Treasury Wine Seeks Cooler Land as Climate Shifts Season
Treasury Wine Estates Ltd. (TWE), the world’s second-largest listed wine company, is seeking out vineyards in cooler regions in preference to ones in warmer areas as climate change starts to shift growing seasons.
The wine maker’s land acquisition teams are looking to buy and lease vineyards in Australia’s Tasmania state, Chief Executive Officer David Dearie said in an interview yesterday. Harvests are already starting as much as a day-and-a-half earlier each year as a result of climate change, he said.
Areas suitable for viticulture may drop 68 percent in Mediterranean Europe by 2050 and fall 73 percent in regions of Australia with a so-called Mediterranean climate, according to a study published this month in the Proceedings of the National Academy of Sciences of the United States of America. New Zealand’s area will more than double and it will also surge in northern Europe and western North America, the authors wrote.
“As the world heats, Tasmania’s very well positioned because of the cooler climate,” Dearie said. “We’ve got out of places like the Hunter; in the longer term I think it will be hot and dry and expensive.”
The Melbourne-based company earlier sold its vineyards in the Hunter Valley north of Sydney, where the Lindemans brand originated, as part of a shift to more profitable growing regions, he said.
Australia’s most prestigious wine award went in 2011 to a shiraz from southern Tasmania, a region better-known for cooler- climate white wines and pinot noir grapes.
Treasury’s growers are monitoring vineyards’ growing seasons to update their forecasts of local climate change impacts, and delaying pruning work to give time to harvest grapes as seasons move later, Rebecca Smith, a spokeswoman, said by e-mail.
Shares of Treasury have climbed 39 percent in the past 12 months in Sydney trading, outperforming the S&P/ASX 200 Index’s 18 percent gain in the period.
Treasury needs to source more high-quality land to meet demand for premium wines and is looking in the U.S., Australia and New Zealand, Dearie said. While the company would also like to find vineyards in France as a means to gain access to the Asian market, prices were too high at present, he said.
“We don’t actually have the wine,” he said. “It’s a question of making the wine first and then selling ourselves into the market.”
The wine maker wasn’t finding the limits of demand for the most expensive wines, Dearie said. Treasury April 4 increased prices for its 2008 Penfolds Grange vintage to A$785 ($827) a bottle, a 26 percent increase on the previous year’s output and 15 percent above an initial pricing in January, as growing Chinese demand for high-end wines outpaces supply.
China will become the largest wine market in the world within 10 years, Dearie said in an interview with Bloomberg News last month. Still, it will take 30 to 50 years for the country, the fifth-largest grower of wine grapes, to establish high quality wine growing regions, he said yesterday.
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