There’s a new concept taking root in the wine industry: activist wines. Unlike traditional special bottlings produced for wine industry charity auctions and special events, activist wines serve a specific social purpose. They do good. But do they make good business sense?
Perhaps the preeminent ambassador for activist wines is Peter Weltman of Borderless Wine. A classically trained sommelier, Weltman founded Borderless Wine in 2017 after attending an ROI Community Summit in the Middle East. There, Weltman witnessed peaceful, cross-border wine production between a winery in Israel and vineyard in Palestine, despite historic hostilities. “That was a very big stamp, that wine is doing something important, and always kind of had been, but had never actually been contextualised that way,” Weltman says.
Activist wines are currently more a movement than a business, and Weltman uses a three-pronged approach to attract attention: savvy media skills, educational seminars and strategic partnerships with importers such as Jason Bajalia of Terra Sancta Trading Company and Frank Dietrich of Blue Danube Wine.
Weltman also aims to offer a network of indigenous wines from overlooked, often war-torn wine regions through the Borderless Wine Alliance, an adjunct of Borderless Wine. Current imports include La Casa Vieja from Baja, Mexico, and the forthcoming Dar Richi, a wine made by Syrian/Muslim refugee Abdullah Richi, currently the winemaker at Lebanese winery Couvent Rouge.
Weltman refers to this cross-cultural coalition building as soft diplomacy. “If there’s one magical thing that is still part of the discovery I can’t fully explain,” he says, “it’s that wine can bring all of these people truly together.”
Start it right
For André Shearer, CEO of South Africa’s Cape Classics, and winner of Wine Enthusiast magazine’s 2018 Wine Importer of the Year award, activist wines make good business sense. “To see it right, and start it right,” says Shearer, “you can embed your philanthropic ideals in the very first business plan you write.”
Shearer founded Cape Classics back in 1992 at a time when rampant alcohol abuse plagued South Africa due to a remnant of the former Dop system, which paid workers in wine rather than wages. He was troubled by the number of inebriated farm workers he witnessed weaving along the roadside each morning, children often in tow. “I realised,” he says, “that one of the historic wounds of our South African wine industry was foetal alcohol syndrome.”
In an attempt to address this, Shearer funded a small wine industry scholarship program to educate and employ South Africa’s most promising, previously disenfranchised youth. Over time, he re-evaluated this approach, determining instead that early childhood education held the key to social betterment.
In 2014, Shearer set up the Indaba (‘important news’ in the local dialect) Foundation which funds Montessori schools, early childhood trauma research, and teacher training institutes throughout South Africa. To fund it, he established Indaba Wine, helmed by winemaker Bruwer Raats of Raats Family Wines in South Africa. James Walton of Walmart’s Walton family also generously supports the foundation.
Shearer contends early childhood education isn’t just good for the children, it’s also critical for business. As proof, he cites the work of Nobel laureate Professor James Heckman regarding early childhood returns on investment. “Basically, what he found is that the earlier the investment, the greater the return,” says Shearer. “You have a child that grows into a healthier, more capable, more sustainable human being that has a much lower cost footprint on humanity, and the community in which they reside.”
Both foundation and brand continue to thrive. “You don’t get named to the Top 100 Best Buys list by Wine Enthusiast because people feel sorry for you, or feel ‘Oh, gosh, what a great cause,’” concludes Shearer. “You get that because the juice is amazing… That’s what we want first and foremost… and, by the way, we hope to change the world one day. Just by the way.”
Cash is king
While ideals and profits can mesh, obstacles sometimes thwart progress. Mika Bulmash discovered this when she founded Wine for the World in 2013 after working a harvest in South Africa, where she met Ntsiki Biyela, the country’s first black female winemaker.
The New York-based business inaugurated a transcontinental collaboration between Biyela and Napa winemaker Helen Keplinger, called Suo (which means ‘to unite’ or ‘to stitch’). The project exceeded expectations, ushering in unexpected supply and demand issues. “Our clients also wanted wines in other price points, or other kinds of wines,” says Bulmash. “We spent all this time building those relationships, and weren’t able to extract all the intrinsic value that was there.”
In response, she accelerated a broader sourcing model to regions including Greece and Brazil. To join the project, producers must meet strict criteria ranging from fair pricing to high quality for value, social responsibility and environmental sustainability. There is also a preference for women-made, organic and minimal intervention wines. “Expanding our scope really helped us to open more doors, and grow the business, says Bulmash, “and we’re continuing to do that.”
Though Bulmash did her homework prior to start-up, she cautions, “One of the first pieces of advice that I would share with anyone wanting to get into the wine industry would be to understand that cash is king.” She also notes: “Anyone wanting to get into the wine industry needs to fundamentally understand the [US] three-tier system and the challenges that it poses, especially to small brands, small importers and small distributors.”
Wine for the World solved these problems by engaging USA Wine Imports in New York, a bespoke logistics support company that organises everything from pan-European trucking and customs brokerage services to stateside warehousing and local market access. The alliance also relieves her company of financial reliance on unreliable distributor payments.
Despite the steep learning curve, Bulmash has enjoyed steady financial gain, is making a social impact and building longer-term client relationships. For example, one of her producers, The Bosman Family, employs 300 workers year round for whom the company has built homes, a retirement facility, a school and a healthcare clinic. “We helped Ntsiki Biyela launch her own wine company,” Bulmash points out. “That has inspired a lot of people in South Africa, and around the world.”
New wine economy
For activist entrepreneurs like Molly Madden, CEO of RedHen Collective (RHC), nothing short of disrupting the wine industry will do. The flame-haired firebrand and owner of the Bay Area and Los Angeles-based feminist, worker-owned wine importer and wholesaler offers “strategically curated” wine for diverse budgets and tastes adapted to “economic and environmental crises”.
Madden posits this ambitious proclamation from a wholly practical standpoint. A neophyte high-end wine sales rep in 2007, she roller-coasted through the 2008 recession but learned a valuable lesson about sustainability which informed her business model. “This [recession] is what happens when you build a wine company or even the larger wine industry on the proposition that wine is a luxury and the only people responsible for supporting it are people with disposable income,” says Madden. “It’s not resilient, because economics fluctuate so intensely.”
To that end, she designed her company to tighten up inefficiencies in the industry, while building in quantifiable value for farmers, winemakers, merchants and consumers. It starts with paying farmers first through a regenerative pool of credit – meaning that when the wine is sold, a percentage of profits goes to the investors and back into the credit pool – thus easing the traditional feast and famine payment cycle and financial stress, to allow for year-round help, instead of contract labourers. RHC also supports investment in ecologically regenerative practices that increase productivity and quality, resulting in more desirable, well-monitored inventory, and allowing more time to train and educate employee-owned sales staff.
The message resonates. “Importing wine is not hard,” says investor Ed Paladino of E&R Wine Shop in Portland, Oregon. “Importing good wine, sourcing good wine, is incredibly challenging, and calls for exceptional talent, energy and knowledge – which the core of the RHC import arm richly possesses.”
RedHen Collective’s initial funds derive from direct investments by everyday people, with more to come from wealthy accredited investors and institutional lenders. Meanwhile, grassroots support grows through word of mouth, events and dinners promoted by passionate retailers, restaurateurs and advocates. “I chose to invest in RedHen for a myriad of reasons,” says Erin Coburn of minimo wine shop in Oakland, California. “I want to be a part of transforming the industry.”
Other companies, like Napa’s ONEHOPE, do good by donating to charitable organisations. Founded in 2007, the company sells more than 100,000 cases of Californian and internationally sourced wine annually, with a donation made for every bottle sold. To date, ONEHOPE has pledged more than $4m to specified charities such as WhyHunger, Raincatcher and WildAid. “We focus on impact,” says Stephane Luzy, ONEHOPE’s chief operating officer, “so we are connecting people to what the donation is actually doing.”
ONEHOPE distributes across multiple channels, including to wholesalers such as McCormick & Schmick’s and Kroger. But the balance of business originates from DtC online, and via brand ambassadors called ‘cause entrepreneurs’ who host wine tastings nationwide, which account for a whopping 70% of ONEHOPE’s business.
Do consumers really want activist wines? Absolutely, provided the wines are good, in addition to doing good. “They want to make the world a better place as much as they can,” says Bulmash of Wines for the World, “so they satisfy their commercial needs with high-quality, well-priced wines that go a little further and do something positive socially or environmentally.”
More importantly, can activist wines make money? Yes again, with the proper amount of due diligence and mastery of supply and demand dynamics and the three-tier system, plus some strategic partnerships.
This article first appeared in Issue 2, 2019 of Meininger's Wine Business International magazine.