Climate change, the end of Champagne?

Written by: Amira Eapen, Dan Kim, Jonas Debrabandere, Kristen Moser

Background

Located in Reims, France, Taittinger is a family-owned Champagne producer that has existed since 1794. Taittinger is geographically the third-largest producer within the Champagne region, owning 288 hectares that compromise 37 vineyards. Like all vineyards, Taittinger is focused on the craft of cultivating high-quality grapes in order to transform them into their popular Champagne and other wines.

The business model of wine production is completely dependent on the initial growth of the grapes – only once successfully grown are they then pruned, harvested, pressed, fermented, aged, and sold. Growing and harvesting grapes is the crux of the business, which puts Taittinger’s business model at the mercy of climate conditions and other uncontrollable events affecting agriculture.

The grapes are the most important input to the Champagne as the dominant ingredient, but they require a long-lead-time before the crop yields. It takes about three years to see the fruit after planting the vineyards. Not only are grapes a time-intensive crop, but they are also very sensitive to the weather. Conditions the grapes grow in can greatly impact their taste. All these characteristics infuse uncertainty into the business model.

Effects of Climate Change on Taittinger Champagne

Recent reports have stated that due to climate change, Taittinger’s production yield is at significant risk due to issues like drought, soil erosion, and rising temperatures. At this moment in time, the climate is optimal for yield, however, a 1 degree Celsius increase will force Taittinger to find innovative solutions like earlier harvesting and new methods of cultivation to protect their annual yields. Moreover, the champagne industry is seeing new competitors from the UK entering from outside of the Champagne region, given its now similar growing conditions due to climate change.

Comité Champagne, Climate Change Press Pack, 2019

How is Taittinger responding to climate change? 

In response to the rising temperatures and altered precipitation, Taittinger is harvesting their grapes on average of 18 days earlier than 30 years ago (from September to August). Therefore, company operations needed to be altered to account for the new growing cycle and harvest season, especially since the grapes are now being harvested during the hotter months.

Smaller changes in practice are also in effect such as planting vines farther away from each to allow more room for roots to search for water, and having to alter the process composition of the champagne because the earlier harvested grapes are less acidic, a key component in champagne quality and flavour.

Champagne producers realised very early on that climate change could significantly affect their operations, and chose to make changes to their businesses early to reduce carbon emissions. They started actively working towards a climate change agenda in 2003, implementing initiatives that touched on many different areas including sustainable winegrowing practices, improving the energy efficiency of their buildings, and using cleaner transportation methods. There were even efforts to redesign the champagne bottle, and producers worked with glassblowers to reduce the weight of the bottles, as the resulting decrease produced fewer carbon emissions during both the production process and transportation.

Comité Champagne, Climate Change Press Pack, 2019

Most importantly, Taittinger is looking towards the future and purchased 70 hectares of land in Kent, United Kingdom as the climate and environment almost directly mimic the growing conditions of Champagne a few decades ago. This move north gives the company time to plant, grow and establish a sparkling wine in ideal conditions and be better positioned for when climate change becomes too much for their current position in France.

What else should Taittinger do?

We think the company should continue to prepare its operations for the adverse effects of climate change. We see 2 broad mitigation strategies:

The first one is a continuation of the current approach. By collaborating with research institutions and farmers, the champagne manufacturer can better understand the precise impacts of climate change on its operations and adjust where necessary. The current expansion strategy into the UK fits into this broad approach. This first category of actions is fairly conventional, though. These may prove insufficient to prepare the business for the long-term impacts of climate change on its operations, its suppliers and clients. By incorporating social and economic goals into its business model, Taittinger may be better prepared for an uncertain future.

Concretely Taittinger can incorporate a stronger social dimension into its business plan. By involving the local communities through techniques like profit sharing, the local community will be motivated to continuously innovate in the champagne making process and, in this way, hopefully, mitigate some of the climate change impacts.

The second mitigation approach is for Taittinger to review its marketing strategy. Rather than aiming to sell to typical wealthy champagne consumers, Taittinger can identify those consumers that appreciate high quality, sustainable products and who will recognize craftsmanship over legacy status labels (like the Champagne label).

Reflection: Looking Ahead

This news has made us ask and reflect on the following question:

1) How open will consumers be in accepting a similar product (Champagne), if branded with a different named, based on where it would be cultivated in the future?

There are no clear answers yet as the definition and rules of classification for “Champagne” are now being debated. We imagine that French consumers, proud of the heritage and legacy of its revered product from Champagne, may be resistant to change. On the other end, there may be a blue ocean, untapped customer segment willing to purchase an alternative to “champagne”. If the industry chooses to rename the product itself, I’m curious to know how companies will approach the positioning of their brands. Will they take a similar approach to Yellowtail in the wine industry that encompassed a more accessible, less pretentious view on wine consumption? Or will they try to maintain the exclusivity of their brand until they can produce no more?