Will Australia's bushfires bring on wine industry burn-out? - comment

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This year started with Australia dominating the news headlines. Chris Losh considers what the country's bushfire crisis has done - and will continue to do - to Australia's wine producers.

Bushfires in Australia have garnered much press attention worldwide in recent months

Bushfires in Australia have garnered much press attention worldwide in recent months

Johann Henschke is normally a cheerful and good-natured interview. But here, despite his dapper tweed jacket, the Australian looked tired and drawn. It could plausibly be attributed to 24 hours in the air and the attendant jetlag, but was actually probably due to something more fundamental.

"In Lenswood [Adelaide Hills] we lost 25% of our production," he said. "But, for some, it's been 100%, so I guess we are pretty lucky."

He was talking, of course, about the fires that had raged in south-east Australia for most of the past six months. Beginning in the winter (June) last year, by the start of 2020, the wildfires had spread over a huge area. They have currently burned getting on for 19m hectares – an area over half the size of Italy.

Torrential downpours and hailstones the size of golf balls have contributed to a growing season for the country's farmers that could only be described as miserable.

Australia is, famously, a country of 'fire and flood', and bushfires have always been a part of the landscape. But, the apocalyptic scenes beamed into screens around the world over the last six weeks are something new. The damage and disruption have been extraordinary.

Wine has not escaped. 1,500 hectares of vineyard area have been affected, with the Adelaide Hills probably the hardest hit. An 18,000ha wine region has lost 648ha of vines.

One respected winemaker I spoke to saw one of his main growing partners lose an entire vineyard - AUD1m (US$612,000) of production - in an hour. The psychological damage of facing a wall of fast-moving flame and seeing your life's work literally go up in smoke must be traumatic in the extreme.

Vines, of course, are famously more resilient than people. Henschke reported that there are already green shoots on vines that were engulfed by flames just a few weeks earlier. While there might not be any worthwhile crop from immolated vines this year, they ought to be back producing by 2021, albeit at reduced volumes.

If there's a (small) benefit to the New Year fires, it's that they occurred early enough in the season to allow vines to recover somewhat before the winter shutdown. "Fire at vintage is the biggest fear for any winemaker," said Henschke.

While vineyards actually burning might be more psychologically damaging, the biggest danger is probably smoke-taint. Anyone who saw images of tennis players struggling during the Australian Open in Melbourne will know how the country's air quality was affected across a wide area. Indeed, New Zealand producers could taste smoke in the air across the Tasman Sea.

The Australian Wine Research Institute (AWRI) has gathered 17 years of research into the effects of smoke taint, making them probably the experts in the field globally. Yet, at the time of writing, they are still unsure what the impact might be.

Most Australian fires take place later in the growing season, post veraison, and since smoke gets into the wine through skins or leaves, the impact for late-season fires is obvious. But, many of the Australian vineyards had not even started veraison yet, making for a more mixed, uncertain picture for the 2020 vintage.

The national government has put aside AUD2bn for fire recovery. This includes money for smoke-testing post-fermentation, which is expensive, but will be crucial this year. Even if the grapes are clean, one smoke affected leaf could wreck a ferment.

The volume of the overall Australian wine crush is not going to be seriously affected. Yes, places like the Adelaide Hills and the Hunter Valley will bear a disproportionate brunt of any drop in volume. But, just 1% of Australia's vineyards are within the fire-damaged areas. Compared to the devastation wreaked on Europe by frost in 2017, this is statistically insignificant.

What is significant is the potential for damage to reputation. Australia simply can't afford for the smell of smoke to linger around this vintage. As Laura Jewell, head of Wine Australia in the UK put it: "If there's a hint of smoke [in analysis], that wine won't be produced." Wineries will be urged to err on the side of caution.

Somewhat harshly, even this might not be enough. After all, critics and visitors were tasting smoke in some Napa bottles from the 2017 vintage, even when the wines in question were picked, vinified and in-tank when the fires hit, so couldn't possibly have been affected. Put a flavour in someone's mind and, whether it's there or not, they tend to find it.

For the last ten years in particular, Australia's 'fine wine' story has started to hit home. A 'smoke vintage' won't affect that message in the long term, but it would be a bump in the road nonetheless. The coronavirus in a market where the Aussies export AUD.1.3bn of wine probably isn't helping much either.

Leaving aside the impact on directly-affected growers, regions and the 2020 vintage as a whole, there are, perhaps, two big questions that need looking at going forward.

Firstly, what impact could these fires have on insurance premiums for farmers and wineries? Of course, it's possible to take out cover to mitigate against events such as fire, hail, frost and the like. But, insurers are famously unsentimental. Fifteen years of drought, followed by the most devastating fires in a generation are only going to send premiums one way. Will growers still be able to afford cover? Conversely, will they be able to afford not to have it? It's an unenviable dilemma.

Secondly, what, if anything, can Australia do to counter such events in the future? It was noticeable at the Australia Day Tastings in London last month that senior figures from Wine Australia declined to comment on whether climate change might be at least partly to blame for the fires.

This is understandable, given that it's a government body and its funding comes, at least partly, from Canberra. With the country's Prime Minister, Scott Morrison, at best ambivalent about climate change, Wine Australia needs to toe the party line.

Talk to producers, however, and they're far less restrained. Like growers around the rest of the globe, they've seen these changes happening in their vineyards for years and, without major concerted political willpower, they know that it isn't a problem that looks like going away any time soon.

Rather than holding up lumps of coal in the Australian parliament, as he famously did two years ago, perhaps Morrison should be given a carbonised 100-year old Shiraz vine to wave about. After all, as Johann Henschke rather chillingly admitted, the fire season is far from over, and all of the building blocks are in place for further conflagration.

"Australia's still tinder-dry," he said with a sad smile. "It's ready to burn…"

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