Treasury Wine Estates Ltd (TWE.AX) is testing technology to water vines underground and is expanding fermentation capacity to combat the impact of climate change on its vineyards around the world.

Rising temperatures mean too much water from over-ground irrigation is lost through evaporation, while changing ripening times are compressing harvest periods and putting pressure on processing facilities.

The owner of brands such as Penfolds, Beringer, Wolf Blass and Rosebank has not been caught off-guard. It began modeling the impact of climate change on its business 10 years ago after seeing a presentation from national science agency CSIRO.

"You can adapt to climate change or you can react to it," Treasury Wine Chief Supply Officer Stuart McNab told the Reuters Global Climate Change Summit on Tuesday. "You've got time to react, but you've got to know what's happening."

The world's No.2 winemaker is looking at ways to supplement declining natural rainfall and deal with a rise in temperatures. CSIRO projects an increase of 0.3 to 1.7 degrees Celsius by 2030 in Australia's main wine regions, reducing grape quality by 12 to 57 percent.

IRRIGATION

One way of adapting to the change is to drip water into the soil from punctured pipes laid under - rather than over - ground. Sensors allow Treasury to monitor moisture levels and make any tweaks immediately and remotely.

If the technology proves successful, Treasury plans to widen its use as vineyards are re-planted.

"It's something we are focused on," McNab said at the summit by video-link from the Penfolds Magill Estate in South Australia. "It's treating water as a scarce and precious resource, but the vines can still produce the same quality."

At the same time, Treasury has joined other wine companies in buying vineyards in cooler climates, such as Australia's southern island state of Tasmania, as traditional growing regions heat up.

The company has tweaked its ratio of cool to mid to hot climate areas and "slowly but surely mapped out a plan to evolve over time," McNab said.

PROCESSING

Rising temperatures and reduced water mean a greater proportion and variety of fruit is ripening in a shorter time window, causing a crunch that is pressuring facilities and management.

Alongside testing irrigation technology, Treasury has invested in more fermentation capacity for luxury wines to ensure the company is able to cope with an increased number of grapes to be processed in a shorter harvesting period.

Treasury is also increasing efficiency by tracking transport trucks with GPS technology and taking advantage of improved weather forecasting.

"You've got to make decisions and this is where information is critical - is it a short burst of hot weather or is it going to be four or five days of extreme weather and the grapes are ripe? You need to be ready," McNab said.