Retailers   //   July 30, 2020

The natural wine industry is facing its own reckoning

Natural wine, a small niche of the over $70 billion wine industry, is in the midst of an upheaval.

Earlier this month, an Italian vegetable business was reportedly arrested over alleged illegal labor conditions. The owner of this business’s daughter, Valentina Passalacqua, has her own fruit-adjacent business: wine. While the two businesses are separate, U.S. companies that work with her have been scrambling to figure out how to respond.

Some natural wine importers have made statements saying they will still do business with Valentina Passalacqua. Others, however, have decided to use this instance as a catalyst for change. “I do not have any evidence that Valentina has done anything wrong, and she has, in fact, worked to be transparent,” wrote Zev Rovine Selections, a natural wine importer, on its website. “However, I do not feel that we yet share a similar approach in how to address the chronic exploitation of workers.” The statement went on: “To this end, we at ZRS are developing a “working contract.” It will address issues such as sexist behavior, racist behavior, labor rights, and responsible stewardship of the land we farm.”

This example lives within a microcosm of a microcosm; it’s a subset of an already small industry, one that prides itself on sourcing and transparency. (One estimate puts natural wine at less than 1% of the overall U.S. wine market.) But it’s a growing issue felt by companies big and small. Companies have long claimed to be ethical, but are now being asked more fervently to practice what they preach. A looming question underneath it all is how much of this talk about transparency and ethical business doing is used to shield from future scandals or as marketing jargon.

Natural wine, which can best be described as wine produced with little to no intervention and additives, has become popular among a certain swathe of often-city dwelling alcohol enthusiasts. More traditional wine-making processes include sulfites and other preservatives and additives to make for a more consistent final product; natural winemakers forgo those additions, and instead let the grapes and yeasts do their magic — often making beverages that are funkier in flavor, as well as ever-changing.

Natural wine’s very definition — which is often debated among oenophilic circles — surrounds the process. Therefore, origin, supply chain and product sold are all inextricably linked. Natural wine importers are as much marketers of the vineyards they represent as they are conduits between wine producers and drinkers. What’s more, transparency is tantamount to the industry, given the vineyards and their reputation are as much a part of the product as the fermented grape juices themselves.

Thus, the father of a well-known natural wine maker being arrested for labor violations brings up uncomfortable questions for the industry. For Zev Rovine, the founder of his eponymous importing business, the issue isn’t about simply making sure business partners are acting legally — it’s about taking the entire industry forward, making it more moral.

“For me, the major issues in the world right now are labor and inequality,” he said, “as well as environmental issues.” Over the last few months he’s come to the realization that in order to run an ethical business, he needs to ensure his business partners share his views. “I just want to make it clear to everybody if you want me to be a wine importer, you need to behave like this all the time.” It’s not only about making sure laborers are getting paid a legal wage (Rovine added that minimum wages in many countries — including the U.S. — are still far too low), but that intangible issues that often can’t be adjudicated in court — like racism and sexism, two very prevalent issues in wine (as well as the world) — are also tackled.

Codes of conduct are nothing new — indeed most multi-national corporations have some kind of agreement with suppliers in place. “That practice is pretty standard, ” said Steve New, associate professor in operations management at Oxford University’s Saïd Business School. Much of this, he explained, is around making sure companies aren’t unknowingly doing business with a supplier who relies on exploited or enslaved labor.

The purpose of these contracts, however, is contested. “One of the debates,” said New, “is the extent to which firms give themselves reputational cover… [or are they] generally trying to make things better.” That is, in some ways a code of conduct focused on the supply chain is about offloading culpability if allegations arise about a certain supplier’s questionable practices. Rovine himself is aware of this. Other contracts large corporations forge, he said, “are trying to have some plausible deniability.”

Beyond corporate protection, there’s a marketing aspect too. Many new businesses — especially those that cater to a certain demographic of young and ethical consumers — try to tout their moral business practices. Companies like Everlane, for example, have long proclaimed their direct connection with their supply chain as a competitive advantage.

Recently, however, those practices have been questioned — exposing holes in the strategy of wearing values on a company’s sleeve. Past Everlane employees have come forward about an alleged culture of anti-Black practices and other frequent micro aggressions in the workplace. Workers tried to the unionize but were met with resistance. The company’s values — specifically its focus on creating an ethical space from origin to product — were the point of reference.

“The entire concept of having a transparent supply chain,” said Tim Gaus, principal at Deloitte Consulting, “is a huge topic.” While codes of conduct may have been a part of corporate structures for quite a while, they’re being scrutinized now more than ever. “It used to be good enough for companies to say the right thing,” he said, “now I’m seeing them have to prove they are doing the right thing.” Big corporations, for example, are asking supply partners for relevant data and current practices as it comes to sustainability and diversity, rather than just having them sign on the dotted line. “They may have committed to an ethical supply chain 20 years ago,” Gaus said, “but they’re now asking for the facts, figures and transparency.”

In Rovine’s eyes, the imperative isn’t about covering himself and his business. “I have direct connections with wineries and direct connections with restaurants and retail,” he said. He is often the person to get a call if there’s an issue involving any of those parties; “it just seemed that this would be a nice way to start addressing it.”

For New, that this conversation surrounds wine is especially meaningful. “Wine is almost the perfect symbolic good,” he said. “Nearly everybody buys and drinks wine,” he went on, “and we rely on the meaning, the value that wine gives us.” That is, unless you’re a sommelier, much of wine’s perceived goodness is defined by how others have described and valued it for you. A wine’s worth is codetermined by labor practices along with other invisible aspects, said New; “the symbolism is all they’re paying for.”

In some ways, that’s especially true for natural wine. The industry, said Rovine, is often very political and progressive. Much of a wine’s worth is explained by the story in the point of origin and how its presence is different from more traditional and commodified parts of the industry. Still, he said, “it’s very easy to look around at our community and see that we’re very white.”

Rovine hopes his natural wine counterparts are doing the necessary introspection. “We still have a ton of work to do,” he said. But, he went on, the fact that others are listening and trying to make positive change is both indicative of the industry’s ability for growth, as well as a potential bright spot. “You’ve never seen a conversation like this in the conventional wine world,” he said.