Navigating Climate Risks in the Wine Industry

Image Source: Unsplash

Climate change is already impacting agriculture and disrupting food supply. This reality is driven home by research published by the Environmental Protection Agency (EPA) which finds that extreme temperatures, lengthy droughts, and extreme events will reduce the overall yield of staple crops and make life difficult for livestock farmers. 

Rising global temperatures are set to impact luxury goods like wine, too. Wine vineyards are reliant upon stable, predictable conditions in order to produce reds, whites, and rosé with distinctive flavors and recognizable aromas. 

Adjusting to the future of climate change is particularly important for vintners based in vulnerable locations like California. California, which produced 599 million gallons of wine in 2022, could become a case study for winemakers around the world to follow in future years. 

Wine and the Climate

Like most crops, grapes need specific climate conditions to grow properly. However, unlike apples, pears, bananas, and other fruits, the flavor of wine grapes is highly dependent on the region they are grown in. Understanding the regional differences between wines is key for oenophiles and vintners who want to navigate the climate risks in the wine industry. 

Regional differences affect the terroir of a given wine. Terroir describes factors like climate, soil, precipitation, and topography. For example, the wines grown in the Champagne region of France have great drainage thanks to the local limestone soil. This ensures that the wines get enough nutrients to produce a recognizable combination of acidity and sweetness. 

Unfortunately, climate change is shifting the terroir of many vineyards due to heightened temperatures. This produces a sweeter, more sugary grape with low acidity. The result is a crop that contains too much alcohol and has a flabby taste and texture. This is a serious issue for vintners looking to break onto the new-world wine scene. 

Old-world vineyards are also at risk of climate change. Renowned wine regions like La Mancha, Tuscany, and Burgundy have enjoyed relatively stable climates for generations. Climate change threatens to change this and could pose a real risk to well-established wine vineyards and wineries. 

Challenges Facing Vineyards

Climate change will influence the flavors and makeup of classic wines. However, some vineyards stand to lose it all in the face of global warming. High-profile cases of wineries that have been affected by climate change include: 

• South Africa: The 2016 El Niño-Southern Oscillation (ENSO) devastated the region with excessive heat and dryness. This naturally occurring phenomenon could be worsened by climate change and significantly reduce precipitation.
• Chile: Wildfires destroyed hundreds of vineyards in 2017 including century-old vines that made the Maule and Colchagua valleys famous. 
• France: The Montpelier region was devastated by golf-ball-sized hail in 2016 and extreme frost caused between $1.1bn and $2.2bn in damages to vineyards in Bordeaux in May the following year. 

Many experts now suggest that parts of California, France, Spain, Portugal, Australia, and South Africa will be too hot and too dry to produce quality wines by 2050. Unfortunately, vintners in these regions may be negatively impacted by climate catastrophes, which are becoming more frequent and severe due to climate change. 

The Industry at Large 

Navigating the issues that climate change presents will take a coordinated effort on all fronts in the wine world. Vintners may have to adopt AI-powered smart agriculture to respond in real-time to weather events and wine merchants will have to rethink the way they market wines in climate-affected regions. 

Responding to these challenges isn’t impossible. However, regulatory changes are necessary to ensure that climate risks are disclosed to potential investors. Climate risk disclosure may sound like a threat to vintners at first but, in reality, disclosure can improve: 

• Decision-making: Vineyards that collect climate data for disclosure reasons are better positioned to make informed decisions about the future, too. 
• Reputation: The wine industry will transform in the coming years. Vineyards with a reputation for transparency and honesty are more likely to attract investment and survive difficult growing seasons. 
• Capital: Investors will only put their money behind climate-conscious firms that have taken precautions to address the issues associated with climate change. 
• Compliance: Vineyards that face the burden of climate change cannot afford to fall foul of regulatory mistakes. Disclosure reduces the risk of climate-related lawsuits that could undermine otherwise profitable vineyards. 

Vintners who have experienced the negative effects of climate change may want to invest in synthetic agriculture. Syntropic agriculture has the potential to reverse some of the effects of climate change by restoring soil to its once-fertile conditions. This can restore wine regions that have been undermined by climate change and may help balance the books when pre-established vineyards are unable to produce a large enough yield to turn a profit. 

Conclusion 

Vineyards and wineries rely on a delicate ecosystem to produce grapes with distinctive flavors and aromas. However, climate change is set to change the terroir of new and old-world wine regions. Vintners and oenophiles can respond to these challenges by pushing for regulatory changes that increase climate resistance and promote practices that can meaningfully combat climate change.