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..."
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