Organic wine growers demand innovative risk management solutions

vineyards

Fewer chemicals, better for the environment, and less powerful hangovers- no wonder organic wine production is booming in the prestigious vineyards of France

Besides producing over 7 billion bottles of wine a year, France is the source of many grape varieties that are now planted throughout the world (including Cabernet Sauvignon, Chardonnay, Pinot noir, Sauvignon blanc, Syrah), as well creating the wine-making practices and styles of wine that have been adopted in other producing countries. Visiting the wine region of the Loire Valley has become as chic an affair as the prestige wines that originate there.

However, viticulture is changing and France is leading the revolution. In the last ten years, organic vineyards (which typically exclude the use of artificial chemical fertilizers, pesticides, fungicides and herbicides) have tripled in surface space (today comprising 66,196 hectares). At the same time, organic wine sales have tripled in France, with 600 million of euros spent each year by the French on organic wine. The region of Languedoc-Roussillon has become the premier regional producer of organic wine (having 23,303 hectares of organic vineyards, a figure that is increasing each year), having developed specialized biodynamic techniques that respect the celestial cycles and the natural rhythms of the vine for determining when to plant, prune and cultivate the vines.

In this way organic wine growers are in harmony with the increasing demand of wine enthusiasts who are on the lookout for not just quality and price but also production methods that are respectful to the environment and health. An added benefit: organic wine contains half the maximum legal limit of sulphur dioxide, a common preservative in wine that is used to inhibit or kill unwanted yeasts and bacteria, and the main culprit for hangovers.

However, the organic wine industry faces a number of challenges. Firstly, without added sulphites to stabilise the wine, wines must be consumed within a few years of bottling, though it is widely considered that certain types of wines improve with age, allowing the flavours to become more integrated and balanced. Moreover, it is a perilous time to be a farmer, let alone an organic one. Across the world, this past year broke records for unseasonal, unprecedented, and unexpected weather. The variability of temperature has doubled since 2000 in France, which means that if the weather had an impact on a vineyard’s performance 15 years ago, this impact has doubled. The threat of climate change to French wines is significant, but without the aid of artificial chemicals, how does the organic wine industry have a chance?

Take this spring, when temperatures in the last week of April dipped on three separate nights below freezing across several of France’s priced central wine regions, with frost severely damaging newly formed buds in the vineyards of both Burgundy and the Loire Valley. The summer brought no relief to vitners, with a heatwave in August across Southern France, with high temperatures leading to leaf loss and bunch damage. In total, the two weather extremes mean that French wine production is likely to be 10% lower this year than last. With increased costs from heating the vineyards during the frost, and irrigating them during the heatwave, and reduced profits due to loss of stock, vitners have no choice but to renegotiate payments with banks and/or raise prices.

However, what if they had another option, one that meant that they were insured for frost days, heat waves, and any other adverse weather peril? What if they didn’t need to raise prices or fear lost profits and higher production costs but would in fact be compensated automatically when weather conditions turned against them? Tactical management options could be applied as the adverse weather is forecast (eg. increasing irrigation at the time of a heatwave), and longer term proactive changes to management could be implemented well in advance (eg. irrigation design/infrastructure, radiation protection).

This is precisely the innovative risk management solution being offered organic wine growers across France today: the opportunity to tackle the effects of climate change with coverage against climate variability using index-based weather insurance. For their clients looking to remain sustainable despite adverse weather conditions Meteo Protect developed an underwriting and pricing platform, Vivaldi™ to provide index-based weather insurance to any farmer, co-operative or organisation effected by the weather.

Using Vivaldi™, farmers themselves choose each parameter of their weather policy, including crop, period of coverage, specific weather event and intensity, and even the amount of payment, based on their unique risk profile and budget. The platform then calculates a premium instantly and the term sheet is presented to the farmer in a manner that is simple, transparent and fully adjustable. The farmer can track their insurance contracts, quotes still under consideration and saved as simulations, and existing contracts that have already been underwritten and purchased. In this way, organic wine farmers have the opportunity to improve margin sustainability, generate additional revenues, and control costs.

Certainly, traditional solutions do not apply to innovative organic wine farming operations in the time of a rapidly changing climate. Meteo Protect is aware that each vineyard is different, and weather risks are local and specific. However, Meteo Protect knows exactly how weather affects each and every plant, so it can provide farmers access to specific and targeted financial solutions for the specific perils they are seeking protection for, at the price that reflects individual risks and operations. Wine aficionados can tip their glasses to that.