It is no news that the wine industry has faced numerous challenges over the past decades, particularly in the last five years (post-COVID).
Discussing the subject with various people in the wine industry and reading more posts and articles over the last six to eight months inspired me to create this image/collage (header) and share my views on these challenges on my blog as well.
Many environmental, demographic, and economic factors influence these challenges, and they vary from one country to the next. Because going case by case would be too long, I will provide further details on these challenges for the wine industry as a whole, meaning generally speaking, and more specifically for the vineyards located in the northern hemisphere (as I'm more familiar with them).
Vineyards located in what we call the "New World" (the USA, South America, South Africa, Australia, New Zealand, etc.) are also affected by similar disrupted weather patterns, changes, and problems; yet, they have different rules that permit the use of equipment to prevent or combat these issues, which may not be authorized in Europe or France, for example.
Among all of them, there are 5 main recurring challenges at the core of this global situation that have worsened over the past five years.
These five key challenges impacting the wine industry include environmental challenges, economic shifts, demographic and preference changes, price fluctuations, and declining production. Climate change poses a significant threat to grape cultivation, while economic factors, such as declining sales and shifting consumer preferences, disrupt the market. Therefore, prices are unavoidably impacted while production declines for various reasons.
Let's delve into these challenges to gain a deeper understanding of why and how they affect the entire wine industry, and ultimately, what it means for the future.
The 5 main challenges are related to:
- Climate change
- Decreasing sales
- Declining consumption (due to changes in demographics and preferences)
- Prices (shifting/fluctuations)
- Production decline
1. Climate Change
The primary challenge facing the wine industry is climate change. Rising temperatures and shifting weather patterns, including longer and colder winters extending into spring and drier or wetter summers and falls, threaten traditional wine-growing regions.
After dormancy during winter, the vine's growing season typically spans from spring to fall. During this time, the grapevines undergo several key stages: budding, flowering, veraison (fruit development), ripening, and eventually, harvest.
Spring (Late Winter/Early Spring - March/April): Budding
Vines begin to come out of dormancy as temperatures rise, and bud break occurs, marking the beginning of the vine's annual growth cycle. Vines start to wake up and release new shoots from their buds. If the low winter temperatures persist for too long, they can affect and delay budding by increasing frost damage.
Spring/Summer (Mid Spring-Early Summer - May/June): Flowering
In the Northern Hemisphere, flowering typically occurs around May. Flower clusters appear, and pollination takes place, resulting in the formation of small green grapes later in June. If flowering happens too early due to warmer temperatures, it can increase the risk of frost damage.
Freezing temperatures damage the plant's tissues, especially the young, tender green shoots and buds. This damage can lead to a reduction in yield, loss of buds and shoots, and even damage to the trunk and cordons. This has been a recurring issue in France over the past 5 to 15 years.
In Bordeaux, for example, recent years have seen significant recurrent vine damage due to frost. The most recent severe frost was in April 2017, causing widespread damage and a 40% drop in the harvest. Estimates suggest that up to 70% of vineyards experienced some damage, with some suffering losses of 80% or more. The frost resulted in a 40% decrease in the 2017 harvest, with estimated financial losses of € 1.6 billion.
Different techniques are allowed to warm up the vineyards to prevent frost damage when lower temperatures are expected to dip below the freezing level during the night and early morning.
In recent years, winegrowers have employed a variety of techniques to combat frost damage, including traditional methods such as candles and heaters, as well as more advanced techniques like wind machines, helicopters, and even sprinklers. While some methods are more sustainable, others are more energy-intensive or expensive.
Burning candles is one of the most common techniques. It creates a slight temperature rise and disrupts the settling of cold air, preventing frost formation. However, it only works until a certain level of cold is reached, raising the temperature in the air by just 1 or 2 degrees. As a result, it may not be very efficient if the frost worsens or lingers. Additionally, it can become quite expensive if the frost lasts.
Candles also require significant manpower to arrange them in rows within the vineyards. They are typically spaced 2-3 meters apart and positioned in alternate rows. Depending on the size of the parcels or vineyards being protected, this can result in increased unplanned labor and equipment costs.
Like candles, electric or fossil-fueled heaters can increase the temperature of the air around the vines. However, unlike candles, they cannot cover the entire parcel or vineyard, so a certain number of them placed strategically is necessary. Yet, they are more expensive and less sustainable than candles and may require constant supervision, which can lead to increased unplanned labor and equipment costs.
Other techniques used mainly by the wealthiest Chateaux and Domaines include wind machines that stir up the air, mixing warmer air from above with the cooler air near the ground, preventing frost. Some also use helicopters that use their blades to stir up the air, similar to wind machines, but they are expensive to operate and require significant capital investment.
Some may use sprinklers, which consist of applying water to the vines to create a layer of ice, which in turn protects the buds by releasing latent heat as the water freezes. Yet, it might prove quite costly in the end, considering the large quantity of water required and the associated costs.
Anti-frost covers also exist; these covers, placed on trellising wire, create a barrier between the vines and freezing air. However, they are not widely used; for instance, in France, they are prohibited. A small number of growers and winemakers, such as Loïc Pasquet, have been advocating for the legalization of the use of these anti-frost covers for several years, which could provide a more sustainable and cost-effective alternative.
However, regardless of the techniques used, they always imply unplanned extra labor costs, as additional personnel are often required to apply these techniques, weakening the growers' and producers' financials that could have been used for other needs, such as repairs to vineyards and cellars, new projects, or expansions.
Summer (Late Spring and Summer - Late June, July, August to early September): Veraison and ripening
Grapes begin to grow and develop, undergoing a process called veraison, during which they change color and start to accumulate sugar.
Over the last decade, more frequent rainfall, humid conditions, violent storms, and moderate temperatures have increased the risk of mildew, oidium (powdery mildew), and other vine diseases, as well as flash flooding and soil erosion.
Hail and violent storms can inflict significant damage on vineyards, leading to reduced yields, compromised grape quality, and potentially long-term vine health issues. The severity of the damage can vary depending on the timing and intensity of the storm, as well as the stage of vine development.
Hail can knock grapes off the vines, bruise or rupture grape skins, or even shatter the fruit, leading to immediate crop loss and reduced yields. It can also strip leaves from the vines, reduce photosynthetic capacity, and disrupt the vine's ability to produce energy for growth, thus delaying fruit maturation.
Damage to leaves, shoots, and fruiting buds can impact the vine's ability to produce future crops. In extreme cases, hailstorms can damage vines so severely that they may not recover, resulting in the loss of the vine.
On the other hand, violent storms can damage shoots and trunks, potentially leading to infection by bacteria such as Agrobacterium, which can cause crown gall disease, especially in younger vines. Damage to grape skins can lead to rot, reducing grape quality and, consequently, impacting wine quality and eventual ageing potential.
Sudden heavy rainstorms and intense hailstorms have become more frequent, even affecting areas where they were previously rare, sometimes destroying a high percentage of the crop.
Therefore, on top of fearing the frost bites of late March and April, growers and producers now face more recurrent and more frequent hail storms occurring usually in May and June, followed by heavy rainfall during the summer months. And unfortunately, there is nothing they can do to prevent these natural disasters.
Managing hail and storm damage can be very costly, as it often requires growers and producers to prune damaged vines and address disease outbreaks. Proper irrigation and fertilization can help damaged vines recover and regain their health. Implementing pest control measures can help prevent further damage from pests.
Some vineyards may choose to invest in protective measures, such as nets, to reduce hail damage. However, these can be costly, require extra labor, and, like the nets used for frost protection, may not always be permitted in certain regions. Others might insure their vineyards against hail damage, which can help mitigate financial losses. Whatever methods are employed, they represent yet another unexpected expense.
Disrupting weather patterns, such as sudden hail and storms, is a problem; however, the ever-increasing temperatures (and eventually, air, water and soil pollution, and deforestation) of the past two decades have also led to major droughts and water scarcity in some regions, which in turn impact grape growth, yields and quality.
The ideal growing season for wine grapes is characterized by a balance of warmth, sunlight, and rainfall, which ensures healthy vine growth and the production of high-quality grapes for winemaking. Conditions that are too cold and humid can cause irreversible damage, but so can excessive sunlight, heat, and high temperatures.
Heat stress in vineyards can cause significant damage, impacting vine health, fruit quality, and yield. High temperatures can disrupt photosynthesis, slow sugar accumulation, and lead to sunburn and shriveling of berries. Extreme heat can also reduce berry acidity, affecting flavor profiles, and even cause berry death.
Heat stress can also cause leaf loss and damage to the clusters, ultimately affecting vine health and future growth. Excessive heat can exacerbate soil moisture deficits and water shortages, potentially resulting in drought stress if adequate irrigation is not maintained.
Growers and producers have limited options to predict or prevent these natural disasters, which are often triggered by excessive rain or heat, except by monitoring the weather forecast and planning ahead through careful vineyard management.
Vineyard management that utilizes weather predictions involves proactively adapting practices based on forecasted weather conditions to mitigate potential risks and optimize crop health. This includes monitoring temperature, rainfall, humidity, and wind speed, then using this information to adjust irrigation, canopy management, and pest control strategies.
Autumn (Late Summer/Early Fall): ripening and harvest
Grapes ripen, and winemakers decide on the optimal time for harvest, which generally occurs in the fall, from late August to mid-October, depending on the grape varieties and their ripening pace.
Various grape varieties have distinct ripening requirements, which means some can be harvested earlier or later in the season. In Bordeaux, for example, for the reds, Merlot ripens faster than Cabernet Franc and Cabernet Sauvignon, so harvest time differs depending on the grape variety, the level of ripeness, and the weather. The same applies to whites as Semillon ripens earlier than Sauvignon Blanc.
During the ripening and harvest seasons in vineyards, problems can arise from weather, pests, diseases, and uneven ripening, which can impact grape quality and yield. These issues can lead to reduced flavor, potential spoilage, and challenges in managing the harvest itself.
The disruptive weather patterns of recent years have led to heavy or excessive rainfall during the ripening and harvest seasons in some regions, which can cause berries to swell, diluting flavors and potentially cracking their skins, making them vulnerable to spoilage. Well-drained soil is crucial for healthy grapevines.
On the other hand, heat stress due to extreme heat and heat waves can also occur during harvest, damaging leaves and berries, reducing sugar production, and attracting pests.
The unpredictable weather, temperature fluctuations, droughts, and rainfall that some regions have experienced over the past decade have disrupted the ripening process, making it difficult to predict optimal harvest times, which sometimes requires multiple passes in the vineyards.
Facing these challenges, vineyards are more susceptible to fungal diseases such as powdery mildew and downy mildew, which can damage grapes and lead to reduced yield and quality. Grapevine pests can inflict significant harm and diminish the quality of the grapes. As previously mentioned, water-stressed vines can be more vulnerable to pests and diseases.
Also, some grape varieties exhibit varying levels of genetic predisposition to uneven ripening. Therefore, if they are not planted or grown in adapted soils with the ideal climate and environment, they may face challenges that prevent some grapes from ripening evenly, complicating the timing and delaying the harvest. A few days may not seem significant, but if grapes, and consequently parcels, are ripening unevenly, the harvest could be delayed by a week or two, depending on the weather and, of course, the ripening pace.
Differences in sun exposure, temperature, and airflow within the vineyard, resulting from geographic location and environment, as well as the proximity of a mass of water, forests, roads or buildings, can also lead to microclimate (lack of sun, uneven air flow, mist, difference in temperatures, air pollution, etc...) and thus uneven ripening.
Fortunately, winemakers can influence the ripeness of grapes by adjusting harvest timing, which impacts the final style and taste of the wine, based on their preferences, the appellation requirements, and the quality of the vintage.
Understandably, the best vintages are typically the least problematic, characterized by an ideal growing season for wine grapes. This season features a balance of warmth (throughout the budding and flowering), sunlight (during the ripening and harvest), and rainfall (in spring, along with occasional summer showers and/or a few weeks before harvest), all of which ensure healthy vine growth and the development of high-quality grapes for winemaking.
After harvest, the vines enter dormancy for the winter, while the winemaker dedicates attention to vinification and crafting the wine.
Changing, adjusting, and adapting - The birth of new Wine Regions
Based on the challenges faced by growers and winemakers in the vineyards (cited above), climate change is affecting vineyard growth and conditions, grape yield, composition, and wine quality. As a result, the practices in the vineyards, the types of grape varieties used, and the geography of wine production are also evolving.
Producers are adapting to the effects of climate change by adjusting their practices in the vineyards across several key areas. This includes switching to more drought-resistant grape varieties and rootstocks, modifying canopy management, and adjusting harvest times. They are also exploring new irrigation methods, considering traditional techniques, and even expanding into new regions that are becoming suitable for viticulture.
In Bordeaux, for example (being a native of Bordeaux, it is the region I know best), growers and winemakers, led by notable figures like Loic Pasquet of Liber Patter and Jean-Baptiste Duquesne of Chateau Cazabone, have fought the appellation authorities for years to incorporate additional grape varieties into the authorized selection: transitioning to drought-resistant varieties and rootstocks, including some from warmer regions and some that were previously existing but prohibited by the appellation rules.
In 2019, producers of Bordeaux AOC and Bordeaux Supérieur sought approval for certain varieties aimed at alleviating the impacts of climate change while preserving the essence of Bordeaux wines. Some of the traits of the listed grapes included high natural acidity, robust structure, intense aromas, and effective resistance to certain vine diseases, such as mildew and grey rot.
The French national appellation authority, INAO, approved six new grape varieties to help Bordeaux wine producers adapt to climate change. The approved varieties include four red grapes—Touriga Nacional, Marselan, Castets, and Arinarnoa—and two white grapes, Alvarinho and Liliorila. Petit Manseng was also suggested but was excluded from the final list.
According to Bordeaux’s wine council, the CIVB, the planting of these varieties commenced in 2021, with a strict rule that these varieties can collectively make up only 5% of a producer’s vineyard area and 10% of the final wine blend, to preserve the taste and style of Bordeaux. As most Bordeaux top appellations have not accepted these new grape varieties as part of their blends, the wines made from them can only be sold where authorized as Bordeaux AOC and Bordeaux Supérieur AOC, or as a Vin de France AOC.
Other regions and appellations in France, which are also experiencing the consequences of climate change, are gradually exploring the possibilities and may eventually incorporate grape varieties previously prohibited in their wines. Some regions previously suited for other types of agriculture are now also emerging as new wine regions and appellations.
For example, Alsace, known for its white wines (ranging from dry to sweet), is now catching up to Burgundy by becoming the new region where Pinot Noir excels.
Regions such as Île-de-France, Brittany (historically in Val de Rance and the Presqu'île of Rhuys), and certain areas in Normandy and Hauts-de-France, where vines and winemaking existed in the past but have not produced wine for decades, are experiencing a renewed interest in viticulture. Additionally, some relatively discreet areas, such as Jura and Savoy, are witnessing growth and gaining international recognition for their unique wines.
Several new and emerging wine regions are appearing across Europe, driven by climate change, innovation, and a renewed interest in local terroir. These regions are producing wines of interest and diversity.
Northern Europe:
Countries such as the UK, England, Belgium, Denmark, and the Baltic states are experiencing an increase in the production of sparkling and white wines due to warmer temperatures and suitable soil conditions. The UK, particularly in areas like Kent, Sussex, and Hampshire, is emerging as a significant player in the sparkling wine market.
Central and Eastern Europe:
The western and central regions of Ukraine, including Lviv, Ternopil, and Khmelnytskyi, are experiencing a resurgence in winemaking, with a focus on aromatic white varieties such as Riesling and Pinot Gris. Romania is also an under-the-radar region with a rich history and a diverse array of grape varieties.
Germany:
Wine production has expanded to all federal states, including Lower Saxony and Schleswig-Holstein, showcasing new opportunities in the north and the cultivation of new varieties in the south.
These are just a few examples, but with climate change, new regions in the northern hemisphere that were not necessarily suited for winemaking and where it was probably unthinkable to grow grapes only 20 years ago due to their geographic location and types of weather are now emerging, competing with the established wine regions that are currently suffering the consequences of climate change and may, over time, become unsuitable for grape growing at some point. Let's hope not. Time will tell.
That's it for this lengthy chapter on climate change, yet it was essential to discuss all the major issues a vineyard may face. I could write more about the problems related to climate change, but this already provides a good overview of these issues. Plus, we still have four more extensive chapters to address the other four challenges facing the wine industry.
2. Decreasing Sales
Wine sales have been declining due to a combination of factors, including economic pressures, shifting consumer preferences, and an increasing awareness of health concerns. Economically, rising inflation and high production costs are making wine less affordable for many consumers, leading to reduced discretionary spending (meaning money that individuals or businesses spend on items that are not essential for basic needs or operations).
Additionally, shifting consumer preferences, including a move towards moderation and alternative beverage categories, are impacting wine consumption. The various tariffs and other taxes applied to wine importing in some countries have also contributed to the decrease in sales. Lastly, but not least, the surge in wine production over the past 30 years has increased the number of countries producing wine, thereby increasing competition and diluting sales as customers face an ever-growing array of wines from more countries than ever before.
The primary economic factor responsible for the decline in wine sales is global inflation, particularly over the last five years (following the COVID-19 pandemic).
Global inflation is a complex issue with multiple causes, generally attributed to a combination of supply and demand factors. Supply shocks, such as disruptions to production caused by natural disasters, geopolitical events, or high oil prices, for example, can increase costs for businesses, ultimately leading to higher prices for consumers. Demand shocks, such as expansionary monetary policies or increased government spending, can also fuel inflation by creating excess demand.
The inflation of recent years, driven by geopolitical events (such as wars), economic and financial crises, tariffs, taxes, supply chain disruptions, and other factors, has led to a rise in the cost of living. As a result, discretionary spending on wine has become less attractive, as consumers prioritize essential goods.
The second economic factor is undoubtedly the production costs. Increased input prices, including energy, raw materials, and transportation, have burdened winemakers, potentially leading to higher prices and reduced profitability. These factors have gradually led to growers and producers facing enormous difficulties, often resulting in bankruptcy and the uprooting of hectares of vines in many regions.
Numerous factors, including rising production costs, increasing input expenses, fluctuating international trade, and the demand for sustainable practices, have contributed to higher expenses for grapes, labor, energy, and logistics, which in turn impact profitability and wine pricing.
The third economic factor relates to supply chain issues. The COVID-19 pandemic, along with recent geopolitical events in various countries, higher tariffs, and taxes, has disrupted global supply chains, affecting the availability of materials necessary for bottling and export, which has also led to increased prices.
3. Declining wine consumption (due to changes in demographics and preferences)
The inflation, the rise in the cost of living, and the increased prices have driven consumers away, but the decrease in wine sales is also associated with a decline in consumption. Wine consumption, which has long been a part of the culture and traditions in many countries worldwide, especially in Europe, has become less appealing to a broader audience with different priorities.
Several factors contribute to the declining popularity of wine, including its perceived high cost, an outdated industry image, the rise of alternative beverages and lifestyle choices, and growing health concerns. Younger generations, in particular, are less inclined to drink wine, citing factors such as the cost of living, the ease of consuming alternatives like beer, which are typically less expensive, lower in alcohol, and easier to access, or even non-alcoholic beverages to stay healthy, and the "elitist" reputation of the wine industry.
Declining wine consumption primarily results from a generational shift in consumer preferences and increased awareness of health and lifestyle issues. As for everything else, the problem lies in the excessiveness, not the moderation.
Wine has had a long history as a beverage of choice for the past two millennia, and it was also considered a medicinal agent. Some studies suggest that moderate consumption may offer potential benefits for specific health conditions, including a reduced risk of heart disease, stroke, and certain types of cancer. However, it's crucial to remember that excessive alcohol intake carries significant risks, and these benefits are not universal.
Until the 1950s, children in France often had wine served with their lunch at school. This practice involved children under 14 being provided with wine, a tradition rooted in the cultural and health beliefs of the era. However, in 1956, concerns about the impact of alcohol on children led to a ban on serving wine in schools to those under 14. In 1981, alcohol was banned entirely from all French schools, marking a significant shift away from this practice.
In France and Western Europe in general, wine has always been an integral part of the culture and traditions, an everyday alcoholic beverage consumed at both lunch and dinner. The generations of my great-grandfather and grandfather drank every day of the week.
The generation of my father, in the 1950s and 1960s, and mine, in the late 1970s and 1980s, witnessed a rise in wine production and consumption. Although health issues related to alcohol consumption were more extensively studied and established, this did not hinder the increase in production and consumption, which grew globally.
In France, despite awareness of health issues and other consequences, heavy consumption persisted. This led to the "French Paradox," introduced in 1992. The paradox stems from the observation that, despite a diet rich in saturated fats and cholesterol, France has relatively lower rates of coronary heart disease (CHD) compared to other Western countries. It sparked interest in the potential cardiovascular benefits of moderate red wine consumption.
Being healthy while following a diet high in saturated fat and cholesterol, along with consuming wine, was a contradiction for the rest of the world. However, for the French, this was normal and deeply rooted in their culture and traditions. This observation sparked further research into the effects of alcohol and wine on health.
Multiple factors have been proposed to clarify this phenomenon. Moderate consumption of red wine, particularly noted for its antioxidant properties, such as resveratrol, is thought to confer cardioprotective benefits. Additionally, a typical French diet, characterized by smaller portions of nutritious foods and balanced meals featuring fish, lean meats, an emphasis on vegetables and fruits, along with olive oil, may help reduce the risk of coronary heart disease (CHD). The French habit of eating mindfully—taking the time to enjoy and savor their meals—can also positively influence overall health. Some studies suggest that the folate found in fruits and vegetables may also be a contributing factor to the French Paradox.
While red wine consumption has been a prominent aspect of the discussion, more recent research has cast some doubt on its primary role in explaining the paradox. However, it's important to note that the French paradox is not a definitive statement asserting that red wine is a cure-all for CHD. It reflects a more complex interplay of factors.
Ultimately, moderate consumption of red wine, combined with a healthy lifestyle, smaller and more balanced portions, and a more relaxed eating environment, may offer some benefits and define this paradox that the French are so proud of.
My generation, Gen X (born 1965-1979), which includes people between 45 and 60 years old, still consumes decent quantities of wine. This is less true for Gen Y (born 1980-1994) and definitely not the case for Gen Z (born 1995-2009), and especially Gen Alpha (born 2010-2024), who are legally too young to drink (even if we all know some do).
Another reason for the decline in wine consumption may also stem from the fact that younger generations have witnessed various health and behavioral issues in their parents and grandparents. After all, the image of wine (or alcohol in general) is often associated with sharing fun moments and memories with others; however, when consumed in excess, it is also linked to domestic and public violence as well as inappropriate behaviors toward women and children.
As a result, younger generations (Millennials and Gen Z) have adopted moderation and "Better-for-Me" choices, opting not to follow the same path and instead prioritizing their health and wellness. This shift has led to moderation in wine and other alcohol consumption, along with a growing preference for non-alcoholic or low-sugar alternatives, such as hard seltzers, canned cocktails, and even legal marijuana as a substitute over the past two decades.
Wellness as a primary concern for wine consumption began to emerge in the late 20th century and early 21st century. This shift was driven by factors like increased awareness of the health effects of alcohol, growing interest in moderation and "sober curious" trends, and a greater focus on overall health and wellness lifestyle choices.
Younger consumers seek more convenience and unique drinking experiences, which some may perceive as not fully satisfied by traditional wine, reminiscent of what they consider "outdated" habits of older generations.
They are also much more aware of the potential health and behavioral risks associated with alcohol consumption, including cancer and other health issues, which is influencing their choices. Public health initiatives, such as those promoting cancer warning labels on alcohol and the recent non-alcohol campaigns that have been mushrooming everywhere, especially since COVID, can further discourage consumption.
Increased competition from other alcohol categories, such as spirits, mixers, hard seltzers, canned cocktails, and even non-alcoholic options, has diverted some consumer demand away from wine, contributing to the decline in wine consumption.
The legalization of marijuana in some areas has also been cited as a factor, as it provides an alternative inebriant for consumers seeking a non-alcohol-based experience.
All of these factors have undoubtedly contributed to the decline in wine consumption, but inflation and rising prices have also significantly slowed wine sales and, consequently, consumption.
4. Prices (shifting/fluctuations)
The cost of a bottle of wine varies depending on several factors, including:
- The initial cost of the wine (production cost: grapes, barrels, labor, glass, cork, capsule, labels, overhead, others, etc)
- Packaging and shipping
- Excise/alcohol duty
- Importer/distributor margin
- Retailer/restaurant margin
- Vat
- The intrinsic, consumption, and/or collectible value
- Any additional fees, taxes, or tariffs applied depending on the country's rules, regulations, and laws
Many other factors contribute to the cost and price of a wine, such as...
5. Production decline
***** work in progress *******
Cheers! Santé!
Dom
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