The SW Summary: On new ESG regulations, mandatory wine labelling, technology in the vineyard, and more

New ESG regulations: Why the wine industry should pay close attention

In SevenFifty Daily Betsy Andrews explores what the new ESG regulations mean for the wine industry. ESG stands for environmental, social and governance and is used primarily by the financial sector to assess sustainability-related risks and opportunities in investment decisions. As with any sustainability term, specific definitions and metrics are difficult to agree on. Recent years have seen rapid progress towards global standardisation, with the International Sustainability Standards Board (ISSB) leading on the development of a “comprehensive global baseline of sustainability-related disclosure standards.” 

ESG reporting has typically only concerned larger, public companies. However, proposed American and European ESG regulations will soon require every public company to account for their suppliers’ ESG scores. Whilst few wine businesses are public, the entire industry will need to comply with this new global standard as the “supply side of the value chain is where the lion’s share of wineries fit in.” 

ESG scores will also be important to the broader wine industry as they will influence a winery’s access to finance, as well as stocking decisions of large retailers. As Dr Peter Stanbury, head of research at the Sustainable Wine Roundtable explains, “in a few years, ESG may not just be about finance in equity markets but about access to consumer markets. It’s not impossible that unless you’re sold in lighter weight bottles, the monopolies will say, ‘We won’t stock you,’ particularly in Scandinavia.” 

Read more here.

The risks and opportunities of wine ingredient labelling

In The San Francisco Chronicle, Esther Mobley considers the opportunities and risks of the upcoming wine labelling requirements in the European Union (EU). As of this December all wines sold in the EU will have to provide nutrition and ingredient information on the bottle’s label, accessible via QR code. The Alcohol and Tobacco Tax and Trade Bureau (TTB) in the U.S. is considered a similar sort of requirement for wines sold in the country.

Overall, this move seems to be welcome by both consumers and producers. Consumers, many of whom are paying more attention to how the wine they drink is made, will welcome this increased transparency. Producers will have the opportunity to share more about their winemaking methods, as well as dispel common myths around wine, such as the widespread belief that it is high in sugar.

However, there is a risk that the information provided will be misinterpreted. Mobley notes how some customers may misunderstand the effects of some common ingredients that go into wines. Tartaric acid, for example, is added to many wines in California. Might this lead consumers to believe that the wine will be highly acidic? Other concerns around ingredients include the common (and negative) consumer misconceptions around sulfur dioxide, a highly common preservative used in the wine industry. 

It will certainly be interesting to see whether consumers actually engage with the information and scan the QR codes, and how this might influence purchasing decisions. Read the article here. 

Looks matter: We buy with our eyes

In the drinks business Christian Smith reports on the importance of appearances when it comes to making wine purchasing decisions. According to a user survey of 1,800 wine drinks on Vivino, an online wine marketplace, around four in five people purchase their wine based on the look of the label. The survey highlights the influence of “impactful, innovative and creative design choices” for capturing consumers’ attention.

Vivino’s wine director Paul Jones notes how “the sheer volume of available wines means one person could never be an expert about every single bottle, no matter how well-versed you are about the world of wine.” Evidently, an eye-catching and well-designed label can have a significant influence on how we buy wine. Read the article here.

Technology in the vineyard

Writing for Ambrook Research Shelby Vittek discusses the rise of precision agriculture in American vineyards. Wine grapes are the highest value fruit crop in America, but they are also extremely high risk. Unlike soybeans, corn or wheat, grapes are not subsidized, meaning that a bad year can result in total losses. Whilst technological advancements in wine production have been widely embraced and adopted by wineries, “vineyard practices have been slower to modernize.” Faced with the threats of increasing temperatures, extreme weather events and persistent labor shortages, many vintners are now also turning to technology for solutions.

With the help of grape-harvesting machines, to weather stations, soil sensors and flying drones, winegrowers are able to pick grapes with less damage to the vines and understand their vineyards better. However, such artificial intelligence and modern hardware require significant investments that not all vineyards can afford. Mike Beneduce, winemaker and vineyard manager at Beneduce Vineyards in New Jersey notes how “the price point on some of that stuff is hard to justify unless you’re managing like 1,000 acres.”

Opinions differ when it comes to the role of technology in the vineyard, but many view it as “another important tool in [the] winemaking toolbox.” This is the belief held by Tom Gamble, proprietor of Gamble Family Vineyards in California. He notes how “so far, there’s no all-in-one Swiss Army knife app that does everything … and I don’t think there’s anything that replaces walking the vineyard, but with data, your experience and judgment can make even more informed decisions.” Read more here.