Napa Valley’s Getting Crushed: Will OneHope Winery Survive Global Warming?
OneHope, a Napa Valley multi-varietal winery is feeling the heat of climate change. They're starting to consider ways to adapt, but is it enough?
When it comes to wine, weather matters – a lot. Produce a cabernet sauvignon at the ideal temperature and you’ll fetch a hefty $4,100/ton. Grow those grapes 5-degrees warmer and the quality demands a mere $260/ton.[1] But price and quality don’t even begin to scratch the surface on how global warming is impacting wineries. Rather, a few degrees or a couple inches of rain can impact product mix (Pinot Noir only grows within 2-degrees[2] and a couple of degrees distinguishes a Rhône from a cabernet[3]), overall yield, required distribution networks – and their timing, irrigation demands, energy use, pest-control measures, and even the larger restaurant and tourism industries. OneHope, a multi-varietal vineyard in Napa Valley, California, is already feeling the heat.
The question is: will they acclimate in time to survive?
Grapes To Raisins: Napa’s Feeling The Heat
Napa Valley, which produces 85% of American wine,[4] has already seen average temperatures rise by 1.5°F.[5] While warmer nights have benefited some varietals,[6] we’ve reached a threshold over which further increases are detrimental. Yet it isn’t just mean temperature winemakers should fear. Far more concerning: the increased frequency of 95°F+ days in a region known for its temperate climate[7]. In 2017, Napa had three consecutive days over 110°F.[8] The result: raisins.[9] Unfortunately, this isn’t a fluke. Models predict 10 more “very hot” days per year by 2040[10] and an ominous study looking at the results of 17 different climate models forecasts a 70% decrease in California’s wine production by 2050.[11]
Tasting Climate Change: OneHope’s Bite On Global Warming
While winemakers are used to varying weather, these recent extremes push the limit. Consequently, Mari Coyle, OneHope’s Director of Wine, is working to protect her prized-crop from the unprecedented heat scorching her grapes and stressing already-constrained water resources. In the short-term, she is focused on precision irrigation, innovative shading techniques, and expanded vine structure. And while she’s not yet exploring the possibility of relocating OneHope’s vineyards, it’s most-definitely on her longer-term radar. It’s not, though, yet on the mind of Jake Kloberdanz, CEO and co-founder of OneHope, who is mostly thinking about global warming “as it pertains to being thoughtful about waste and carbon emissions.” While it’s admirable to note his primary focus on reducing OneHope’s contribution to climate change – and we most definitely need more industries to turn their gaze inwards if we’re to prevent climate change’s exponential impact –I worry that by the time he pivots from mitigation to accommodation, it may be too late.
Avoiding ‘Pour’ Decisions: How OneHope Can Better Address Climate Change
If OneHope is to remain competitive, they must dramatically reconfigure their supply chain in order to accommodate changing climate conditions and weather this storm (er, heat wave). To do so, they should reconsider their inevitably-evolving product mix, work with distributors to accommodate harvest schedules that appear destined to vary, and implement new pest-control measures (using owls[12] and falcons,[13] perhaps), to cull the increased number of grape-eating rodents that will continue to survive warmer winters. They would also be keen to more seriously consider the use of greenhouses (such as those in crop-desserts like Iceland and Israel) as well as the acquisition of land at higher latitudes or elevations. I would urge them to investigate these more drastic relocation-based approaches sooner rather than later in order to capitalize on a first-mover advantage which would both give them prime access to land before competitors’ pounce on available property and drive-up prices and afford them additional time to establish the infrastructure required to harvest in a new location.
In the medium-term, OneHope should consider how they can employ data to anticipate and respond to climate change – and share it with all players in their supply chain. Additionally, they should explore innovative ways of weather-protecting their crops (such as in partnership with a company like Indigo) and consider partnering with co-dependent industries, such as restaurants and hotels that may be incentivized to share in some of the financial burden resulting from this reconnoitering of the supply chain. More broadly, wine’s climate sensitivity makes it an ideal warning system for other crops[14] and thus I hope the global food supply chain is paying attention.
Looking Ahead…
If OneHope is to survive – and, ideally, thrive – post-climate change, I’m left wondering: how will wine drinkers adapt to a changing industry ripe with rising prices, fewer varietals, and a trip to the vineyard now taking place in a greenhouse? And how can vineyards like OneHope work to change consumer preferences and purchasing decisions in anticipation?
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[1] Hertsgaard, Mark. What Climate Change Means For Wine Industry. Wired. April 26, 2010.
[2] Donner, Paige. Winemakers Rising to Climate Challenge. New York Times, November 16, 2011.
[3] Cattanach, Jamie. A Wine Drinker’s Guide To Climate Change Winners And Losers. Vinepair. July 27, 2017.
[4] World Wildlife Magazine. Climate Change’s Impact On California Wine. Fall 2017.
[5] Napa Valley Vintners. Napa Vintners Release Findings of Climate Study. February 3, 2011.
[6] Nemani, R.R., M.A. White, D.R. Cayan, G.V. Jones, S.W. Running, J.C. Coughlan, and D.L. Peterson. 2001. Asymmetric warming over coastal California and its impact on the premium wine industry. Climate Research. 19:25-34.
[7] Diffenbaugh N S and Ashfaq M 2010 Intensification of hot extremes in the United States Geophys. Res. Lett. 37 L15701
[8] CBS San Francisco Bay Area. California Heat Wave Crushed Grape Growers’ Dreams Of Fruitful Harvest. September 10, 2017.
[9] Mobley, Esther. Torrid Temperatures Shrivel California Wine Grapes To Raisins. San Francisco Chronical. September 9, 2017.
[10] Zubryd, Sascha. Global Warming Could Significantly Alter The U.S. Premium Wine Industry Within 30 Years, Say Stanford Scientists. Stanford Report, June 30, 2011.
[11] White, M.A., N.S. Diffenbaugh, G.V. Jones, J.S. Pal, and F. Giorgi. 2006. Extreme heat reduces and shifts United States premium wine production in the 21st century. Proceedings of the National Academy of Sciences 103:11217-11222.
[12] Robertson, Sarah. Are Barn Owls Nature’s Best Pest Control? Sierra: The National Magazine of the Sierra Club. August 20, 2016
[13] Gelles, David. Falcons, Drones, Data: A Winery Battles Climate Change. New York Times. January 5, 2017.
[14] Hertsgaard, Mark. Grapes of Wrath. The Atlantic. April 26, 2010.
Interesting article about climate change’s impact on wine growers. I agree with your assessment that Jake Kloberdanz, the CEO, should be looking at accommodation measures in addition to mitigation measures, but I’m not sure something as drastic as turning to Greenhouses is the answer, at least in the short-term. Wine in particular has a great deal of history and “romance” tied up in the way it is produced and I think consumers would balk at Greenhouse-grown wine grapes. There is likely a spot for a niche player to capture those who like to be on the cutting edge of new things and who care most deeply about climate change to build a greenhouse winery (and to get lots of free publicity from the novelty of it) but the vast majority of wine drinkers would likely reject such a move.
In the same way Jean-Claude Biver was able to attack the quartz watch movement by emphasizing the “authenticity” of a Swiss mechanical watch, “normal” wine-makers would attack greenhouse wine as less authentic and fake. This would likely have an even more detrimental affect on greenhouse wine than quartz watches because wine is something that is consumed so having it be “natural” is even more important to consumers.
As such, I would recommend that OneHope double down on things that are perceived as more natural, such as relocation of vineyards and better irrigation and shading techniques as mentioned above. OneHope could also look into “adaptive plant material” techniques (http://www.wine-economics.org/aawe/wp-content/uploads/2016/06/Vol11-Issue01-The-Impact-of-Climate-Change-on-Viticulture-and-Wine-Quality.pdf) which use things like longer root stalks and selective breeding for later blooming varietals to adapt to a warming climate.
The effects of climate chain on wine makers are drastic – as you lay out really clearly in this article. Similarly to Graham above me, the mitigation efforts need to be added to the accommodation efforts. Although I think the product mix idea is likely to be effective, I think the struggle is to estimate when weather patterns will happen and therefore proactively respond. Although the use of natural pesticides could be effective, the core problem of controlling temperature would not be mitigated. I disagree, however, with Graham positing that greenhouses would not be effective. Fancy, old-fashioned wines generally come from Europe, and it could be an effective way to use something man-made to create a trend in the wine-industry, a disruption of sorts, leading to much more consistent blends.
The issue that I foresaw with this is the effect on the quality of wine. Without the varying of temperature, the quality of the grape may be forsaken – although you will have a consistent grape, you may not be able to exceed the quality of your wine year to year. This may be an interesting way to infuse A-B testing into finding the perfect weather variation pattern leading to the best grape. It could be interesting, with the rise of digitization, to use technology to better the quality of wine and be able to avoid the detrimental effects of climate change.
Great article. Clearly, the impact of climate change on very temperature-sensitive crops like grapes is severe. While clearly there is interest in protecting the existing vines through accommodating actions, the other side of that coin is the opportunity to plant vines in areas that are likely to become the new prime wine-producing regions. Your article paints a dire picture for consumers – rising prices and fewer varietals – but wouldn’t there be a simple substitution with new wines grown in the areas that now have the best climate for wine production. Further, with the efforts of the incumbent growers to adapt to the changing climate, the overall supply of wine could in fact increase. Could this in fact be a situation where disruption actually creates value for wine consumers?
Thanks for the interesting article. I agree with your view that the CEO needs to take more significant action to address the impact of climate change on OneHope’s business in the short and medium term, and I agree with Graham’s comment that the initiatives likely need to be “natural” or “organic”.
However, I’m not convinced that wine drinkers are going to suffer in this new, warmer, environment. Although wineries in existing wine producing regions may be at risk from climate change, wine production is increasing in other regions as a result of climate change [1]. The global mix of grape varietals may change, and the global mix of wine producing regions may change, but demand for wine likely will not change significantly. As new and different supply comes online, consumers may have to adapt their tastes, but I doubt they will see a negative impact in their wallets. If anything, producers in new regions may be incentivized to come into the market at lower prices in an effort to gain market share. Existing wineries in vulnerable regions like OneHope will have to adapt their supply chains to combat both climate change and these new entrants to the market.
[1] Business Insider, “Climate change is turning these unexpected regions into the next wine hotspots,” http://www.businessinsider.com/climate-change-leads-to-new-wine-hotspots-2016-3/#china-1, accessed November 2017.
From my perspective, I actually very much agree with Graham on the “romance” of wine – at least optically. What I mean by this is, I agree that people would balk at the idea of grapes grown in greenhouses if they were exposed to those greenhouses upon visiting the vineyards and going wine tasting. The reality though is most hectares of grapes are constantly outside of the sights of visiting consumers and they would never even know what practices are being conducted on their wines unless the producer is advertising “all natural” or “organic”, etc. For this reason I am actually not opposed to the idea of taking more drastic steps when necessary – though I would argue we are not quite there yet and so I wouldn’t invest immediately in these types of initiatives.
Moving on to Paul’s comment, while I agree exploring new land opportunities for growth makes sense – it is actually REALLY hard and the particular soil and land atttributes (e.g., tilt for irrigation, etc.) are far more critical for wine production than temperature and so the company would be better to invest in tempering the temperature on their existing plots of land that moving to new plots of lands.
I wonder if OneHope could pivot given the issues it is seeing with wine production and climate change. In my mind, they seem to have an interesting opportunity here to build out an arm that serves as more of an innovation testing ground for the wine industry at large. The team is well versed in climate change’s affect on wine — OneHope’s Director of Wine is also doing research on innovative farming / harvesting techniques to help mitigate climate change risk. If the team continued doing this research and worked with other vineyards to implement new growing strategies, they could help the entire wine industry and maybe address some of the potential price and consumer behavior issues others have mentioned above.
I imagine the biggest challenge to adding this core competency to OneHope’s “portfolio” would be convincing the CEO that adding staff makes economic sense. New headcount would be required to research/work on these short and long-term climate change response strategies and also to sell these strategies to other winemakers. However, OneHope has a unique chance to 1) learn how to protect its own vineyards through research, 2) become a thought leader in this space, and 3) perhaps gain some additional revenue from sharing these strategies with the rest of the wine world. It’s a bit of a crazy plan because this could also just turn out to be a huge competitive advantage for them, but I think it’s one that they should consider.