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Climate change is having a seismic effect on the global wine industry, but not only in the vineyards. Chris Losh believes consumer sentiment towards companies is also taking a hit from freak weather spates.

As freak weather episodes provide challenges in the vineyard, so the challenges are also playing out with the consumer

As freak weather episodes provide challenges in the vineyard, so the challenges are also playing out with the consumer

Late last month, I was broiling gently in a vineyard in Germany with a group of wine merchants. It was 37 degrees - fully ten degrees higher than a typical June maximum.

We were at a spectacular viewing area, looking out over the Rhine. Before us, the river shimmered in the heat, and behind us was a sign explaining the basics of wine production to curious tourists. "The Riesling harvest begins at the end of October, often the start of November," it said confidently.

Thirty years ago, when the sign was erected, this might have been correct. Now, it is so inaccurate they might as well have said "grapes are harvested by pixies riding unicorns". In 2018, Germany's grape harvest began - for the first time ever - in August. Last year might have been a freak, but mid- to late-September is usual. Either way, end of October it ain't.

In wine-producing regions such as northern Italy, where Prosecco producers have just experienced an entire season's rain in two weeks, or southern France, where vines were last week burned by a freak heatwave, growers are in unknown territory. The accumulated wisdom of previous generations counts for nothing in the face of climate change.

As Ernie Loosen in the Mosel pointed out, while his father focused on maximising ripeness from watery sunshine, now vineyard technique is all about slowing down sugar ripening to allow flavours to develop fully. It's a 180-degree switch in focus.

These points came to mind last week, when I attended a talk on what the drinks industry of ten years' time might look like. As well as 'less booze' (which I covered last month), the other big trend is a huge rise in the importance of sustainability. "Generation Z are justifiably pissed off with what previous generations have done over the last 30 years, despite having all the information about what we are doing to the planet," said Bacardi's global advocacy director, Jacob Briars. "They are going to be asking the businesses of the future 'what did you know, and what did you do?'"

In the not-too-distant future, we could see a world where a product's Carbon Index is routinely recorded (possibly even as compulsory as its abv), and blockchain makes the entire supply chain transparent, from grapes to packaging to transport. Products with high carbon scores, a poor record in staff treatment or a history of buying products from a company deemed unacceptable by the Twitterverse, could struggle to find favour, no matter how good they taste. For a generation inspired by Greta Thunberg's Friday school strike protests, ethics is a big, big driver.

Moreover, the pace with which expectations are being raised is extraordinary. See how the 'War on Straws' escalated in less than six months to a full-on war on plastic. Last year, Bacardi began a five-year plan to strip all plastic out of its supply chain. "When we began it 18 months ago, I felt like we were ahead of the consumer," said Briars. "Now, we are slightly behind."

Certain wine companies have been laudably dedicated to a quest for carbon neutrality for a while. Yalumba, for instance, became the first winery to receive a Climate Protection award from the US Environmental Protection Agency over ten years ago. 

Recently Torres and Jackson Family Wine Estates joined together to form the International Wineries for Climate Action, with the thoroughly-admirable intention of reducing 80% of their carbon emissions by 2045. These actions, they hope, will act as a catalyst to spur others on to following their lead.

There are, I'd suggest, several points of order here.

Firstly, the fact that Torres and JFW's plan is so newsworthy tells you much about where the majority of the wine industry is on this issue. Not many wineries go beyond a few token solar panels and a bit of recycling; most don't even manage that.

Secondly, going forward, this debate is probably not going to be led by the wine industry but by an angry, informed, connected consumer base. It's quite possible that an 85% reduction, which seems so impressive now, will, in fact, be the bare minimum demanded by Generation Z – and probably a lot sooner than 2045.

Finally, I've a feeling that the narrative will move on even from here. Let's assume that the shift to organic/biodynamic/low intervention in the vineyards is well-established and will continue, and that the CO2/sustainability element is going to increase further too. There's a further element, though, that has not been heavily focused on yet, but could well be in the future: wages and social responsibility.

I've always felt there was a contradiction between the care and attention that many wineries lavish on their vines in pursuit of organic or biodynamic production, and the general lack of nurturing given to their staff. Ask wineries about bugs, mulching and cow horns and they're comfortable. Ask them about migrant workers, staff conditions or training and they're significantly less so. It's as if they care more about plants than people.

Which is the thing I most liked about the 'Fair 'n' Green' initiative I discovered during my time in Germany. The concept covers everything from staff training and benefits, to sustainability and ecological vineyard practices. Businesses are audited across all areas and given a score. Their challenge is to improve that score by a small amount every year. As one member put it, "Nothing is forbidden, but everything is rated."

Businesses can be as green, sustainable or socially progressive as they like, provided they keep nudging forward every year. There is no certification, just a buy-in to a long-term set of principles.

This commitment is important because looking after your staff is expensive and it doesn't make your wine any easier to sell. In fact, it's one of the rather sad paradoxes of wine (or possibly human nature) that the public tend to be more attracted to plant-health words like 'organic' or 'biodynamic' than they are to a human welfare narrative such as Fairtrade.

There clearly are benefits to participants (low staff turnover, better knowledge, more engagement etc), but these are felt in the medium- to long-term. In the short term, it's a net cost to businesses that are largely operating on wafer-thin margins as it is.

In South Africa, which of course has decades of institutionalised inequality to reverse, wineries are more aware of this than in other parts of the world, and there is some impressive work being done. Bosman, for instance, invests a lot back into the community, their workers own a quarter of the winery, and impressive rates of uplift have led to a laudably diverse management structure. They are, as Petrus Bosman points out, "future fit" for the modern South Africa.

The interesting element is that, in a region where few wineries are even profitable, Bosman sees such activity not as a financial burden, but a benefit. Having an inclusive business model, he says, has "enabled us to grow in a challenging economic climate".

The question is how many wineries can afford to follow such a lead.

To me, we are at a transformational moment in the history of wine. The new generation is placing (and going to place ever-more) extraordinary demands on how products are made and how businesses are run if companies are to secure their spend. Transparency means these consumers can sniff out duplicity a mile away.

But, it can't be one-way.

The old way of big business, chemicals and pared-back margins made wine cheap, not very green and carbon-hungry. If Generation Z wants fair wages, carbon neutrality and organically-run vineyards, they're going to have to pay for it.


Sectors: Wine

Expert Analysis

Opportunities in the Western Europe Wine Sector: Analysis of opportunities offered by high-growth economies

Opportunities in the Western Europe Wine Sector: Analysis of opportunities offered by high-growth economies

The Western Europe wine sector was valued at US$126,799.8 million in 2017, and was the largest worldwide with a share of 39.6% of the global market.

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