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Himanshu Gupta • March 13th, 2023.
What if you went to the grocery store, and a bag of pistachios cost $20? What if your favorite bottle of wine doubled in price?
These high price tags could become a reality. As climate change accelerates, the costs of producing, processing, and transporting key ingredients in beloved foods and drinks could rise significantly. The beverage & agriculture sectors face up to $17 billion in climate change-caused supply chain disruptions within the next three years, according to leading risk organization CDP.
Luckily, companies are taking action today to address these climate risks and supply chain challenges — and even turn them into new opportunities. In ClimateAi’s recent webinar, How The Wonderful Company Uses Climate Intelligence to De-risk Their Supply Chains, business leaders from the Wonderful Company and ClimateAi described how they are using technology to get ahead of climate-related risks in supply chains and turn this risk management into a competitive advantage.
To watch the webinar, you can access a recording here, and learn more below.
Dave Whittleston, the Director of Sustainability & Analytics at The Wonderful Company, said that teams across the Wonderful Company were already aware of climate hazards facing the company.
When he joined two years ago, one of his first questions was, “‘Do we know what the impact of future changes in climate will be on our business?’” he recalled.
Forecasts that provide climate intelligence are the most useful when they translate these insights into actionable, business-useful information. It’s not only about accurate, reliable data points — it’s about what they mean in terms of yield, profitability, and strategy.
“What was missing was how some of these things translate into business impacts,” he elaborated. “So how does, as an example, a change in chill hours translate to yield impacts? How do other potential changes in hazards reduce or increase yields? Maybe there’s a reduction in frost risk — how does that interplay with this change in chill hours? And what would be the net impact of those things? And then of course, how does that translate to economics for the business?”
Understanding the impact of the season’s weather on yield allows companies and farmers alike to dynamically approach their processes allowing for the greatest levels of profitability.
“Unless you can translate that financially, I think it’s very hard to justify adaptation, or know whether you are under or overreacting,” Whittleston added.
Wonderful looked at a variety of climate services providers, but they did not provide actionable, customizable information with a platform and support that integrated well with The Wonderful Company’s team.
Too often, climate services provide generalized, averaged data. They aren’t “capturing that ranch-level microclimate information,” Whittleston said, “and it’s, in effect, a source of bias. You want to know things like the number of days temperature exceeds a particular threshold during a particular phenological cycle for that crop.”
“If you have that information, that is much, much more useful,” he added.
ClimateAi’s tools can provide such granular, contextualized data on operational sites, he said, along business-specific variables. Our tools don’t just say that it is getting warmer; we say how much warmer, in what months the heat will be concentrated, and if the heat will happen during the day or night. They also show what the impact on the crop will be in terms of yield and quality (e.g. germination), and when the warming will make the climate unsuitable.
Then, we offer solutions to these climate risks, such as: “Here are 5 other locations with optimal climates for this crop variety with similar soils and pest/disease profiles and secure water availability for the next 15 years.” Or, alternatively, “These are the precise tolerances you need to breed into this crop if you wish to stay in this target market.” We might also recommend how you can best manage the crop in-season to mitigate these risks.
“What we saw when we spoke to a few other vendors was they had their set [of climate data] … but they weren’t necessarily ag-specific, and they weren’t necessarily willing to work with our ag team, who have decades of experience,” Whittleston said.
ClimateAi’s team, on the other hand, works closely with multiple teams within each company, at a regular cadence, to make sure we understand their challenges and can offer solutions. Each customer has a private climate-crop advisor from our team that ensures we are doing everything scientifically possible to help these groups make difficult decisions.
Dave Farnham, Lead Innovation Scientist at ClimateAi commented, “We want to really understand your business and help make sure we’re asking good questions, and are going to help lead you to some questions as well.”
“The pain you’re experiencing — how costly is that?” he added. “What does that mean in terms of what we can do for you and how we can mitigate that? And what does that mean in terms of dollars for you and your business?”
ClimateAi worked with The Wonderful Company to assess its vineyard holdings, as well as with their agronomists.
Whittleston said that The Wonderful Company has a team of advanced agronomists who have been with the company for decades. So, they have deep experience and knowledge of on-the-ground climate and business impacts. They were able to integrate ClimateAi’s technology with their workflows, he said. “They could bring in, for example, what we actually see on the ground, how we want to translate what we see, and how that impacts our business into the analytics.”
Farnham described how the engagement worked. “A lot of our customers have fabulous agronomy teams, and we’re happy to integrate all of that beautiful data that you have to make our forecast even more powerful,” he said. “It means dialing in on variety specifics. If you wanna really dial in some of the risks associated and some of the different timelines around a variety, whether it be early or a later season, we can absolutely do that for you.”
Whittleston discussed how ClimateAi provided granular location- and variety-specific information. (The below image is an illustrative example, not The Wonderful Company’s data.)
“Some varieties have significantly more risk than others,” Whittleston said, describing it as “representative of the spatially detailed variety-specific insights that we’re able to start a discussion with.”
“Yield, combining it with vineyard economics on our side, to view things like income, and impact, at different locations” helps to understand the future of these vineyards and plan accordingly, Whittleston mentioned.
“Potentially maybe what you might think are minor changes in the yield difference could translate to more significant differences in income just because of the economics of that particular vineyard,” he added. “We are still digesting initial results. But hopefully this shows kind of how the asset-specific financial impacts could be started to be incorporated into things like development decisions or due diligences, along with all the other business considerations.”
Overall, Whittleston said, The Wonderful Company’s journey with ClimateAi has provided data-driven insights into future climate risks in supply chains — which is directly tied to its long-term strategy.
“We have achieved one of the main things we set out to do — which is building this quantifiable basis to start considering adaptation strategies,” he said. “We have an indication of financial impact [from ClimateAi]. Any adaptation strategy costs money. But to justify going in that direction, you need to know what is at stake. And we’re starting to build that.”
The Wonderful Company’s long-term strategy is essentially a climate strategy, Whittleston expanded, because the world in the next 20-30 years is “locked in” to climate change impacts due to warming that’s already occurred.
“There’s a time-discounting thing that happens in people’s heads when you start talking to them about 2100,” Whittleston added.
But the business environment of the next 20-30 years will be defined by climate change challenges, and Whittleston and The Wonderful Company are determining how to adapt today with business-specific, decision-useful climate information.