Escaping to Tasmania

Climate change’s effect on Australian winemakers and their migration to Tasmania to survive.

If you talk to any French winemaker, he or she will undoubtedly tell you that the quality and personality of a wine is all about its “terroir.”  Terroir, literally the soil or region, is primarily built upon the region’s temperature and moisture patterns[1].   Though there are many stages in wine production including fermentation, aging and bottling, all production essentially begins on a farm with vines that have potentially inhabited a single location for many decades.  Therefore, the wine industry, almost more than any other agricultural industry, is extremely sensitive to changes in climate where the entire range of climate growing zones is about 10°C and only 2°C for popular varietals like Pinot Noir[2].

The quality of a wine is largely dependent on the amount of sugar and acids present in the grape when it is harvested.  Increasing temperatures means increased fruit sugar (and therefore alcohol), lower acid concentrations (especially malic acid), and lower anthocyanins and methoxypyrazine levels (other compounds that contribute to a wine’s color and flavor)[2].  A “good vintage,” then, is often determined by whether the weather patterns of that year allowed for the grapes to ripen at the perfect time so that they have just enough sugar and acid to produce a quality wine.  For winegrowers like the Australian Brown Brothers, warm springs and hot summers can produce lower-quality, more alcoholic wine[3].

Due to the variations in terroir, growers have chosen specific wine varietals to optimize the compromise between yield and quality, both of which are important for future revenues[4].  This means that certain regions typically grow specific types of grapes.  For example, cooler climate regions like Oregon and Burgundy, France are known for their Pinot Noirs which are better grown in cooler climates.

Companies like Brown Brothers have built businesses around Pinot Noirs, planting vines in the region of Victoria, cool enough to grow these delicate grapes[3].  Over recent history, though, grapes have on average been harvested 1-2 days earlier each year due to rising temperatures[5].  In fact, research has shown that grapes can ripen 7 days earlier for every degree warmer a year is[5].  This has caused several problems in production and supply chain including capacity issues and the inability to grow certain varietals.

The shorter ripening season is causing red grapes to ripen at the same time as white grapes, when historically white grapes were harvested first.   This creates great pressure on the infrastructure of the winery because there is limited space in the steel fermenters[3].  Lastly, the increase in temperature could eventually make it impossible to grow certain cool region grapes at all given the narrow temperature range in which they can grow.

So what are Australian winemakers’ options?  Well, they can grow different grapes…or they can move.  Growing different varietals, such as those that thrive in warmer climates like in Italy and Spain, could potentially cause marketing challenges as consumers may expect certain wines from certain regions.  Moving, on the other hand, is expensive[3].

The Brown Brothers decided they had the time and capital to move, so they did just that.  Tasmania used to be a region of the world too cold to grow grapes, however, in recent years it has become a very desirable location for Australian winemakers being pushed out of their regions due to warming temperatures[3].  Brown Brothers saw the opportunity and jumped on it, allowing them to continue to produce their traditional grapes varietals and even developing Tasmanian Pinot Noirs that are earning international recognition[3].  An additional perk was that given the region was so new and yield was therefore so low, demand greatly outweighed supply and prices on grapes from Tasmania could garner prices five times that of grapes from mainland Australia[3].  Now vines plantings have increased by 25% in the last decade to keep up with this trend[3].

In the long-term, as other wineries continue to follow this lead, Brown Brothers will have to find a way to develop a competitive advantage aside from the rarity of its terroir.  Differentiating itself from fast growing competition will be an equal threat to its survival as finding growable land.  Another long-term concern for the company will be what to do with the land they already own in Australia.  If high-quality grapes can no longer be grown there, how will this affect the value of their company?

Lastly, the question remains, should producers still invest in building a market for grapes that have adapted to warmer temperatures or bank on there always being a cooler area to flee to?

(Word Count: 749)

[1] Lee Hannaha, Patrick R. Roehrdanzb, Makihiko Ikegamib , Anderson V. Shepardb, M. Rebecca Shawc , Gary Tabord , Lu Zhie , Pablo A. Marquetf, and Robert J. Hijmans. “Climate change, wine, and conservation.” Proceedings of the National Academy of Sciences of the United States of America, vol. 110 no. 17, Pages 6907-6912

[2] Michelle Renée Mozell, Liz Thach, The impact of climate change on the global wine industry: Challenges & solutions, In Wine Economics and Policy, Volume 3, Issue 2, 2014, Pages 81-89, ISSN 2212-9774, https://doi.org/10.1016/j.wep.2014.08.001.

[3] Fiona Breen, “Rising temperatures spark ‘race to Tasmania’ for winemakers escaping heat,” The Australian Broadcasting Corporation, June 5 2016, [http://www.abc.net.au/news/2016-06-05/rising-temperatures-spark-winemakers-move-to-tasmania/7371262], accessed November 2017.

[4] Cornelis van Leeuwen and Philippe Darriet. “Impact of Climate Change on Viticulture and Wine Quality.” Journal of Wine Economics, Volume 11, Number 1, 2016, Pages 150–167 doi:10.1017/jwe.2015.21

[5] Calla Wahlquist, “Australian wine under threat from climate change, as grapes ripen early,” The Guardian, February 16, 2016, [https://www.theguardian.com/environment/2016/feb/17/australian-wine-under-threat-from-climate-change-as-grapes-ripen-early], accessed November 2017.

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5 thoughts on “Escaping to Tasmania

  1. Brown Brother’s decision to move Pinot Noir production to Tasmania was an interesting one. Relocation is an option for some (likely, more serious and larger) wine growers, but may be more difficult for smaller wine growers who don’t have the ability to move their production. A Catalan winery – Bodegas Torres – opted to change out their grapes to combat the impact of climate change on their production. The cultural heritage of the region is deeply important to the winery, taking relocation off the table. They are now using an ancestral grape species that is more resilient to the changing climate. This isn’t withoutu challenges though – they needed to revive the species and grow a plant shoot in vitro for a year before testing the species. Which takes years. It still remains to be seen if this is a sustainable solution.

    Sedacca, Matthew. “Resurrecting Ancient Wines That Can Survive Climate Change,” The Atlantic, July 17, 2017, accessed November 2017, https://www.theatlantic.com/science/archive/2017/07/at-least-there-will-be-good-wine/533886/

  2. Such an interesting article. Thank you for sharing. Moving to Tasmania is a rational choice. Yet raises the question, is it sustainable? Invariably, climate change will impact Tasmania’s weather, and prompt the search for a longer term solution.

    One potential solution I see is for Brown Brother’s to partner with other agricultural businesses and invest in alternative solutions to allow agricultural products to flourish under extreme weather conditions. Agriculture remains a significant proportion of Australian’s economy. Live stock and produce are also impacted by these weather conditions. Moreover, the Australian government has been comparatively more proactive on the climate change front. Brown Brother’s should also explore grant funding and R&D subsidies from government agencies.

    The other opportunity I see is to create a new wine product that has higher alcohol content. Alcohol consumption in Australia is higher than the average OECD economy. Certainly, the business case for this kind of product could be defensible.

  3. While Brown Brother’s move to Tasmania may have been successful for its top/bottom line, I do worry about the broader impact of how climate change will impact the wine industry in Australia (and across the world). Your essay highlights the key insights in climate change in the wine industry is an important one. Brown Brother’s decision is not one to be copied by all other wine companies though because it is a short term solution to a long term problem. Given the capital investment and high asset qualities of the wine industry, when paired with the number of years it takes to mature a vineyard, I worry about how successful this strategy will be. Tasmania may have been a wise decision but can be copiable. I would hope that the wine industry (or companies with deep enough pockets) would invest in new technology to be able to continue to create wine in their current climate in the face of changing weather.

  4. Fascinating article! In addition to the options of moving locations and lobbying for more systemic solutions to climate change, I wonder if the company (and wineries more broadly) would be open to the idea of experimenting with genetically modified grapes for use in winemaking (i.e., the Monsanto road). Let’s assume for a moment that it was possible to produce a grape via this method that was able to meet quality standards in a wider range of temperature conditions (and at higher temperatures). This more resistant grape would enable wine companies to remain where they are, avoiding the capital investment associated with moving, and then potentially moving again. The question would then become – would consumers accept this? Genetically modified food products are highly controversial, but I believe they should be on the table as the wine industry increasingly finds itself challenged by climate change.

  5. As Clare and Francesca mention, most wineries do not have the luxury of relocating in the face of climate change. This is simply not a trend they can outrun. Additionally, region is so closely associated with the wine’s reputation that most well-known vineyards do not have the ability to move without impairing their reputations.

    You mention shifting grape varietals to grow grapes that grow in warmer weather. A risk there is that wineries become known for wines that require certain grapes. Abandoning a “famous” wine could irreparably damage sales. However, I wonder if shifting product mix could be a near-term solution, before Isabel’s longer-term R&D suggestion. If climate change has caused red grapes to ripen earlier so they now compete for the white grapes’ space in steel fermenters, could wineries shift their mix of red vs white to alleviate space pressures? While the simple solution is buying more fermenters, that would require substantial investment and decrease utilization. A more cost-efficient solution would be to shift the product mix in the short-term, abandoning wines with subpar sales to give room to the ones that sell well. A long-term solution would still need to be found for vineyards that cannot relocate, however.

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