Bank and climate crises are crowding the vines

Hey there, time traveller!
This article was published 25/03/2023 (1232 days ago), so information in it may no longer be current.

The collapse of Silicon Valley Bank in the U.S. could spell big trouble for winemakers in California.

SVB is primarily known as one of the American tech sector’s most powerful financial institutions. But it also played a key role in the California wine industry, to the point where it established a division devoted solely to wine in 1994. And while its wine business made up less than three per cent of its total business, as of early March, Wine Spectator reports SVB had more than 400 winery clients.

While most SVB winery clients have been able to retrieve funds from their accounts, their concerns are more about loans and financing — and where they’re going to be able to find help going forward. Starting a new winery requires a whole whack of necessary capital — from building the winery to buying barrels, tanks and vines (and grapes, if needed) to employing people to turn fruit into booze. Upstart wineries looked to SVB for said capital; as of early March, Wine Spectator reports the bank had more than US$1.2 billion in outstanding industry loans. Where that money will come for future startups, and what will happen with SVB’s outstanding loans, are among the big questions hanging over Golden State wineries.

SVB’s relationship with California wineries went beyond just banking and lending. In a blog post on his winery’s website in which he describes setting up Siduri, his previous winery, Adam Lee of Clarice Wine Co. called SVB “partners in our growth as a winery and as winemakers. Harvest after harvest, Silicon Valley Bank employees would come over on a particularly busy day and help us sort grapes. They’d bring us lunch and spend hours — literally hours — standing at the sorting table with us separating out leaves and damaged clusters.” (To read the entire blog post, see wfp.to/0t2.)

SVB also published extensive, detailed documents that proved invaluable to many in the California wine industry (and to anyone interested in it). SVB’s annual State of the U.S. Wine Industry report is one of the most comprehensive documents when it comes to American wines — California wines in particular — and also offers plenty of valuable insight into the global wine industry and emerging trends. (The 2023 report can be read/downloaded at wfp.to/0tg.)

For California producers who had worked with SVB, it’s now a game of wait and see to figure out who, if anyone, will step into the defunct bank’s shoes as a key financial partner of the industry.

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Across the Atlantic, Spanish producers are facing an issue sure to affect their future — drought.

Earlier this month, Spain was declared to have officially entered a period of long-term drought, with little rainfall and soaring temperatures bringing forest fires and heat waves over the last three years.

A Canadian Press report noted 2022 was the hottest year and sixth-driest since 1961, although December rainfalls helped boost water reservoirs to around half capacity from around one-third full in late 2022.

In many regions of Spain, the 2022 grape-growing season brought extreme heat and a lack of precipitation, meaning grapes got riper much faster than usual. Those grapes that weren’t affected by nearby forest fires were harvested a few weeks earlier than normal, with vines planted at higher altitudes generally faring better. Overall the vintage proved to be extremely challenging, but the end result was very good quality fruit; the lack of precipitation meant producers had less fungal disease to deal with, which can rot grapes on the vine.

With no end in sight to the rising temperatures and decreasing rainfall, producers have had to adapt in order to succeed. Winemakers and grape growers in a number of wine-producing regions have started seeking out grape varieties that are more resistant to extreme weather; a recent Guardian report noted that in the past two decades, the number of commercially registered grape varieties has jumped by 50 per cent. In some cases, varieties that have long been abandoned by Spanish producers are being rediscovered and replanted.

Producers in other regions have made similar moves in recent years in response to climate change. In 2021, for example, the governing body over Bordeaux wines approved the use of six additional grape varieties that are better suited to warmer temperatures in the production of red and white wines from the region.

uncorked@mts.net

Twitter: @bensigurdson

 

Wines of the week

Zuccardio 2018 Q Chardonnay (Uco Valley/Tupungato, Argentina — $18.74, Liquor Marts and beyond)

The grapes for this Argentine Chardonnay are sourced from multiple vineyards in the Mendoza region. It’s pale gold in colour and brings peach, caramel, pineapple, lemon candy and green apple aromas. Medium-bodied and rich, it brings ripe red apple, peach, lemon zest as well as vanilla and butterscotch notes from oak aging and a medium-hot finish thanks to the 14 per cent alcohol. The fruit concentration in this relatively older vintage is just starting to fade; drink now (especially as it’s on sale from its regular price of $24.99 until the end of March). 3/5

Cono Sur 2021 Organic Cabernet Sauvignon Carmenère Syrah (Central Valley, Chile — $9.59, Liquor Marts and beyond)

A 51-28-21 blend of the aforementioned three wine grapes, this Chilean red blend brings cassis, black cherry, milk chocolate and subtle vanilla notes aromatically. It’s medium-plus bodied and dry, but the fruit remains plush and ripe, the chocolate flavours add some richness, tannins are mild but provide a touch of grip and the 13.5 per cent alcohol is unobtrusive. A solid value, particularly while it’s being blown out until the end of March (it’s regularly $15.99). 3/5

Catena 2019 Vista Flores Malbec (Mendoza, Argentina — around $33, private wine stores)

From high-mountain vines comes this big Argentine Malbec, which delivers slightly meaty and peppery aromas along with the primary blackberry, black cherry and plum notes. It’s a full-bodied, chewy and dense red, with loads of plush (but not sweet) dark fruit flavours, some cocoa and vanilla from 12 months in oak, white pepper that comes with the grippy tannins and a long finish (it’s 13.5 per cent alcohol). Would be great now with a steak or fajitas, or could be put away for two to three years. 4/5