Business

If you want to see how family businesses are adapting to climate change look at the wine industry

Families which cultivate wine – whether they be the Rothschilds or Napa Valley newcomers – are braced for the temperature extremes set to come with climate change. 

The immediate future is hard to predict but the slow pace of cultivation means they must make their plans soon. 

 So far, not so bad

Data for Beaune compiled by Thomas Labbé of the University of Leipzig in 2019 shows that grapes in Burgundy are being picked 13 days earlier than the previous six centuries. Further South, harvests are happening three weeks earlier, says Kevin Parker, owner of Chateau Maris.

The trend continued in 2020 and the Champagne harvest of mid-August became the earliest on record following a warm spring and February temperatures similar to summer.

The year 2020 was a “remarkable advance” in production, according to the French agricultural ministry, leading to a 6% rise in the wine harvest. 

The climate extremes which brought this April’s frosts are less damaging than feared. Parts of California have also experienced a glut, heading into 2021. According to Steve Borba of wine insurer Zurich: “Growers are planting in areas that wouldn’t have been considered thirty years ago.” The 2021 Argentine crop is “extraordinary”, according to harvesters. 

 The heat is on

Growers in southern parts of France and Spain are nervous of another hot summer, where vines get scorched and grapes change their flavour and structure. Analysts say a glass of Burgundy will end up tasting more like a Bordeaux in the near future. 

Grapes that survive the heat process their sugar quickly and raise their alcohol content. Analysis of tree rings by Cambridge University has shown that summer droughts that can produce these conditions have become more severe than at any period over the last 2,100 years.

Grapes are more at risk than most agricultural crops because they are sensitive to temperatures, preferring a growing season which averages 12 to 22 degrees Centigrade. 

Saskia de Rothschild is head of Chateau Lafite Rothschild, renowned for its wine estate in Bordeaux, plus other family vineyards. She recently said her family had enjoyed a good run: “But that doesn’t mean we are not extraordinarily wary.”  She said Merlot was showing sensitivity to heat, and other estates tend to agree. 

The family has been seeking to grow more Cabernet Franc and Cabernet Sauvignon grapes to preserve the balance. 

Research co-authored by Columbia University says two degrees of warming would be sufficient to cut land under cultivation by 56% while four degrees would hit 85%. 

Families adapt

The year 2020 reinforced the forecast with massive fires in Napa Valley, California. Enriquez Estate Winery was forced to deal with several fires which broke out near its Russian River Valley. This led to smoke taint appearing in its grapes, which needed to be treated. Cecilia Enriquez is also ready with precautions against power outages and evacuations: “It becomes part of your normal everyday life.”

Parts of Australia also suffered extreme heat and wildfires in 2019 and 2020, although this year is relatively benign. In bad years, producers have been forced to repackage their premium wine as a cheaper brand because of smoke taint, according to Zurich. 

But winegrowers, like farmers, learn to live with the elements. Brown Brothers of Victoria, now in its fourth generation of family ownership, has no plans to relocate although it hedged its bets via a Tasman purchase in 2010.

Jackson Family Wines of California, founded by Jess Jackson and Barbara Banke, is involved in land conservation, low impact farming and water preservation in a region with massive irrigation problems. Jackson now generates enough solar energy to serve 12 wineries. energy management.  

In 2019, it co-founded International Wineries for Climate. It formed the IWC with Spain’s Familia Torres, led by Miguel Torres,  to halve emissions by 2030 and achieve net-zero by 2050, in line with United Nations proposals.

Kevin Parker and Bertie Eden have taken organic cultivation to another level with biodynamics which purifies cultivation and treats the soil. Their Chateau Maris estate of Languedoc even runs a hemp cellar which is energy self-sufficient and absorbs carbon dioxide.  Maris has B Corp status and Eden is a consultant to Invivo, a large French organic wine co-operative.

Parker viewed climate change as a megatrend back in 2004 when he was in charge of Deutsche Bank’s asset management arm. Alongside Maris, he runs Sustainable Insight Capital Management, an ESG pioneer backed by Jeff Skoll’s Capricorn Investment Group and the Kresge Foundation of Kmart fame.

Grape switch

Many families are preparing to change the grapes they are using. Family-owned Lakemead Estate, California are looking into hardy grapes like Touriga Nacional of Portugal. Others cite Nero d’Avola of Sicily, Vermentino of Sardinia and Fiano of Southern Italy.

According to the Columbia University study, swapping cultures could cut the loss of vineyard land by half in two degrees of warming and a third in four. But advance planning is essential.  

Saskia de Rothschild has warned it takes a decade to establish new growth. Microclimates can vary hugely and may vary further if prevailing winds and rainfalls change. 

Nate Walsh of Virginia’s Walsh Family Wine is taking his time: “We are looking for varieties that are not only suited for the warmer weather and more violent rains and can be approached with less passes on a tractor, less chemical input and still speak to the region.”

Walsh’s small size makes it nimble. But larger family businesses, like E&J Gallo of the US, started by Ernest and Julio Gallo in 1933, seek to benefit from a broader portfolio that diversifies their climate risk. Gallo has developed a code for sustainable winegrowers. 

It has altered its mix of grapes and researched better ways to protect them from heat stress by using shade cloth, positioning vines on sun-sheltered slopes and using irrigation. It has generated associations with other businesses and invested in premium brands, most recently by acquiring Pahlmeyer Winery in 2019. More consolidation is likely as families seek support to deal with climate stress.

Time to move

Some producers are seeking cooler climes. The Torres family of Spain is developing production at a new site, a thousand metres above sea level. Organic specialist Avinea of Argentina is among several businesses investing in Patagonia for the first time.

Developing warmth is also giving the United Kingdom a chance to compete, particularly the North Downs whose soil shares the chalk, clay and flint of Champagne. Sir Adrian White’s water treatment business, Biwater, bought an estate near Dorking called Denbies in 1984. His son Christopher has turned it into one of the largest vineyards in England – latterly winning an international gold award for its dessert wine. 

A digital solution

 The tech-driven solution to climate change is Endless West which has won the backing of family offices to stay safe from the weather. It starts at the molecular level to make wines and spirits, and says its whiskey needs 92% less land than traditional development and 94% less water.

Profiled in Family Capital, Endless raised an additional $21 million in April from Denmark’s North East family office, Li KaShing’s Horizons Venture, Litani Ventures and Justin Mateen, co-founder of dating site Tinder. 

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