{"id":23794,"date":"2017-11-15T15:38:01","date_gmt":"2017-11-15T20:38:01","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/escaping-to-tasmania\/"},"modified":"2017-11-15T15:38:01","modified_gmt":"2017-11-15T20:38:01","slug":"escaping-to-tasmania","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/escaping-to-tasmania\/","title":{"rendered":"Escaping to Tasmania"},"content":{"rendered":"

If you talk to any French winemaker, he or she will undoubtedly tell you that the quality and personality of a wine is all about its \u201cterroir.\u201d\u00a0 Terroir, literally the soil or region, is primarily built upon the region\u2019s temperature and moisture patterns[1]<\/sup>.\u00a0 \u00a0Though there are many stages in wine production including fermentation, aging and bottling, all production essentially begins on a farm with vines that have potentially inhabited a single location for many decades.\u00a0 Therefore, the wine industry, almost more than any other agricultural industry, is extremely sensitive to changes in climate where the entire range of climate growing zones is about 10\u00b0C and only 2\u00b0C for popular varietals like Pinot Noir[2]<\/sup>.<\/p>\n

The quality of a wine is largely dependent on the amount of sugar and acids present in the grape when it is harvested.\u00a0 Increasing temperatures means increased fruit sugar (and therefore alcohol), lower acid concentrations (especially malic acid), and lower anthocyanins and methoxypyrazine levels (other compounds that contribute to a wine\u2019s color and flavor)[2]<\/sup>.\u00a0 A \u201cgood vintage,\u201d then, is often determined by whether the weather patterns of that year allowed for the grapes to ripen at the perfect time so that they have just enough sugar and acid to produce a quality wine.\u00a0 For winegrowers like the Australian Brown Brothers, warm springs and hot summers can produce lower-quality, more alcoholic wine[3]<\/sup>.<\/p>\n

Due to the variations in terroir, growers have chosen specific wine varietals to optimize the compromise between yield and quality, both of which are important for future revenues[4]<\/sup>.\u00a0 This means that certain regions typically grow specific types of grapes.\u00a0 For example, cooler climate regions like Oregon and Burgundy, France are known for their Pinot Noirs which are better grown in cooler climates.<\/p>\n

Companies like Brown Brothers have built businesses around Pinot Noirs, planting vines in the region of Victoria, cool enough to grow these delicate grapes[3]<\/sup>.\u00a0 Over recent history, though, grapes have on average been harvested 1-2 days earlier each year due to rising temperatures[5]<\/sup>.\u00a0 In fact, research has shown that grapes can ripen 7 days earlier for every degree warmer a year is[5]<\/sup>.\u00a0 This has caused several problems in production and supply chain including capacity issues and the inability to grow certain varietals.<\/p>\n

The shorter ripening season is causing red grapes to ripen at the same time as white grapes, when historically white grapes were harvested first.\u00a0 \u00a0This creates great pressure on the infrastructure of the winery because there is limited space in the steel fermenters[3]<\/sup>.\u00a0 Lastly, the increase in temperature could eventually make it impossible to grow certain cool region grapes at all given the narrow temperature range in which they can grow.<\/p>\n

So what are Australian winemakers\u2019 options?\u00a0 Well, they can grow different grapes\u2026or they can move.\u00a0 Growing different varietals, such as those that thrive in warmer climates like in Italy and Spain, could potentially cause marketing challenges as consumers may expect certain wines from certain regions.\u00a0 Moving, on the other hand, is expensive[3]<\/sup>.<\/p>\n

The Brown Brothers decided they had the time and capital to move, so they did just that.\u00a0 Tasmania used to be a region of the world too cold to grow grapes, however, in recent years it has become a very desirable location for Australian winemakers being pushed out of their regions due to warming temperatures[3]<\/sup>.\u00a0 Brown Brothers saw the opportunity and jumped on it, allowing them to continue to produce their traditional grapes varietals and even developing Tasmanian Pinot Noirs that are earning international recognition[3]<\/sup>.\u00a0 An additional perk was that given the region was so new and yield was therefore so low, demand greatly outweighed supply and prices on grapes from Tasmania could garner prices five times that of grapes from mainland Australia[3]<\/sup>.\u00a0 Now vines plantings have increased by 25% in the last decade to keep up with this trend[3]<\/sup>.<\/p>\n

In the long-term, as other wineries continue to follow this lead, Brown Brothers will have to find a way to develop a competitive advantage aside from the rarity of its terroir.\u00a0 Differentiating itself from fast growing competition will be an equal threat to its survival as finding growable land.\u00a0 Another long-term concern for the company will be what to do with the land they already own in Australia.\u00a0 If high-quality grapes can no longer be grown there, how will this affect the value of their company?<\/p>\n

Lastly, the question remains, should producers still invest in building a market for grapes that have adapted to warmer temperatures or bank on there always being a cooler area to flee to?<\/p>\n

(Word Count: 749)<\/p>\n

[1] Lee Hannaha, Patrick R. Roehrdanzb, Makihiko Ikegamib , Anderson V. Shepardb, M. Rebecca Shawc , Gary Tabord , Lu Zhie , Pablo A. Marquetf, and Robert J. Hijmans. \u201cClimate change, wine, and conservation.\u201d Proceedings of the National Academy of Sciences of the United States of America, <\/em>vol. 110 no. 17, Pages 6907-6912<\/p>\n

[2] Michelle Ren\u00e9e Mozell, Liz Thach, The impact of climate change on the global wine industry: Challenges & solutions, In Wine Economics and Policy, Volume 3, Issue 2, 2014, Pages 81-89, ISSN 2212-9774, https:\/\/doi.org\/10.1016\/j.wep.2014.08.001.<\/p>\n

[3] Fiona Breen, \u201cRising temperatures spark ‘race to Tasmania’ for winemakers escaping heat,\u201d The Australian Broadcasting Corporation<\/em>, June 5 2016, [http:\/\/www.abc.net.au\/news\/2016-06-05\/rising-temperatures-spark-winemakers-move-to-tasmania\/7371262], accessed November 2017.<\/p>\n

[4] Cornelis van Leeuwen and Philippe Darriet. \u201cImpact of Climate Change on Viticulture and Wine Quality.\u201d Journal of Wine Economics<\/em>, Volume 11, Number 1, 2016, Pages 150\u2013167 doi:10.1017\/jwe.2015.21<\/p>\n

[5] Calla Wahlquist, \u201cAustralian wine under threat from climate change, as grapes ripen early,\u201d The Guardian, <\/em>February 16, 2016, [https:\/\/www.theguardian.com\/environment\/2016\/feb\/17\/australian-wine-under-threat-from-climate-change-as-grapes-ripen-early], accessed November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

Climate change’s effect on Australian winemakers and their migration to Tasmania to survive.<\/p>\n","protected":false},"author":10090,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[3692,1218],"class_list":["post-23794","hck-submission","type-hck-submission","status-publish","hentry","category-australian-wine","category-climate-change","hck-taxonomy-organization-brown-brothers","hck-taxonomy-industry-agriculture-and-agribusiness","hck-taxonomy-country-australia"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nEscaping to Tasmania - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/escaping-to-tasmania\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Escaping to Tasmania - 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