As supply-chain issues bite, wineries are looking at innovative ways to cut costs – and help the environment.
Kathleen Willcox · Last updated 30-May-2022
The pandemic, the war in Ukraine and rising inflation have created innumerable challenges for businesses and individuals – but amid the crises, there have also been opportunities to reconsider and rethink.
For the wine industry in particular, the past few years has been a roller coaster ride of extreme highs and stomach-lurching lows.
On the one hand, global wine consumption increased by 4 percent in volume, and by 16 percent in value to $36.15 billion last year, according to numbers from the International Organization of Vine and Wine (OIV). This gap suggests that people were not only drinking more, but were trading up in price as well, always something that gets the industry’s pulse racing.
But on the other, supply chain disruptions due to the pandemic, and now exacerbated by the war in Ukraine, plus rising inflation threatens to bring that progress to a screeching halt.
And to be fair, winemakers have been eating rising costs in glass increases of – up to 20 percent, according to global strategist at Rabobank’s beverages division Stephen Rannekleiv – for about two years. The price of shipping wine has skyrocketed in the past few years as well, with reported increases of up to 300 percent, and long delays in port and on the sea. As fuel prices (up 500 percent in Europe) and logistical headaches drag on, it’s difficult to see an end in sight.
Winemakers are also contending with depressed production due to extreme weather across Europe; global production was down about 1 percent last year, with some of the most premium regions – Bordeaux, Champagne, Beaujolais – seeing their harvests plummet by 30 percent or more.
Producers are responding to the chaos and uncertainty, counter-intuitively perhaps, by investing in short-term expenditures that they believe will make them stronger, more viable and definitely more sustainable – in every sense of the word – for the long haul.
Shortening the chain
Many winemakers are saying that rising costs and delays are making them speed up plans to convert land to organic management, and find ways to ensure they don’t need as many inputs from afar.
Napa’s Baldacci Family Vineyards had 50 acres under vine across three vineyards, and the shortage and inflation crisis has prompted the team to redouble sustainability efforts.
“The situation means we have to think ahead more than ever when it comes to ordering glass, to ordering fertilizer,” says director of vineyards and winemaking Michael Baldacci. “It has also made us even more hands-on in the vineyard, with fewer tractor passes. While there are more up-front costs initially when we decided to go organic, and we could never have anticipated what’s happening now, what we’ve seen happening with the supply chain has moved up our timeline on converting all three of our estates faster.”
Sequoia Grove Winery, also in Napa, with 100 acres under vine, is also circling the wagons.
“We didn’t have an ideal set-up for making compost, so for years we purchased it,” says Sequoia’s director of vineyards, Jake Terrell. “But recently, we started making our own with a local farmer from wine pomace and local organic cow manure. We’re reusing all of our winery waste, and also saving about 50 percent in costs.”
Terrell says the organic farming practices make cellar management and wine production less costly as well.
“Since beginning organic conversion, the grapes have been higher quality, and come to the cellar with better nutrients and amino acid balance,” Terrell says. “That means less intervention, fewer augmented nutrients and additions, and it saves us on time and cost of supplies.”
Other winemakers with long histories of farming organically are enjoying the fruits of their long labor, and sowing additional seeds for the future.
At Gemtree in Australia’s McLaren Vale, Melissa and Mike Brown have been slowly transforming the winery’s 306 acres of estate vines to organic and biodynamic production since she joined her parents’ winery in 1994.
“We saw what was happening in the Australian wine industry in the 1990s, and it wasn’t good,” Mike says. “The UK and US were driving sales, but Melissa saw that the farming, production and sales methods weren’t sustainable in any sense. It was quantity over quality, and no one was giving any consideration to the environment, or even economic sustainability.”
Before environmentalism began trending, Melissa began investing in farming methods that were initially more expensive to institute and develop, but now make them completely self-reliant.
“We make our own biodynamic sprays from ingredients on the farm, we make our own compost from grape waste, so we don’t have to depend on any fertilizers or chemicals from abroad, which has certainly made things easier,” Melissa says. “We also use sheep for weed control, which reduces fuel costs.”
On the winery, in the tasting room and in the cellar, everything is recycled or upcycled, and solar energy provides power, initial infrastructural investments that are paying dividends now. While the couple says that 2021 “was the toughest year financially in Gemtree’s existence”, they remain bullish on the future, and are doubling down on viticultural and experiential investments.
“We’ve created a 25-acre regeneration site on what was barren land,” Melissa says. “We’ve revegetated the area with more than 50,000 plants to increase the biodiversity and ecological health of the estate. We didn’t really open the trail through the site until 2019, and it was shut down by Covid, but now people are drawn here to spend time with native plants and the birds and animals that have populated it. People are hungry for experiences like that in a way that they weren’t before Covid.”
They’re also replanting grapes that are still technically viable now – like Chardonnay and Pinot Noir – but may not be in the near future.
“We’re replacing them with Grenache and Fiano,” Mike says. “That’s what we see growing well here as climate change continues.”
Investing in technology
Other wineries are investing in tech for a more sustainable, and ultimately less pricey path forward.
Terraview, an operating system designed to help wineries analyze data to make farming decisions, has seen a huge uptick in interest from wine producers dealing with climate change, supply chain issues and inflation. Their free model allows users vineyard operators to track canopy cover, disease, nutrient deficiencies and weather data, while their prescription model provides a much more detailed assessment of vine health, with specific recommendations for treatment.
“Producers are feeling the impact of supply chain and inflation issues, and it isn’t just about cost,” says Terraview’s co-founder and CEO Prateek Srivastava. “It’s also about availability and delays. This has led to immense pressure on efficiency in the vineyard, especially when it comes to chemicals and water. Our tools allow our customers to optimize spraying and water-use by targeting specific spray spots and deploying chemicals and water in a manner that is both cost-efficient and environmentally better.”
The Terraview team is working with producers to track savings, but estimate that the platform is reducing usage of both assets by 50 percent.
At De Bortoli Wines, which has vineyards across Australia, and a line of organic wines, the team is focused on slashing their spend by using electrodialysis in lieu of refrigeration for tartrate stabilization. Wine is generally held at subzero temps for several weeks, and switching out the refrigeration for electrodialysis allows the process to be completed at room temperature in a matter of hours, saving up to 90 percent in energy output.
Initially, when St Helena’s Newton Vineyard purchased an electric tractor, the team was motivated for ecological reasons. But now, consultant Jean Hoefliger says, they’re also saving a bundle on fuel costs.
“We’re definitely fielding more questions about our electric tractor from other producers who are concerned about climate change and fuel costs,” Hoefliger says.
He is also working with UV boosting, an ultra-light technology that stimulates plant’s natural defenses, and is designed to eliminate the use of vineyard fungicides.
“Technology that can reduce the dependence on chemicals and the supply chain benefits the environment and reduces costs,” Hoefliger says. “It already saw it as an obligation for all to progressively move towards these better alternatives, and the supply chain issues and inflation we’re seeing is just pushing all of us to do it faster.”
About 1 billion pounds of pesticides is sprayed in the US alone every year, contaminating water and soil, and poisoning all manner of living beings, including humans. (Bayer, the makers of Roundup, widely used for decades in viticulture, has been forced to pay $10 billion in damages to those who suffered cancer linked to exposure).
Change won’t happen overnight, but if the last few years of black news can deliver greener pastures now, and in the future, we’ll take it.
