman - cheers, Bernie!). At the changing of the guard, Phil gets his 60 seconds (well, a bit more actually) to talk about where who’s going to win the Ashes and where he’s off next…