We all love a good deal, especially when the wallet is feeling a bit light. But cheaper goods often carry hidden costs. For better or worse we live within a system that encourages maximum profit by keeping production high, expenses low, and finding a ‘sweet spot’ price point that’s accessible (to most).
Maintaining low prices in the face of external pressures – resource scarcity, unpredictable weather caused by climate change, evolving regulation, higher taxes and tariffs (to name just a few) – can sometimes mean unethical and unsustainable practices behind the scenes, with workers being on the frontlines of cost-cutting measures. The wine industry is no exception, but a growing number of winemakers and buyers are focusing on more sustainable production, with fair wages and employee rights being a critical part of the package. The potential results? Happier employees leading to more productive harvests and fairly priced wine you can feel good about buying.
The power of retail and the race to the bottom
It’s no secret that when buyers press suppliers to keep costs low, it’s often the vulnerable workers throughout the supply chain, particularly those who work in countries with loose labour laws or are temporary workers, who pay the price. ‘Growing grapes and making wine can, for many, be a very low margin business. So if a retailer is pushing the price of wine down, it puts pressure on producers to reduce the cost of wine production so they can maintain their margins and survive financially,’ explains Dom de Ville, Director of Sustainability and Social Impact at The Wine Society. ‘But where is one of the first ways to cuts costs? People, of course.’
This unfortunate reality was highlighted during the 2023 summer harvest in Champagne, where reports of seasonal workers living in inhumane conditions with little income sparked wider investigations into modern slavery and human trafficking in wine. ‘One of the big risks, particularly in Europe, is that vineyard owners need large numbers of people to pick grapes at harvest time and to do pruning at certain times of the year. But local people aren’t available or don’t want to do that kind of work anymore,’ says de Ville. ‘So those vineyard owners have to go to recruitment companies or labour agencies, and the big question is where are those agencies actually finding workers and how are they treating them?’
According to the Fairtrade Risk Map, one of the biggest issues in the world of wine is producers making enough money to cover the costs of production and the subsequent knock on effect this has on workers. In Chile, for example, agricultural workers on average earn less than half of a living wage, and the South African wine industry association reports that 37% of wine producers there are making a loss. The Risk Map also points out that retailers and big brands hold the strongest bargaining power over pricing and other standards across the wine value chain, with some using price as the sole criterion in tendering.
With ongoing pressure for retailers in the UK to keep prices low in the face of the cost-of-living crisis and higher alcohol duty rates on wine, there are fears this could feed into this ‘race to the bottom’ of cheap labour and unethical wine production. ‘Wine sales are tough at the moment, so retailers are going to be trying to keep their prices low in the face of duty rises, and it all has this knock on effect,’ adds de Ville. For The Wine Society, maintaining fair prices for its wine producers and members, as well as enacting programmes to tackle human rights abuses and encourage better labour practices across its value chain, is paramount to its sustainability mission. As a co-operative, The Wine Society doesn’t have shareholders dictating profit margins. This enables it to put profits back into the business to keep prices for its members low and prices for its wine producers fair, supporting ethical and sustainable business practices down to the vineyard. ‘Some of our supplier relationships go back over 100 years,’ explains de Ville. ‘So those relationships are extremely important to us – it’s in our DNA. We don’t exist without them. We have a genuine belief that if we have a better relationship with our suppliers, we get better wine. Pricing is a big part of that.’
A view from the vineyard: protecting workers and building resilience through regeneration
The social side of sustainability goes hand in hand with protecting environmental conditions and long-term economic gains, and many winemakers are embracing policies and practices that actively aim to regenerate ecosystems and communities. Winemakers, for example, can now become Regenerative Organic Certified (ROC), a powerful accreditation which shows a winery is meeting certain criteria in three pillars: soil health, animal welfare and farmworker fairness.
‘We’ve always believed that the team we have is our greatest asset and have given our field crew year-round employment since 1996,’ shares Jason Haas, Partner and General Manager at Tablas Creek Vineyards, the first Regenerative Organic Certified (ROC) winery in the US, ‘But the focus on the human side of things was intensified when we joined the ROC pilot program in 2018. As a part of farmworker fairness pillar, we made a number of changes including setting up weekly round-table meetings with our crew, initiating new team-building and communication training to break down some of the cultural and historic barriers to communication, and increased our pay and benefits to meet the ROC gold standard, which requires paying a living wage for your county plus 10%.’
Haas believes that becoming an ROC, and implementing the transformations required of the certification, has also built resilience against external shocks such as pricing fluctuations and unpredictable weather due to climate change. ‘We feel like we’ve been able to insulate ourselves from some of these shocks through the ROC commitments,’ he explains. ‘It means that we have a full-time crew we can deploy as we need, without having to worry about finding labour on the open market. Of course, that doesn’t protect us against droughts, or fires, or pandemics… but it does mean that we’re better positioned to respond to them nimbly, and the ROC’s resource use and soil health pillars mean that we’re also doing our part to help address the root causes of climate change.’ Haas continues, ‘Obviously cost is a challenge. The higher costs mandated by the living wage requirements do end up in our cost of production. But it hasn’t been crippling, and it’s been offset by increases in efficiency that have helped keep cost increases moderate.’
Treating workers fairly and with respect tends to lead to happier employees which can also improve efficiency, productivity, and a business’ bottom line. ‘One of the cool things we noticed [as part of the ROC] was that our crew, many of whom had been at Tablas for years or even decades, started bringing their families out on weekends to see the work that they were doing,’ says Haas. ‘We feel that this new level of pride in their work (and their workplace) has translated into the quality of their work too!’
