Will Global Warming Destroy E&J Gallo Winery?

California makes 85% of all U.S wine. In 2015, 230 million cases of wine worth $32 billion were shipped from California throughout the U.S. [1]. Needless to say, wine is a big deal in California.

E&J Gallo Winery is the leading provider of California wines. First opened in 1933 and located in Modesto, California, this family owned business produces well-known wines and spirits such as Barefoot wines, Andre champagne, and E&J Brandy [2]. However, within the last few years, California has experienced extreme drought and warming temperatures, which threaten the sustainability of E&J’s current operation. How will they adapt to the physical affects of climate change? This is a key question because E&J’s action plan will likely set a precedent for how other vintners respond going forward.

Will innovation save E&J Gallo?

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Wine grows best in a tight geographic range that exhibits narrow climate fluctuations. While growers have seen short-term positive effects of global warming—rising temperatures have reduced frost damage to fruit—the climate will soon warm past an acceptable range for cultivating quality grapes. As a result, wineries will be left with overripe grapes that are absent of the acidic undertones and richness of iconic harvests [3].

To outpace the effects of global warming, E&J has begun innovating new types of grapes that can withstand rising temperatures. However, according to E&J’s VP, Nick Dokoozlian, while they’ve found some promising new varieties, demand for these products doesn’t exist because consumers aren’t aware of them [4].

Despite E&J’s drive for product innovation, getting customers to actually want new types of wine is a challenge for their marketing team. But Dokoozlian believes that the pressure of increasing temperatures and decreasing water supply will force the market to shift its consumption habits. Eventually [4].

What else can be done to save the wine industry? 

Other vintners, such as Ava Winery, are taking an even more innovative approach to product development. The tech start-up is creating synthetic versions of classic champagnes that attempt to evoke similar aromas and flavors. It is still too early to tell how successful Ava Winery is at mimicking originals [3].

The wine community in California is also implementing a sustainability program. The Sustainable Winegrowing Program seeks to establish sustainable practices that are environmentally sound, socially equitable, and economically feasible. Started in 2003, the program measures improvements in water, energy, and nitrogen use and greenhouse gas emissions [5].

There are also some more extreme tactics wineries can employ to adapt to global warming. A 2013 journal article in the Proceedings of the National Academy of Sciences suggested that grape growers move their vineyards to higher elevations to mitigate the risks of climate change [6].

While solutions to global warming exist for vintners, I’m skeptical about what these solutions really mean in practice. How will E&J and other wineries change their operations and the behavior of consumers to incorporate these ideas? Dokoozlian has similar reservations.

“The wine business is an extremely capital intensive business. The financial risk of planting the wrong variety in the wrong place is pretty significant,” he says [4].

Wine is good. We should do more. 

Although wineries have started to feel the effects of climate change, I’m not confident they have been hit hard enough to fully understand how serious the current environmental situation is and how necessary it’s for them to make immediate changes. For example, while the Sustainable Wine Program has defined goals, participation in the program is voluntary, and I didn’t find any results from participating companies. If preventative sustainability programs are mediocre at best, what signal is being sent to the industry? It’s certainly not that they should devote financial resources to developing new products or move their vineyards to new locations—both sound expensive. As a short-term initiative, existing sustainability programs should ratchet up their efforts to compel all players to get on board and up the rigor of the metrics measured. This will spark wine growers to do even more.

Perhaps Earth increasing by a few degrees doesn’t feel like much. But for wine growers, this incremental change threatens their entire business model. A temperature increase of 2 degrees—which could happen as soon as 2040—could reduce California’s prime vineyard land by 30 to 50 percent, according to a study at Standard University [4]. If wine growers are resisting the fate of global warming, it’s too late. It’s here.

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1. Wine Institute of California, “Media & Trade Statistics,” http://www.discovercaliforniawines.com/media-trade/statistics, accessed November 2016.

2. E & J Gallo Winery, “Our Portfolio,” http://www.gallo.com/portfolio, accessed November 2016.

3. Mark Ellwood, “Three Ways to Beat Champagne’s Climate-Change Problem,” The Wall Street Journal, October 18, 2016, http://www.wsj.com/articles/three-ways-to-beat-champagnes-climate-change-problem-1476799848, accessed November 2016.

4. “Climate Change Has California Vintners Rethinking Grapes,” Lauren Sommer, All Things Considered, National Public Radio, November 2, 2011, http://www.npr.org/2011/11/02/141932301/climate-change-has-calif-vintners-rethinking-grapes, accessed November 2016.

5. California Sustainable Winegrowing Alliance, “Sustainable Winegrowing Program,” http://www.sustainablewinegrowing.org/sustainable_winegrowing_program.php, accessed November 2016

6. “An Upside to Climate Change? Better French Wine,” Alastair Bland, All Things Considered, National Public Radio, March 21, 2016, http://www.npr.org/sections/thesalt/2016/03/21/470872883/an-upside-to-climate-change-better-french-wine, accessed November 2016.