Like Wine? You Better Pay Attention to Climate Change

Like Wine? You Better Pay Attention to Climate Change

Some of you may have read my recent blog post on Greta Thunberg, the Swedish climate change activist, and her mission to wake people up to the threats of climate change. While there is a consensus older white males revile her, one segment of that group that may start to pay attention is the many oenophiles, as climate change is possibly the most significant threat coming after their wine.

Growing grapes is a tricky business; first, the terroir, the unique aspects of a place that influence and shape the wine made from it, needs to be correct. For great wines this requires:

  • poor soil,

  • in either a Mediterranean, a maritime, or a continental climate;

  • certain climate-soil-water relationships; and

  • lots of sunshine, but not heat.

Winemakers have kept careful track of harvest dates for centuries, with some records going back to the Middle Ages, as the harvest dates are crucial for the quality of the wine. Harvest too early, the grapes might not have developed the right balance of fragrant chemicals that give the wine its characteristic flavors. Too long and the grapes will have too much sugar, making the wine will be more alcoholic, and the acids that give the wine some of its feel in the mouth may disintegrate.

Scientists and historians realized in the 1800s that these careful records could be used to provide an insight into how climate has changed in different parts of Europe has over time. “Grape harvest date records are the longest records of phenology in Europe,” says Elizabeth Wolkovich, a biologist at the University of British Columbia who studies wine and climate relationships. “We have these hundreds of years of records of what the summer temp was like, and we can use them like a thermometer.” With the winemakers’ records, scientists and historians were able to stitch together a history of grape harvest dates going back to 1354.

The data showed that over the past few hundred years, temperatures wobbled around, skewing warm for short stretches and cooling down in others. But overall, climate rocked up and down around a relatively consistent average value—until recently. Now, the nearly 700-year-long record of harvest dates from the town of Beaune, in Burgundy, shows that early harvest dates like the one from 1540 when there was extreme heat, are now par for the course, thanks to climate change.

Thus, for decades, the traditional climate changes were not dramatic enough to be a problem; however, the sudden rise in temperatures over the last three decades has changed the status quo. The sudden increase in temperatures is impacting the global wine industry in many ways.

High temperatures are lowering acidity in grapes and increasing sugar, which yeast turns into higher alcohol during fermentation. As a result, the alcohol content of wines has climbed to about 14% from about 12% in the 1970s. Warmer conditions shift red wine flavors from red fruit notes like raspberry and cherry toward black fruit tastes such as blackberry. As a result, aromas are flattened, and the refreshing brightness that gives wines energy is gone. Heat also affects trace compounds in the grapes that contribute to flavor and aroma. “Wines are becoming fuller-bodied, more alcoholic, and riper in flavor,” said Gaia Gaja, whose family owns an eponymous winery in Italy’s Piedmont. She worries that subtle notes and fleeting, delicate aromas that add so much to wine’s drinkability are at risk. “Finding the sweet spot, when sugar, acid, color, tannin, and flavor in the grapes are in perfect harmony, will be more and more difficult,” according to Kimberly Nicholas, senior lecturer at Lund University Centre for Sustainability Studies in Sweden.

Finally, climate change is also causing more frequent extreme weather events, i.e., flooding, fires, and surprise frosts—that can damage vines. The severe weather has most recently been evident in California, where fires significantly or destroyed 11 wineries. Six were in Napa, including Patland Vineyards, Roy Estate, Signorello Estate, VinRoc, Sill Family, and White Rock Vineyards; Sonoma’s Paradise Ridge Vineyards and Helena View Johnston and Mendocino’s Oster, Frey Vineyards and Backbone Vineyard & Winery.

It is not all bad news, though, with rising temperatures, regions that were once too cold are becoming more suitable for wine-growing, and the world’s wine map is shifting. Familiar grapes planted in surprising new regions and terroirs will offer an even more intriguing taste difference. However, world wine production is set to fall to its lowest levels in decades, primarily due to the weather, according to estimates from the International Organization of Vine and Wine. More specifically:

 

France

In one French winemaking town, according to 700 years of records harvest dates have moved up two weeks from the historical norm, and during this past summer, with temperatures hitting 115°F, some winegrowers lost half their crop. Pomerol’s Château Lafleur and other top châteaux are cutting back on early ripening merlot because it produces wines too high in alcohol. With rising temperatures, though, Burgundy may say goodbye to the silky, elegant style pinot lovers prize. However, the upside is that Burgundy may produce more exceptional vintages, says Philippe Drouhin of Maison Joseph Drouhin. “Even if the flavor profile changes in the future, that doesn’t mean the wines won’t be as good,” he says. In the Rhône Valley, the summer heat is already pushing alcohol levels to 16%, about the strength of sherry.

 

England

As the climate has changed, the South Downs region in England has developed weather similar to the Champagne region, and it happens to boast already the chalky, clay soil that characterizes the iconic part of France. Thus, sparkling wine accounted for 68% of the wine produced in England and Wales or four million bottles in 2017, and estimates for 2018 are 10 million bottles, a record high. English sparkling wines have risen in prominence since the late ’90s due to awards from competitions like the IWSC, served at the Queen’s golden wedding anniversary, and banquets for the visits of the Emperor of Japan and the President of China. The French Champagne house Taittinger planted its first vines in Kent in 2017, for a new venture into English sparkling wine, and the first bottle will be ready in 2023.

 

Scandinavia

Sweden, Denmark, and Norway had a hobby industry in the ’90s. Over the last 20 years, this has changed dramatically with articles on wineries in Sweden and Denmark now appearing in Wine Spectator and other publications as they expand production, varietals grown, and quality of the wine produced. “Sweden has about 30 to 40 vineyards now,” said Elin McCoy, author and wine critic for Bloomberg News. “There’s a new vineyard up on one of the Norwegian fjords at the same latitude as Alaska, so that is a real change.” By 2050, Norway, and Sweden may be the source of some of the world’s great wines.

 

Argentina

Mendoza remains the center of Argentina’s wine production, but with climate change, production in Patagonia is increasing. Patagonia is producing good Pinot Noir, Merlot and Sauvignon Blanc, wines which are benefiting from the colder Patagonian conditions. Patagonian wines are considered fruitier and much more vibrant, with the mineral-enriched soil gifting bursts of flavor, while climatic conditions are stressing vines to an optimal level.

 

Germany

While the country has produced pinot noir for a long time, its wines have lacked the depth and complexity of their counterparts from Burgundy. As climate change warms the growing season, German pinots are delivering “previously unattainable heft and nuance.”

 

USA

States like Montana and Michigan are becoming the new producers. Montana boasts just eight wineries now but expects the western half of the state to be a player in the wine scene by 2050. Michigan, while already producing wine on a small scale, is scaling up as the climate warms. The number of wineries has gone from 16 to 130 in the last ten years.

 

Australia

The overall number of wineries in Australia may be dropping, but winemaking is on the rise in Australia’s southernmost state. As a result, Australia’s famed Barossa Valley may be under threat from climate change and Tasmania. Climate change is making Tasmania’s weather even better for the production of dry rieslings to sauvignon blancs, which are vastly different from what the rest of Australia is offering.

 

China

China is undertaking a multibillion-dollar project to transform its Ningxia desert region into a wine oasis. Currently, there are about 50 wineries in Ningxia, which is about 500 miles west of Beijing. The area boasts 80,000 acres of vineyards, and that number is expected to more than double by 2020, nearly triple the acreage of the Napa Valley. China is expected to overtake the US as the most significant wine consuming nation in the next twenty years. As a result, the recent release by the Rothschilds of their first vintage produced in China may be perfect timing as the young, middle-class nationalist drinkers seek local brands.

 

Ethiopia

To date, South Africa has been the leading wine producer in Africa; however, Ethiopia, with its high, central plateaus and temperate climate, could be uniquely placed to be the second-largest African wine producer by 2050. Castel Group, the largest wine producer in Europe, in 2007 agreed with the Ethiopian government, planting 750,000 Merlot, Syrah, Cabernet Sauvignon, and chardonnay grapes vines of near the Rift Valley town of Ziway. In 2014, the company celebrated the production of its first 1.2 million bottles. Producing wine in Ethiopia does have its unique challenges: the vineyards are surrounded by a two-meter-wide trench to deter pythons, hippopotamuses, and hyenas.

 

Russia

By 2050 it is expected that large areas of western Russia will be suitable for wine grape-growing. In support of the growing wine industry, Russians are developing the requisite thirst as reflected in the skyrocketing imports of Georgian wine in 2016, which were up over 150%. Besides, hard liquor sales are falling across the board.

 

The Rearguard Action

Most winemakers can’t just pick up and move, so they have to get creative to fight climate change. They’re coming up with crafty solutions:

  • Bordeaux began loosening appellation regulations that permit the planting of only classic red and white varieties this summer.

  • Higher elevations offer cooler temperatures and more significant “diurnal shifts,” which helps grapes ripen at a more even pace.

  • Some planters are moving to slopes with less direct sunlight/heat exposure to prevent over-ripening.

  • In Bordeaux and Napa, growers are planning for the day that their current champions hand their crowns to zinfandel, petite sirah, or foreign strains like tempranillo and other grapes from southern Europe that better tolerate heat and drought and maintain high levels of acidity. Dan Petroski, the winemaker at Larkmead in Calistoga, has planted a parcel with zinfandel, tempranillo, and more varieties to blend with cabernet in the future, to add color and density to keep the valley’s elegant, sun-kissed style. “With wine, you better think 20 years ahead,” he says.

  • At a “research vineyard” in Israel’s Negev Desert, scientists are studying how to grow grapes in harsh environments successfully. Possible solutions include shade nets, thermal cameras, and soil humidity sensors.

  • In Spain, Miguel Torres is reviving almost extinct grapes that thrive in hotter, drier climates. He has identified five that offer exceptional flavors, such as floral-scented forcada, a white with striking citrus, herb, and mineral notes.

 

Implications

For you savvy wine connoisseurs, new markets trying to prove themselves = top-shelf wines at mid-shelf prices. All of this should make for some exciting changes. A chance to get in on some new great wines, and also to invest in some that will never return. In the meantime, drink those you enjoy. As Maya said in Sideways

“Wow, this is really starting to open up, what do you think? I started to appreciate the life of wine, that it’s a living thing, that it connects you more to life. I like to think about what was going on the year the grapes were growing. I like the think about how the sun was shining that summer and what the weather was like. I think about all those people who tended and picked the grapes. And if it’s an old wine, how many of them must be dead by now. I love how wine continues to evolve, how if I open a bottle the wine will taste different than if I had uncorked it on any other day, or at any other moment. A bottle of wine is like life itself – it grows up, evolves and gains complexity. Then it tastes so good.”

If you are interested in an excellent discussion of the current status of climate change, I would recommend listening to Sean Carroll’s Mindscape podcast, where he interviews Michael Mann.

For everyone, look at your businesses and see what climate change is going to do to your business. How will affect your clients, suppliers, production facilities, and supply lines?

 

© 2019 Marc Borrelli All Rights Reserved

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Greta Thunberg, is She Relevant? Yes, and Why You Should Follow Her

Greta Thunberg, is She Relevant? Yes, and Why You Should Follow Her

Who is She

 

For those who are unaware of Greta Thunberg, she is a 16-year-old Swedish student credited with raising global awareness of the risks posed by climate change, and holding politicians to account for their lack of action.

A year ago, Greta took time off school to demonstrate outside the Swedish parliament calling for bold climate action. Following Thunberg address to the 2018 United Nations Climate Change Conference, on 24 November 2018, she spoke at TEDxStockholm. Also, Greta attended the World Economic Forum in Davos in January 2019.

The media attention her “school strike for the climate” attracted, resulted in other students undertaking similar protests in their communities. Together Thurberg and these different communities have organized a school climate strike movement. The first student strike was held 15 March 2019 and was the most significant climate strike in history with 1.6 million students in over 125 countries. Every week since, student strikes take place somewhere in the world. In 2019 two of the pupil climate strikes have involved over one million pupils. In Germany, the protest is under the name Fridays for Future.

Greta has argued that students should not attend school and study for a future that may never come. Thunberg observes that politicians, most of whom are over 50 years old, decide students’ futures which they will not experience. “If I turn 100, I will still be alive in 2103. Most of the climate targets are set for the time until 2050. With a little luck, I haven’t even lived half my life“.

Thunberg is not only protesting but is adjusting her life to her cause. Thunberg has persuaded her parents to adopt lifestyle choices to reduce their carbon footprint, i.e., forgoing air travel and meat. This fall, Thunberg is attending the UN Climate Action Summit in New York, and the COP 25 Climate Change conference in Santiago, Chile. Following her avoidance of air travel and limiting her carbon footprint, Thunberg traveled from the UK to New York in a 60ft racing yacht equipped with solar panels and underwater turbines.

 

Her Message

When, at age 15, Thunberg began her protests, she had two simple messages:

  1. A sign stating “school strike for the climate”; and
  2. Leaflets which said: “I am doing this because you adults are shitting on my future.”

Since then, her message has evolved into four interwoven themes.

  1. The global warming crisis is so severe that humanity is facing an existential crisis, “that will most likely lead to the end of our civilization as we know it.”
  2. Thunberg holds the current generation of adults responsible, saying, “You are stealing our future,” and she is especially concerned about the impact of the climate crisis on her generation. To the UK Parliament she said, “You lied to us. You gave us false hope. You told us that the future was something to look forward to.”
  3. We should all be panicking because nothing is being done to solve the problem. Change is required now!
  4. Politicians and decision-makers need to listen to the scientists because “according to the IPCC (Intergovernmental Panel on Climate Change), we are less than 12 years away from not being able to undo our mistakes.”

With her Asperger’s, Thunberg speaks bluntly to business and political leaders deriding them for their lack of action. At Davos, she told a panel, “Some people, some companies, some decision-makers, in particular, have known exactly what priceless values they have been sacrificing to continue making unimaginable amounts of money. I think many of you here today belong to that group of people.” She added, “I want you to act as if the house was on fire — because it is“. In London, in October 2018, she said, “We’re facing an immediate unprecedented crisis that has never been treated as a crisis, and our leaders are all acting like children.”

She also points out that various governments’ strategies as part of the Paris Agreement to limit global warming to 1.5C are insufficient. In addition, she has stated that the greenhouse gas emissions curve no later than 2020 needs to start declining steeply. She told the UK Parliament at the beginning of 2019 that Britain needs not to ‘lower’ emissions but think of eliminating them. In February 2019, she said that by 2030, the EU must reduce their CO<sub>2</sub> emissions by 80%, double the 40% goal set in Paris.

While, Thunberg acknowledges that she is not a climate scientist, but merely repeating what scientists have told the the public for decades, albeit, without much success. Thunberg says if everyone listened to the scientists and acknowledged the facts, “then we (students) could all go back to school.” On arriving in New York, she admonished Donald Trump to “listen to the science.”

 

Her Impact

In May 2019, Time magazine featured Thunberg on its cover, naming her a “next-generation leader” and noted that many young people see her as a role model. A 30-minute documentary titled Make the World Greta Again is on Thunberg and the school strike movement. Her impact on the world stage is called the “Greta Thunberg effect.”

Her impact on the world stage is called the “Greta Thunberg effect.”

In response, some politicians, mostly in Europe, have acknowledged the need to focus on climate change. A British YouGov poll, in June 2019, found that public concern about the environment had soared to record levels since Thunberg and Extinction Rebellion had ‘pierced the bubble of denial.

Reports in August 2019, stated that the number of children’s’ books addressing the climate crisis published, and sold, have effectively doubled. All these books aimed at empowering young people to save the planet. The “Greta Thunberg effect is attributed for this increase in publication and sales.

Inspired by Thunberg, US wealthy philanthropists and investors have donated over $0.5MM to the Extinction Rebellion, and school strike groups establishing the Climate Emergency Fund.

In February 2019, with Thunberg sharing the stage, Jean-Claude Juncker, then President of the European Commission, said “In the next financial period from 2021 to 2027, every fourth euro spent within the EU budget will go towards action to mitigate climate change“.

As a result of climate issues, in the May 2019 European elections, Green parties nearly doubled their vote to finish second on 21%, boosting their MEP numbers to a projected. The northern European countries where responsible for many of the gains where young people have taken to the streets inspired by Thunberg.

In June 2019, Swedish Railways (SJ) reported an 8% rise number of Swedes taking the train for domestic journeys over the previous year. This rise in ridership reflects growing public concern about the impact of flying on CO<SUB>2</SUB> emissions. Thunberg has highlighted the effect of air travel on CO<SUB>2</SUB> emissions by refusing to fly to international conferences. Being embarrassed or ashamed to take a plane because of its environmental impact has been described on social media as ‘Flygskam’ or ‘Shame of flying,’ along with the hashtag #jagstannarpåmarken, which translates as #istayontheground.

 

The Criticism

While there is worldwide support for Thunberg, there is also a great deal of criticism, primarily from the right and conservative groups. While many of these critics are Baby Boomers, who grew up during the Vietnam War movements, they seem unable to accept protests by a younger generation.

The most vociferous attacks on Ms. Thunberg have come from far-right politicians and conservative writers.  Having read many comments from articles about her in the US, the primary responses I see are:

  • Go back to Europe

  • Her parents should have disciplined her more

  • Too naïve to understand anything

  • Climate change is a hoax

  • If there is climate change deal with Asia first

  • She is mentally unstable

  • She should die/be killed

  • Knows nothing, so how dare she lecture us.

  • She is a Fascist, Communist, Liberal ****, or spoiled little girl.

Unfortunately, since she is reporting what the scientific community says most critics have “launched personal attacks,” “bash (her) autism,” and “increasingly rely on ad hominem attacks to blunt her influence.” As Thunberg’s influence grows, more columnists have been making “ugly personal attacks” on her, and Germany’s Alternative for Germany party has attacked her “in fairly vicious ways.”

The New York Times journalist, Christopher Caldwell, claims that Thunberg’s simplistic to climate change will reveal climate protesters to the complexities of decision-making in western democracies. French philosopher, Raphaël Enthoven, argues that many people “buy virtue” with their support for Thunberg but don’t do anything to help. In July 2019, Mohammed Barkindo, OPEC secretary-general, “complained of what he called ‘unscientific’ attacks on the oil industry by climate change campaigners, calling them ‘perhaps the greatest threat to our industry going forward.'” Later he said he was referring to the recent wave of school strikes inspired by Greta. Andrew Bolt, a right-wing Australian journalist, questioned the validity of ThunbergÆs activism based on her Asperger’s. He wrote “I have never seen a girl so young and with so many mental disorders treated by so many adults as a guru… Her intense fear of the climate is not surprising from someone with disorders which intensify fears.” Also, Brendan O’Neill, the editor of the Koch-backed internet magazine Spiked, described Thunberg as a “millenarian weirdo” whose “cultish” movement is fundamentally “against people.”

Thunberg is relatively unknown in the US, and how the US will handle her arrival is uncertain. “It will be interesting to see whether there is any paid-for anti-Greta advocacy,” Richard Black, said, pointing to the funding for anti-climate action lobbying in the US. “There will be one tranche that absolutely does not welcome her.” The US remains the largest climate denial country in the West, primarily due to hundreds of millions of dollars spent on lobbying and paid media by climate deniers like Koch Industries.

Two of the reasons given above I would like to mention, the cost of dealing with climate change is too high. However, cost of the 9/11 attacks, which resulted in 4,000 dead and damage in downtown Manhattan is estimated at $3.3 trillion and rising. GIven that Maria killed 4,000+ in Puerto Rico and the cost of Hurricane Sandy was estimated at $65bn, I don’t think we can keep ignoring these costs with the claim that prevention is too expensive. I think the price of climate change denial is far higher, and prevention would be more cost-effective than cure. The second is to look at Asia first; however, while China is currently the largest emitter of CO<SUB>2</SUB>, the following shows the roles of all countries since 1750.

 

The people who hate her do so because she looks and acts like the sort person they believe is not supposed to speak and tell them to do things they don’t want to. Instead, they see children mainly as symbols of a protected innocence that can be passively invoked to justify whatever they choose, not as harbingers of a better world.

However, the misogynistic nature of the criticism towards Greta reminds me of the Taliban and religious conservatives’ attacks on Malala Yousafzai for wanting girls to have an education. I believe that these critics are trying to stop change and tilting at windmills to put the world back to some time when they had the control and more power.

 

Is She Relevant?

I would argue the following:

Climate change is here, and even if you don’t accept that humans are the cause, you need to plan for it, adapt and protect your business. Your strategy and plans need to consider the risks and impacts of climate change on your customer base, operations, supply chain, revenue sources, costs, and ability to deliver products and services. McKinsey identified the following risks:

Value Chain Risks

  1. Physical
  2. Price
  3. Product

External Shareholder Risks

  1. Ratings
  2. Regulation
  3. Reputation

Customers. Research by Cone Communications, a consumer brand PR agency, found that 87% of Americans said they would purchase a product because of a company’s alignment on an issue about which they care.

HiringNearly two-thirds of millennials said they take a company’s social and environmental commitments into account when weighing a job offer. This generation makes up the majority of the labor force now, and will make up half of all US employees by 2020, 

Your kids care, they expect you too.

Most Americans are worried about it, and especially millennials and generation Z, emphasizing the age gap in concern.  So lead!

Many major companies are starting to try to fight climate change:

  1. To help conserve the planet, Patagonia has pledged to donate 1% of its sales to climate change. Also, earlier this year, Patagonia stopped selling its apparel to companies that don’t align with its environmental values, including multiple large banks and Fintech startups.
  2. IKEA. IKEA intends to remove all single-use plastic from its global home furnishing range by next year, and use only renewable or recycled materials in all its products by 2030. Their goals are here.
  3. Unilever is seeking, by 2025, to replace all of its plastic packagings with reusable, recyclable, or compostable materials.
  4. Tesla CEO Elon Musk has stressed the importance of speeding up the “advent of cars powered by electricity made from solar power,” like those from his company.

 

Why You Should Follow Her

There is the old saying, “Generals always fight the last war?” I think CEOs do too, even those who have read What Got You Here Won’t Get You There. Many CEOs are not familiar with many of the top social influencers and what they are doing in the market. Some of these, like Yuya and Jenna Marbles, have considerable influence on their audience and lead them where no one is expecting. While you cannot get ahead of these people, you should not get too far behind. Even if you don’t sell to them directly, they are influencing many. Climate change is an essential issue with the younger generation, your future clients. You need to understand their concerns when connecting with them.

 

Conclusion

While you may not agree with Greta’s views, a 16-year-old that has gotten millions of students to protest and has over 1.3MM followers on Twitter and 3.0MM followers on Instagram is an impressive force. Her YouTube video of her speech to the UN has had over 1MM views. Furthermore, someone who not only protests but is changing her life to live her message increases the strength of her message. So, if you don’t like her, I would ask, “When was the last time you believed in something so much you are willing to do something about it on a public stage, take on the major political and corporate interests, and that could cost you everything?” As Kirk Lippold said, “Integrity is doing the ethical thing regardless of the consequences.”

For a great piece on climate change, I would recommend Neil Kakkar’s article, A Guide to Climate Change

 

© 2019 Marc Borrelli All Rights Reserved

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Sunk Costs Are Just That, Sunk!

Sunk Costs Are Just That, Sunk!

If you were starting your business today, what would you do differently? This thought-provoking question is a valuable exercise, especially when it brings up the idea of “sunk costs” and how they limit us. A sunk cost is a payment or investment that has already been made. Since it is unrecoverable no matter what, a sunk cost shouldn’t be factored into any future decisions. However, we’re all familiar with the sunk cost fallacy: behavior driven by a past expenditure that isn’t recoupable, regardless of future actions.

Do You REALLY Know Your Business Model?

Do You REALLY Know Your Business Model?

Bringing clarity to your organization is a common theme on The Disruption! blog. Defining your business model is a worthwhile exercise for any leadership team. But how do you even begin to bring clarity into your operations? If you’re looking for a place to start, Josh Kaufman’s “Five Parts of Every Business” offers an excellent framework. Kaufman defines five parts of every business model that all flow into the next, breaking it down into Value Creation, Marketing, Sales, Value Delivery, and Finance.