Sustainability, the new frontier for the wine sector by Opera Research Center

Contents 1

Acknowledgements

p. 2

Foreword

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Sustainability - The new frontier for the wine sector

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Raising awareness A practical guide to wine sustainability certification The VIVA program The value of sustainability certification A journey towards a global sustainable wine standard Which evolution for VIVA

OPERA and VIVA

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ACKNOWLEDGEMENTS

Sustainability: the final frontier On 24 and 25 October, was held in Rome, at Palazzo Faletti the international conference â&#x20AC;&#x153;Sustainability - the new frontier of the wine sectorâ&#x20AC;?, a reflection event on the VIVA public standard. Numerous national and international experts have participated in the revision of the results of eight years of application of indicators and sustainability certification to the Italian wine sector. The event, animated by an authoritative and scientifically robust debate, analysed the perception of sustainability and the trends in the wine market and then focused on the effects of sustainability standard implementation on the socio-economic returns (social capital) and ecosystem services (environmental capital). The participation of the private sector has underlined the voluntary nature of certification under this initiative, within the public standard. The private sector helped clarify the importance of communications and transparency to raise awareness among consumers on the benefits for the environment and the community. The event was followed by numerous participants and streamed on YouTube. This document is a reflection paper stemming from the event. In it, for the sake of simplicity, we have reported the main facts and shared opinions, omitting data, technicalities, and bibliographical references. However, the entire discussion remains accessible in the video documentation of the event. This document benefited from contributions provided by a range of experts and representatives of organizations working in fields adjacent to vine and wine sustainability certification. We would like to thank them for their contributions

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ACKNOWLEDGEMENTS

Contributions Miriam Bisagni Piace Cibo Sano

João Onofre European Commission

Paolo Brogioni Assoenologi

Fabrizio Paloni Federconsumatori

Stefano Cantelmo Azienda Agricola Montevibiano Vecchio

Milvia Panico Metro Italia

Ettore Capri Università Cattolica del Sacro Cuore

Paolina Pepe Ministry of the Environment, Protection of the Territory and Sea

Sara Cecchetto Azienda Agricola Cecchetto Giorgio Rossella Cerulli journalist and TV author Maria Dei Svaldi Rete vini sostenibili Pierclaudio De Martin Cantina di Orsago Filippo Gallinella Italian Parliament Guendalina Graffigna EngageMinds HUB Markus Ihre Systembolaget Allison Jordan Wine Institute of California California Sustainable Winegrowing Alliance Lucrezia Lamastra Università Cattolica del Sacro Cuore Chiara Lungarotti Società Agricola Lungarotti

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Alessio Planeta SOStain Giovanni Rizzotti Unione Italiana Vini Maria Grazia Sagretti IMAC Società Agricola Stefanella Stranieri Università degli Studi di Milano Fiamma Valentino Ministry of the Environment, Protection of the Territory and Sea-AT Sogesid David Alejandro Zambrana Vasquez ECO-PROWINE

Coordination Romano De Vivo OPERA Research Center (UCSC) Alexandru Marchis OPERA Research Center (UCSC)

FOREWORD

Paolo De Castro

Paolina Pepe

The protection of agri-food sector and the promotion of its unique characteristics, such as geographical origin, traditional culture and sustainable production systems, are natural complements of the pillar of rural development of the common agricultural policy.

With the approval of the UN Agenda 2030 and the Paris Agreement on Climate Change, Italy has signed a formal commitment to redesign the development model.

European Parliament

The certification and labelling of wine are an integral part of such promotion of the history, culture, landscape and sustainable development of winegrowing areas. Since Italy is a world leader in the manufacture and export of this exceptional product, it needs to assume the first stage in the sustainable development of the sector. We need to produce more and better with fewer resources, and for this, we need research and innovation so that we can concretely respond to todayâ&#x20AC;&#x2122;s significant challenges. And sustainability certification is an essential part of this continuous improvement process. I wish VIVA all the best for this eighth anniversary, full of successes and development promises for our rural communities and territories.

Ministry of the Environment, Protection of the Territory and Sea

The National Strategy for Sustainable Development, based on different objectives of sustainable development and a joint assessment of the impacts, represents the strategic reference framework for the transformation of our production and consumption models. The wine sector is one of the many excellent Italian products and also one of the most popular and accessible ways to enjoy our landscape. The VIVA program for Italian winemaking offers a new way to preserve and promote our territory by helping companies make efficient use of natural resources and measure improvements over time; helping consumers to recognize and reward the commitment of producers both in the environmental and socio-economic fields through a simple and transparent system that makes the sustainability data certified by a third party and guaranteed by the Ministry of the Environment accessible. In just eight years, the program has become a national and international reference that makes us proud and eager for new challenges.

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FOREWORD

Allison Jordan

Wine Institute of California

Sara Norell Systembolaget

California Sustainable Winegrowing Alliance

Establishing high sustainability standards for the wine community, training producers on good practices and engaging in an open dialogue with the entire value chain and stakeholders. These principles well describe the vision of sustainable winegrowing that has motivated the California wine industry and stakeholders to design, develop, implement and communicate a sustainability program for vineyards, wineries and wine. The VIVA program is following in our footsteps, in it, we relive the difficulties and the successes of our journey, and we appreciate the scientific value and the innovative example of this public standard. Sustainability standards are already leading to improvements in vineyards, wineries and regions, optimizing crops by reducing production costs and the carbon footprint and improving biodiversity and landscape quality. There is still a long way to go and many new ideas to bring to fruition.

We believe in sustainable development with a balance between economic growth and social and environmental responsibility. This approach includes human rights, occupational safety, sustainability in production, transport and sales, social responsibility and the promotion of moderate alcohol consumption. We want to offer our customers sustainably produced wines and actively make decisions to reduce the impact of transport on the environment. We are proud of our range of wines from producers from different countries of the world because the products we offer have a high degree of ethics and sustainability. We have already included the certified sustainable wines in our portfolio, and we believe that this segment will grow significantly, in the near future. We welcome the opportunity to work with VIVA since this standard is in line with our philosophy and brings us closer to our customersâ&#x20AC;&#x2122; expectations.

One of the elements we should all be focusing on is communicating the industryâ&#x20AC;&#x2122;s sustainability commitments and the benefits of our programs to the public. Influencing the perception of trade and consumer value and preferences thoughtfully and constructively is the last frontier. I am pleased that in this last mile we can partner with valuable organisations, such as VIVA.

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Sustainability, the new frontier for the wine sector1 In recent decades, there has been a growing interest in sustainable certification initiatives around the world. However, how useful are these certification schemes? Also, how do they influence consumer choices? In making purchasing decisions, consumers evaluate a variety of features, ranging from packaging to labels, to the most modern sustainability indicators. Also, companies that market sustainable products to consumers declare that they receive increasingly more questions about their production and products. In most cases, however, the purchasing decision is entrusted to personal perceptions and assessments that are not always traceable to tangible elements. Also, while consumers say they want products that reflect environmental, social, and economic goals, often choose products that are associated with environmental programs (e.g. Bio and 0 km) that are more popular or better communicated. Sustainability certification should provide consumers with reflections, guaranteeing a high level of reassurance on the company, its practices and processes and its products. However, existing certification schemes are not always easy to compare. Furthermore, much of the information that could allow an informed choice is often confidential or the result of the application of sophisticated algorithms.

aimed at improving production, adding value to the final product and promoting differentiation for competing products. Sustainability certification offers the opportunity to implement continuous improvements and to exchange best practices, create partnerships and rethink the business model, or have access to information on the latest new technologies and innovations. In the wine sector, adherence to credible thirdparty certified standards is becoming a distinctive feature that can increasingly influence consumers’ perceptions (e.g. quality and willingness to pay more) and opens up new business opportunities. Certification is becoming an investment, not without costs, in reputation and value creation from producers to distributors, to consumers. Recent market studies have placed sustainability at the forefront of the food and beverage industry’s trend over the next few years, and in-depth investigations on consumer psychology have helped shed light on the impact of sustainability certification on purchase decisions.

Certification systems are the expression of needs of different geographical areas or specific producers’ associations. Thus, their initiatives are set-up

Video contributions on the topic: YouTube, Sostenibilità, la nuova frontiera per il settore vitivinicolo: Ettore Capri, Filippo Gallinella, Milva Panico, Paolina Pepe 1

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Raising awareness2 Wine talks about culture, tradition, people. A sustainable behaviour will protect the critical features, the territory and the communities, whose in turn contribution was to make that wine unique. That is why this process can influence choice and purchasing decisions. The challenge is about ensuring that consumers understand sustainability and the effects it has on wellbeing, health, the environment. In the past five years, 85% of retailers reported an increase in sales of sustainable products, with 65% of them reporting sales increase of more than 10%. Over 90% of the latter group of retailers expect sustainable products sales to further increase in the next five years. For products like wine, the purchasing process becomes a statement of intent, reflecting the individual attitude towards broader social and environmental goals. In the last decade, there has been a significant change in consumer attitude towards sustainable products, which has influenced the market. Studies show that in many consumer goods categories - and wine is no exception - the majority of consumers indicate that they are interested in the sustainability performance of the products they purchase. That about almost half of the interviewed consumers in some studies declare that they have decided not to purchase a product because they perceived it as not being produced concerning societal or environmental expectations. When purchasing a product, the consumer is looking for value, and in the case of sustainability, this value is not always easy to understand. There is a significant disparity between the intention to buy sustainable products and the actual action of choosing a product because of its sustainability profile. According to the same studies, while half

of the consumers declare that they are interested in buying sustainable products, only about one in five can state with certainty that they purchase and regularly consume them. Only about one in twenty does it daily. Hence, the consumer is acting instinctively, providing sometimes mixed messages about perceived value and future purchasing choices. Further efforts are therefore needed to better explain to consumers what the value of sustainability is, how it is transparently measured, and what is the positive impact on the environment, health and society wellbeing. Raising awareness is also needed for the entire value chain. A commitment to sustainability involves analysing the organisation, the processes, the value-added and competitive strategies to understand how these factors impact company reputation and profitability in the long run. The sustainability indicators offer vineyard and wine operators the opportunity to analyse their performance, taking into account environmental, economic, social and cultural aspects of their activities. Even when only specific segments of the value chain are interested in a sustainability certification, this activity will create a positive pressure for the rest of the value chain, which will start to conform and adjust in its totality and adopt sustainability behaviours gradually. A sustainability program is about raising awareness of all operators about the opportunities for improvement in the most critical areas of wine value-chain and providing guidelines for practical commitments, and clear communications both at organisational and product level. This awareness is even more relevant when we consider wine as part of an integrated culture, relationship, hospitality system and landscape.

Video contributions on the topic: YouTube, SostenibilitĂ , la nuova frontiera per il settore vitivinicolo: Rossella Cerulli, Miriam Bisagni, Guendalina Graffigna, Fabrizio Paloni 2

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S U S TA I N A B I L I T Y, T H E N E W F R O N T I E R F O R T H E W I N E S E C T O R

A practical guide to wine sustainability certification 3 The story of vineyard and wine sustainability certification systems began in 1997 when was introduced the first sustainable viticulture certification. Since then, the certification schemes have multiplied, and with them their scope, methodologies, and product assessments. Each of the systems (recent literature reports more than ten certification schemes dedicated to wine) is a unique snapshot of the most exciting components of the wine lifecycle and use a diversity of different methodologies for the assessment. Certification programs aim to support communities, reduce environmental impact and improve on the competitiveness of local companies. Besides, all certifications include training and encourage the use of technology for continuous improvement. Combining the efforts of associated companies, confronting issues in the production processes and applying the best management practices, these certification systems create the opportunity to reflect, self-improve and compete. The majority of the certification schemes offer the possibility to use one or more sustainability labels. So far, certifications were specific to certain regions or countries, which is why the certification criteria differ significantly worldwide. Certification usually involves high costs. In the case of public standards, though, the institutions managed to keep costs at a reasonable level, allowing smaller businesses to join the program.

Some vine-growing regions, around the world, have introduced a sustainability certification to mitigate the effects of climate change or for other social or environmental goals, like protecting biodiversity or water or reducing carbon footprints. Producers are encouraged to implement sustainability protocols with a variety of adaptation and mitigation methods to preserve the quality, identity and profitability of their wines. All wine producers can have a positive contribution to the management of ecosystem services and sustainability standards help understand how such a provision can be implemented and measured. For certification schemes that evaluate products throughout their life cycle to assess the production process and establish the impact, the data needed cover all the stages of the life cycle: from field to table and the recycling of packaging. Using indicators allows for continuous assessment of the progress made in all critical areas of the process and can indicate current or potential areas of improvements and suggest immediate corrective actions. At the end of the process, an official label confirms compliance with the program verified through the execution of an audit on complete and accurate data, that are relevant from a geographical and temporal point of view.

In almost all certification systems, the audit is carried out by independent third parties. While this measure ensures compliance with the segregation of duties, it is not always enough to promote transparency and clarity of data for consumers to recognise the true extent of sustainability. Video contributions on the topic: YouTube, SostenibilitĂ , la nuova frontiera per il settore vitivinicolo: Markus Ihre, Allison Jordan,Joao Onofre 3

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The VIVA program4

The wine sector is one of the pillars of Italian agrifood production and exports, and vineyards are essential components of the diverse landscapes across the peninsula and in the islands. These elements were inspiring, already in 2011, the Ministry of the Environment to launch VIVA to measure and improve the performance of the entire vine and wine value chain. VIVA is not just a public certification standard for vine and wine sustainability but the result of an innovative partnership between institutions, companies, research centres and verification bodies. The project uses four indicators based on national and international principles and experiences: “Air” for emissions and carbon footprint, “Water” for water use and quality, “Vineyard” for agronomic management, and “Territory” for socio-economic development and the cultural impacts. The

Product label

Organization label

International market label Video contributions on the topic: YouTube, Sostenibilità, la nuova frontiera per il settore vitivinicolo: Maria Dei Svaldi, Lucrezia Lamastra, Fiamma Valentino. 4

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indicators provide an in-depth analysis of the current reality, support decision-making and capture the continuous improvement in business performance. A scientific committee regularly updates all the indicators.

Since the UN Millennium Ecosystem Assessment in 2000, ecosystem services have been the focus of the sustainability discussion. VIVA has selected relevant ecosystem services that are affected by the vineyard and winemaking activity, and set conservation goals that reflect acceptable footprint that wine activity has for the ecosystem. VIVA uses indicators to assess the impact of products and manufacturer on ecosystem services to pursue the continuous improvement of the relationship between the producer and its ecosystem. VIVA certification guidelines developed in 2014 and updated in 2016 and 2019 help companies apply the assessment methodology, manage the remediation of critical points and communicate all the results in a clear format. VIVA guidelines direct the processes and form the basis for the review by independent certification bodies. Vocational education and training ensure the correct and complete application of the indicators and the integration of sustainability in all stages of the life cycle and stakeholder dialogue. The Italian sustainability certification VIVA is winespecific, has its sustainability label, makes data accessible and applies to all producers and wine products. The main goals are to improve on the sustainability of the wine industry and to add value throughout certification, education and technological improvements. The program is open to all vine and wine companies and is reflecting the The VIVA program specifications are available at the following link: www.viticolturasostenibile.org/Disciplinari.aspx

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The value of sustainability certification 5 excellence and diversity of the Italian regions. It started with a pilot program in 2011, and the first VIVA completed certification took place in 2014. Since then, around 90 companies have joined the Program certifying their products or the organization itself. VIVA is based on the definition, measuring, improvement and the communication of individual commitments. The certification results are published in open source on the website www. viticolturasostenibile.org The certification is valid for two years, at the end of this period to renew the certification, the applicant needs to present a plan of corrective measures to address the specific challenges and to drive continuous improvements. At the end of the certification process, VIVA labels inform consumers through a digital link, on the product or company performance, allowing an evaluation of the challenges and progress over time. Each sustainability journey leads to further environmental protection, better opportunities for community development, an increasingly efficient production framework, and the fulfilment of the expectations of a highly competitive market. VIVA development has encouraged the creation of a multidisciplinary network of advisors. This network provides farms, transformers and distributors with technological, training, communication, liaison and support services. The agreement obtained for the development of the single certification standard with the Ministry of Agriculture, the promotion of VIVA in international markets and the cooperation with the industry association have contributed to a better business environment and a clear pathway towards sustainability.

Is there a market incentive for a company and its products to be certified? To understand the value of certification, we must assess how certification contributes to transforming the current market. A program may be relevant or necessary but ultimately has to have an impact in terms of reputation, innovation, differentiation and networking of the company.

Reputation Sustainability certification provides manufacturers, bottlers and distributors with a clear recognition of the excellent practice they have applied and in showing that the external audit has verified the implementation of a structured protocol. Sustainability certification initiatives are becoming increasingly important as they improve on the transparency and credibility of organisations and products.

Innovation Participating in certification schemes allows producers to be informed about the critical hotspots in their production process and stimulates them to seek alternative solutions to reduce their impact. To this extent, certification can be an essential driver for innovation in the entire value chain. It is quite common that certification schemes establish long term collaborations with several actors and research organisations to develop new practices to address the crucial challenges. New solutions help improving efficiency and reducing costs, hence having a positive impact on both the environmental and socio-economic aspects of the operations.

Video contributions on the topic: YouTube, SostenibilitĂ , la nuova frontiera per il settore vitivinicolo: Stefanella Stranieri, Stefano Cantelmo, Sara Cecchetto, Pierclaudio De Martin, Chiara Lungarotti, Maria Grazia Segretti 5

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Networking Being part of a community that has common goals and interest facilitates knowledge sharing and contacts with potential partners. Studies confirm that producers believe that participating in certification schemes help establish new business and collaboration opportunities. Participants to certification schemes value the opportunity to talk to peers in a pre-competitive environment. It allows them to exchange new ideas and to improve processes. Such synergies provide producers with the opportunity to gain a competitive advantage on the non-certified producers.

Differentiation Market research confirms that, in response to a continually growing trend, characterised in the last decade as the demand of organic wine, distribution increasingly considers sustainability as a differentiation element in the purchasing decision and certification as an element of reassurance and commercial risk mitigation.

Anticipation Producers are aware of the fact that, through certification, they partially avoid the hurdles of regulatory restrictions, thus providing them with the choice of means to construct their sustainability approach.

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Competitiveness The sustainability certification enhances the brandâ&#x20AC;&#x2122;s value and reputation, differentiates the product and provides a competitive advantage, while the continuous improvement helps producers to generate a value that depends on greater production efficiency, but also on the ability to manage natural resources in a way that satisfies societal expectations.

Communication All these efforts require adequate explanations and communications. Therefore, the combination of packaging and websites is becoming an indispensable tool for companies that choose certification and want to share more information on their best practices. The diffusion of sustainability brands and labels in several sectors will further increase consumersâ&#x20AC;&#x2122; awareness and expectations, while certified sustainable wine promises to become soon mainstream. However, there are still obstacles to the introduction of sustainability certification. Not all companies see accreditation as a means of immediate and direct value creation. As sustainability is not considered as a means of increasing economic returns, companies are reluctant to make new investments and the knowledge gap, and the variety of certification systems make them even more hesitant.

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A journey towards a global sustainable wine standard 6 Certifying sustainable behaviours means developing and reviewing a system of good practices for managing vineyards, cellars, products and communication. There are many reasons why a company seeks sustainability certification. The certification builds on innovation, improvements and efficiency, consolidation of reputation, product differentiation and competitive advantage and can be used to anticipate future regulations, standards, market trends or customer expectations.

compatibility of international sustainability certification schemes will favour more transparency on socio-economic and environmental data and impact and will generate increased confidence in the certification system. Alignment of standards does not necessarily have to go through the introduction of a single global certification standard. Progressive alignment of all initiatives with existing international principles and standards such as ISOs is in practice reducing the distance continuously.

Sustainability in the wine industry is already evolving, and with it, certification. Hence, increased

Video contributions on the topic: YouTube, SostenibilitĂ , la nuova frontiera per il settore vitivinicolo: David Alejandro Zambrana 6

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Which evolution for VIVA 7 The Italian vine and wine sustainability certification VIVA respond already exceptionally well to market trends and needs. It has its sustainability label, expression of four easy to understand indicators and every two years, companies are requested to present improvement plans which have to be implemented during the next biennium. Results are visible to consumers via the online portal, and the program focuses on continuous education and openly pursues goals of technological progress. A scheme has value as long as the certification concerns a large number of wine producers. Despite the success of VIVA, there is a need to scale-up implementation and enhance the real impact on the Italian system. The reasons that still prevent many Italian wineries from joining this initiative are often the perception of rising costs in the face of uncertain economic returns and a value chain sometimes with conflicting positions. A perception that is changing over time, as it becomes evident the success of companies that have already benefited from the competitive

advantage of certification in international markets. What could be the elements to speed up the progress of this initiative? From the discussions are emerging some considerations: 1. Better awareness of the benefits of sustainability certification can help make it a stable part of

consumersâ&#x20AC;&#x2122; purchasing corporate strategy.

behaviour

and

2. It is appropriate to promote the continuous updating of the standard through research and innovation and to foster a broader convergence of certification programs. 3. It is necessary to continue to spread the VIVA approach nationally and internationally through adequate means of communication, increasing the number of member companies in the scheme, promoting the development of a territorial network and the broader participation of all the

subjects in the supply chain.

Video contributions on the topic: YouTube, SostenibilitĂ , la nuova frontiera per il settore vitivinicolo: Giovanni Rizzotti 7

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O P E R A A N D V I VA

OPERA and VIVA

Ettore Capri

TERRITORY

Director OPERA Reserch Center

VIVA offers companies a tool to diagnose the impact of wine production and consumers a guarantee of transparency. At the center of this service there the four indicators which ensure the monitoring of producerâ&#x20AC;&#x2122;s performance. Periodically, a committee of experts checks the consistency of the indicators with the state of knowledge and market practices through a bottom up approach that sees companies together with the ministry real sustainability managers. The work of the OPERA Research Center is to assist such committee in evaluating and implementing scientifically correct solutions that are also simple and practical to implement. Compared to the many sustainability certification schemes on the market today and more recent, VIVA is characterized by the evaluation of the impact of wine production with respect to ecosystem services, the inclusion of the entire supply chain, and ministerial recognition. All these make VIVA a sustainability certification system, new and robust, in line with market expectations, and an ambassador of local Italian tradition and culture.

AIR

VINEYARD

WATER

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