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. 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.
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). 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.
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. 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. Over recent history, though, grapes have on average been harvested 1-2 days earlier each year due to rising temperatures. In fact, research has shown that grapes can ripen 7 days earlier for every degree warmer a year is. 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. 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.
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. 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. 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. Now vines plantings have increased by 25% in the last decade to keep up with this trend.
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?
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 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.
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