Drink Up! That wine ain’t cheap…and it ain’t getting cheaper.

Wine consumption in Massachusetts ranks 3^rd among states in America [1], likely due, in part, to the vino aficionados at Harvard Business School. What these imbibers may not know is that wine production is expected to see a drastic decline in the coming years due to climate change, meaning that bottle of Pinot Noir is about to become pretty pricey for a student budget.

If you enjoy drinking wine, chances are you’ve tried a bottle from the largest wine company in the world [2], Constellation Brands (Constellation), whose labels include Robert Mondavi, Ruffino and Manischewitz. With ~16% share of the world wine market [3], Constellation is facing the threat of climate change as wine grapes are extremely sensitive to two specific climactic shifts [4]. First, key harvest areas like California (where Constellation has more than 10 vineyards and wineries [5]) and parts of Australia are facing reduced rainfall, making it costlier to produce wine as water needs to be accessed via other means. Second, the rise in global temperatures (see Table 1 below) is shifting the weeks and months in which wine grapes can be harvested and is leading to the mortality of grapes or failure of flavor ripening, among other things [4].  This leads to less productive crop yields, again increasing the cost of wine production for Constellation in critical parts of the world.

Table 1- Global temperature trends in key wine producing regions [6]

Constellation is making significant strides in responding to these shifts. In response to the drought, the company has undertaken efforts to reduce water consumption through programs like subsurface irrigation, which applies water directly to crop roots [7] and is an extremely efficient farming tactic. This program and others like it have led to a drop in water consumption from 4.54 liters of water withdrawal per liter of product produced in FY 2015 to 3.64 in 2016 [8] [9]. Additionally, the company is exploring wastewater treatment at places like the Mission Bell Winery in California [10]. This not only reduces the environmental impact of wastewater from the wine production process but it also enables Constellation to reuse wastewater in the irrigation of grape harvests. In reaction to rising air temperatures, Constellation is divesting brands in parts of the world most impacted, like Australia [11]. Instead, the company has flexed its production process to take advantage of longer harvesting seasons in northern parts of the world where the season was previously narrow, like the Niagara region of Canada [12]. Constellation is also reducing its impact on the global crisis by installing the world’s largest winery solar energy system at its Gonzales, California facility [8], aimed at reducing greenhouse gas emissions from its wine producing process. Finally, Constellation is creating incentives for its brands to adapt to climate change by awarding the first-ever Internal Sustainability Reward in 2015 to Estancia Winery for, among other things, creating a “closed-loop system that uses glycol instead of water in their lab” (Constellation Corporate Sustainability Report, 2015, p. 5). For all of these efforts, Constellation was named to the Carbon Disclosure Project’s Leadership Index and was ranked #1 among wine suppliers in Wal-Mart’s Sustainability Rankings [8].

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While Constellation is an industry-leader in their efforts to adapt to climate change, there is even more that they can do to further protect their operational processes and maintain cost levels. First, to address changes in temperature, Constellation can adapt the grape varietals used in their wines to focus on those that are better suited for warmer climates, like the Spanish Tempranillo [4]. Second, to further cope with reduced precipitation, Constellation can use new technologies to maximize water efficiency, like plant cell density images which identify differences in grape “vigor” (or flavor) and allow farmers to target those plant areas for water usage [4]. Finally, Constellation can ensure the right communication channels are in place to allow its wineries around the world to share best practices in adapting to climate change. As an example, three wineries in Constellation’s network saw 20%+ reductions in water usage in 2014 [8]. These wineries are likely adapting new processes and/or technologies that can be implemented for impact across the network.

With the ongoing drought in California and temperatures continuing to rise around the world, Constellation and its peers will need to continue to advance adaptations to climate change. This is one area where the sharing of competitive information should be encouraged. Let’s hope these companies can react quickly so that we can continue to enjoy our favorite wines worry-free.  (732 words)

[1] Andy Kiersz, “The States That Love Wine The Most,” Business Insider, March 6, 2014, http://www.businessinsider.com/wine-consumption-map-united-states-2014-3, accessed November 2016.

[2] Excerpt from press release, “Constellation Brands to Acquire Australia’s Largest Wine Producer BRL Hardy,” PR Newswire, 2003, ABI/INFORM via ProQuest, accessed November 2016.

[3] Miriam Reimer, “Constellation Brands Uncorks Market Share,” TheStreet, August 23, 2014, https://www.thestreet.com/story/10842525/1/constellation-brands-uncorks-market-share.html, accessed November 2016.

[4] Climate Change research, “To What Extent is Business Responding to Climate Change? Evidence From a Global Wine Producer,” Jeremy Galbreath, Spangler Science+Business Media, 2011, ABI/INFORM via ProQuest, accessed November 2016.

[5] Constellation Brands website, “Facilities” http://www.cbrands.com/about-us/facilities, accessed November 2016.

[6] Climate Change research, “Climate Change and Global Wine Quality,” Gregory V. Jones et al., Climactic Change, 2005, ABI/INFORM via ProQuest, accessed November 2016

[7] Constellation Brands website, “Constellation Brands Expands Sustainable Business Practices to Include World’s Largest Winery Solar Energy Project” http://www.cbrands.com/news-media/constellation-brands-expands-sustainable-business-practices-include-worlds-largest-winery, accessed November 2016.

[8] Constellation Brands, 2015 Corporate Social Responsibility Report (Victor: Constellation Brands, 2016), p. 6.

[9] Constellation Brands, 2016 Corporate Social Responsibility Report (Victor: Constellation Brands, 2016), p. 7.

[10] Jeff Gunderson, “Brewing & Winemaking: Sustainable Treatment Options For High-Strength Effluent Challenges,” Indusrial WaterWorld, http://www.waterworld.com/articles/iww/print/volume-15/issue-4/features/brewing-winemaking-sustainable-treatment-options-for-high-strength-effluent-challenges.html, accessed November 2016.

[11] Ari Sharp, “Winemaker Constellation falls back to earth in Australia,” Farm Weekly, August, 8, 2008, http://www.farmweekly.com.au/news/agriculture/general/news/winemaker-constellation-falls-back-to-earth-in-australia/1238754.aspx, accessed November 2016.

[12] Bruce Demara, “Traditional wine-producing regions face decline, climate study finds,” TheStar, April 9, 2013, https://www.thestar.com/life/food_wine/2013/04/09/traditional_wineproducing_regions_face_decline_climate_study_finds.html, accessed November 2016.