This year marks the 200th anniversary of the birth of Friedrich Wilhelm Raiffeisen. It was in the mid-1800s that Raiffeisen, moved by the plight of the rural poor, founded Germany’s first so-called benefit societies and credit unions, forming the basis of the country’s co-operative movement.
Two centuries on and the co-operative movement encompasses a billion people across the globe. Such is its influence that two years ago UNESCO added co-operatives to its list of intangible cultural assets. Its contribution to the wine industry — predominantly, though not exclusively, in Europe — can hardly be overstated. Although declining in number, co-ops still represent around half of wine production of France, Italy and Spain, and a third of Germany.
The real crucible of wine co-ops existed between Germany and France following the Franco-Prussian war, when Alsace was annexed to Germany and lost its French markets. It was then that struggling Alsatian growers, inspired by Raiffeisen’s ideas, began to form co-operatives. Ribeauvillé (1895) was the first; thanks to annexation, history records Les Vignerons du Pays d’Ensérune (1901) in the Languedoc village of Maraussan as the first French co-operative.
In the 1930s French co-ops became politically organised through the National Confederation of Wine Co-operatives, launched in 1932, then expanded dramatically from 82 wineries to 827 between the two wars, before stabilising in the 1970s.
It’s since the 1960s and ’70s that the tide has changed and co-operative cellars across Europe have had to adapt to changing consumption patterns and market developments. Since then a Darwinian “survival of the fittest” principle has set to work refining out those who have been unable to adapt. The well-managed ones by contrast are flourishing, in some cases standing out as spearheads of innovation and quality for the wider wine industry.
The French connection
Few regions have struggled with that “quantity over quality” stereotype of co-ops more than the Languedoc. Here, despite the influx of dynamic private wine businesses, co-ops remain the main drivers of the wine industry, representing around two-thirds of production.
“You have to bear in mind that in the 1960s when France was drinking over 100 litres of wine per head per year, the co-ops were the main provider of wine to satisfy that consumption,” says Languedoc specialist Matt Stubbs MW. “One of the reasons quality never really progressed at that time was because co-ops had no incentive to improve quality — or even to market their wine. The local market was who they sold to. Now what’s happened is that since consumption in France has declined, the market no longer exists.”
He says that the ones that have survived realised that to do so, they had to make better quality wine, while also adapting it to various markets. “To do that you need expertise, so you need to employ people who can deal with the viticulture side of things, go out and help the growers, improve the quality of their grapes. The good co-ops are paying people for the quality of the grapes rather than purely for the alcoholic degree.”
But it takes more than mere grape quality to prosper in today’s wine market. For large-scale Gascon co-op Plaimont Producteurs, a commitment to regional identity has helped to raise it from the ashes of the commercialisation of Armagnac in the 1970s to become one of the biggest players in south-west France, producing 40m bottles annually from 5,300 ha of vineyards.
These days Plaimont is reaping the benefits of its dedication to reviving indigenous varieties and old vineyards across Gascony. It has been able to protect four pre-phylloxera parcels — one of which was planted in 1810 and is registered as a Historical Monument — and to carrying out genetic research on long-lost grape varieties, such as Manseng Noir and Tardif.
“There are two categories of co-operatives,” says Plaimont managing director and head winemaker Olivier Bourdet-Pees. “First, those in which winemakers have come together in order to achieve economies of scale and to reduce costs associated with the production of wine. They feel by creating technically correct wines produced at lower costs they can exist durably in generic markets. It is these winemakers who are finding themselves in real difficulty because the price necessary to access the market with these wines with no soul, no typicity and no originality has considerably decreased over the past few years.”
He says there are also those who have come together to set up a real shared project, investing heavily in the creation of original wines and the means necessary for their creation. “Plaimont was not born out of a desire to save costs; Plaimont was born out of the promise to collectively give ourselves the means financially, humanly and commercially to give life to something that this region did not have and that was not even possible to imagine to do alone.”
The Italian case
In terms of volume the Italian wine market is still dominated by co-ops, but there is much variation from region to region. A key feature, however, is that beyond the big-volume producers racing for the bottom price-wise, there are many small and medium-sized co-ops that have adopted a more quality-driven approach and a more centralised management.
Dario Poddana, operations manager at Masciarelli in Abruzzo, worked closely with Italian co-ops during his 13 years working for UK importer Les Caves de Pyrene. He explains: “In the late 1980s and early ’90s, the co-op reached a bottom point where some of them had to disappear. If they were still existing it was to serve the very cheap end of the local market, or they had to reinvent themselves.”
The first ones to do so in Italy were in Alto Adige, he says. “The Alto Adige market today is driven not by the private growers but by co-operatives that are being run in a very modern way, where the grape suppliers have been asked to step back from the decision-making and where a proper winemaking teams have been put in charge.
That has been a dramatic change that has been introduced in the co-op world.”
Cantina Terlano in Alto Adige is the classic example that has been at the forefront of the co-op quality revolution. Prime high-altitude terroir has naturally pushed the co-op towards lower yields — an average of 49hl per hectare — and higher quality but, as cellar master Klaus Gasser explains, the winery has also implemented structural changes as it has looked to improve as a business. In practice, this has meant the supervisory board of the co-op now overviewing the decision-making process without being actively involved. Strategic marketing has also played a crucial part.
“Historically, the biggest market for our winery was our region, which represented 90 percent of sales,” says Gasser. “But our marketing strategy changed, initially focusing on the national market and then developing into the international market. This involved and still involves an acceptance of impulses coming from different countries and finding orientation in the important wine producers worldwide.”
He adds that strategic marketing is still very important for them, particularly positioning their wines in top restaurants. “Our marketing budget is focused mainly on this goal of positioning and visibility.”
A similar story comes from Domäne Wachau in Austria. In Austria the co-operative movement has never been as cohesive as in other European nations. There are now just 15 wine co-ops, down from more than 40 in the 1990s, most of them bulk wine suppliers. Domäne Wachau is an exception that has managed to position itself among the country’s top white wine producers, aided by more streamlined organisation, along with a strict vineyard management programme; with an average of €15,000 to €20,000 per hectare, they now pay the highest grape prices in Austria.
“What has changed is that the supervisory board is not that much involved in the strategic work of Domäne Wachau,” explains director Roman Horvath MW. “We report to them, we tell them how the business is going, but they are not involved in decision-making — if we do this single-vineyard or if we change the labelling or target a new market.” There are exception, he notes — huge decisions like the recent record €11m investment in new cellar facilities.
German co-ops
In neighbouring Germany, which boasts the oldest wine co-operative in the world — Winzergenossenschaft Mayschoß-Altenahr in the Ahr Valley was founded in 1868 — co-ops have shown remarkable consistency in terms of both production and quality in past decade. Yet German co-ops face a stern challenge in the shape of the country’s fiercely price-driven market, with around 70 percent of German wine being sold through large-scale grocery retailers and discounters.
This has had two salient effects: it has forced many wine co-ops to consolidate in order to improve production structures and lower costs, and it has highlighted the need to develop export markets. This latter area is one in which the co-operative concept has been instrumental.
The German Wine Group (GWG) GmbH was founded at the end of 2017. It is the attempt of four premium German co-operatives — Alde Gott from Baden, Cleebronn & Güglingen from Württemberg, Divino from Franken and Weinbiet from the Pfalz — to strengthen their export activities. This limited company pools the co-operatives’ resources, offering a portfolio of mid-range to premium wines as a bundled export package.
According to export manager Nicola Blanchard, collaboration is key to success in a country where most growers are only working with small areas of land. It can also give competitive advantages in terms of quality at the premium end. “A co-op is often seen as being inferior in terms of quality, and that’s wrong,” she says.
“The advantage that people like Wine Group have is that, although we have the top sites, we’re not solely dependent on them to bring in our income. So we can actually go a step beyond the quality level that someone else might have in that vineyard, harvesting only the best of the best to create a stunning wine, and the rest of it, if we’re not happy with it, drops down into the lower-grade wines. Because we’ve got the volume, the premiums are super,premium at really reasonable prices.”
Another important factor for co-ops, says Blanchard, is sustainability. “I truly believe that if we look at things in a more sustainable way, it is better and stronger for the whole region. Some of the regions, what would they be if there were no viticulture? How many hundreds of people wouldn’t have a job? We’re there to support the community. They are our members, they own the business and the profits flow back to them. And they see that the better the quality, the better the results they’re getting. For me, particularly nowadays when you see so much emphasis on profit, the co-operative business model is incredibly relevant because it is sustainable.”
The above example hints at how many-faceted today’s wine co-operative model is. Although the main trend is a tendency to merge smaller groups, all sizes of co-operatives exist in the wine sector and the concept has been adapted to suit a multitude of different needs. The successful contemporary co-op model undoubtedly includes a streamlining of the decision-making process, recruitment of expert consultants to improve viticulture and cellar work, increasing as much as possible the amount of wine sold in bottle, and strong investment in strategic marketing — especially if they are looking to export.
But whatever the final form, the co-operative is still at the heart of the modern wine industry — with quality the key to success.
What is a co-op?
A wine co-operative produces and sells wine made from the grapes grown by its members. It mutualises such tasks as winemaking, storage, selling, and, in some cases, the bottling process.
‘Winemaking in common’ does not imply that the grapes are all mixed together to make a single wine. The co-operative vinifies separately grapes from specific vineyards that are later sold under different names (château, domaine) or grapes that are selected for their specific qualities or growing process (organic grapes, or ‘terroirs’ for example).
The Deutscher Raiffeisenverband (DRV) model: To establish a cooperative requires at least three people. There is no minimum capital contribution required. The co-op is comprised of three essential parts: a management board, supervisory board and general assembly. Small cooperatives (fewer than 20 members) can operate without a supervisory board. It is a fundamentally democratic institution - each member has equal rights. It should have compulsory membership in an auditing association and members are liable with their capital share only, as long as the reserve liability is excluded, as per the statutes.
A classic co-op: Cantina Tollo
Cantina Tollo, situated in Italy’s Abruzzo region was founded in 1960, during a period when people were not only abandoning the Italian countryside, they were emigrating abroad. The members of what become Cantina Tollo, however, decided to stay and make the land economically viable.
Over 50 years, the co-operative has helped shape the landscape, by maintaining vineyards until cultivation, while gently nudging members to adopt better viticulture. Local grapes such as Montepulciano, Pecorino and Passerina — among others — are retained, but experimentation is also encouraged; today, bio and vegan wines sit alongside classic offerings.
To ensure grape quality, rather than quantity, the co-op implemented the Vigneto Avanzato project, which remunerates shareholders based on each hectare worked, not on the quantity of grapes produced. Today, Cantina Tollo has 800 members farming 3,000 ha of land, and producing 13.3m bottles a year. As in many regions across Europe, the local co-op has helped prevent the local economy from hollowing out. Tollo, the local town, today remains renowned for its picturesque — and economically active — vineyards and olive groves. FC
Europe’s Co-operatives by Country
FRANCE
French Confederacy of wine co-operatives (CCVF)
619 wine co-operatives
85,000 co-operatives members, more than half of French wine-growers
51% of the wine production in France (43% taking into account the Charentes region, which produces mainly alcohol for brandies)
Combined sales: Nearly €6bn per year
ITALY
Alleanza delle Co-operative Italiane
493 co-operatives
179,000 grape growers
58% of Italy’s total wine production
Combined sales: €4.3bn per year
AUSTRIA
Austrian Wine Marketing Board (ÖWM)
15 co-operatives
No of growers: no figures available
10% of total Austrian wine production
Combined sales: no figures available
GERMANY
DRV
165 wine co-operatives
43,000 growers
33% of total German wine production
Combined sales: €770m per year
SPAIN
Co-operativas Agro-alimentarias
551 wine co-operatives
Number of growers: no data for this
60% to 65% of total Spanish wine production
Combined sales: €1.477bn per year
Breakdown of co-op production:
Wine in bulk: 57%.
Bottled wine: 29%.
Mosto: 8%.
Grape: 4%.
Vinegars, aromatized wines: 1%.
Alcohols: 1%
PORTUGAL
Vini Portugal
97 wine co-operatives (29 of which with ‘significant commercial activity’)
37,000 growers
37% of total Portuguese wine production
Combined sales: €200-230m per year
