World wine production hits a 56-year low

Global wine production plummeted to an almost six-decade low this year – and that isn’t even the worst news.

Thanks to the ravages of climate change, experts say that these sorts of bad harvests, once considered historic, will likely grow more common in the future.

This week, the International Organization of Vine and Wine, a Paris-based scientific and technical group, announced that production would fall by roughly 3 billion bottles this year, a drop of more than eight percent from 2016 and the lowest level seen since 1961. The losses were driven by a trio of extreme weather events in Italy, Spain and France, three of the world’s largest wine-producing countries. The most-impacted regions include those that produce Bordeaux, Rioja and Chianti.

U.S. drinkers are unlikely to see shortages or price changes now, analysts said, since European producers prioritize this market. But that could change if extreme weather events become more frequent.

“This is something the wine industry is keenly aware of,” said Stephen Rannekleiv, the global beverages strategist at Rabobank. “How to respond to climate change, how to adapt varietals, how to decrease their own footprint – it is a concern for the whole industry.”

According to the OIV, the industry’s losses this year were concentrated in Italy, France, and Spain – the first-, second- and third-largest wine-producing countries, respectively.

All three countries suffered a bout of severe spring frost in April, after shoots and buds had already begun appearing, explained Gregory Jones, a wine climatologist at Linfield College in Oregon. On top of that, parts of Italy experienced a lengthy summer heat wave – nicknamed “Lucifer” by local vintners – and Spain weathered a historic drought that saw 37 of its 150 districts declare a state of emergency.

As a result, the OIV says that Spanish wine production is down 15 percent, while the French have seen a 19-percent drop. Italy’s total production is estimated at 23 percent less than last year’s, with the worst damage in Tuscany, Sicily, Puglia, Umbria, Abruzzo and Piedmont. (The organization has forecast only a marginal decline in U.S. output from the California wildfires, as they struck after most grapes were harvested.)

Already, the decreased volumes are causing headaches for winemakers in Europe. For several years, the world’s wine inventory – the wine produced in excess of demand, often aged or stored for later sale – has grown leaner with steady consumption and a smattering of other bad weather events. Now the cost of commodity or bulk wine is increasing, giving wine-sellers the choice of eating into their own margins or raising costs for consumers.

Fortunately for oenophiles, most winemakers “will be loathe” to raise costs, Rannekleiv said. And the winemakers who have no choice but to pass on their losses likely won’t be the ones who export to the U.S. – instead, they’ll be the smaller, more down-market brands that produce chiefly for the European market.

“Unlike other crops, all wines produced during one harvest are not consumed during the following year,” said Yann Juban, the deputy director general of OIV, by email. “Stocks still exist in producers’ and merchants’ cellars.”

Still, U.S. drinkers shouldn’t get too comfortable: experts say this year’s poor harvest is a harbinger of challenges to come. While extreme weather events can’t be attributed entirely to human actions, most scientists agree that a warming climate will make heat waves, droughts and intense storms more common.

That could pose a problem for wine grapes, which require not only specific temperatures, but specific humidity and light intensity levels to develop their best flavors. At higher temperatures, for instance, Syrah wines lose their peppery aromas, and Riesling picks up a gasoline flavor. A growing body of research suggests that some of the world’s most famous wine regions may eventually become too warm for the grapes they’re best-known for.

“It’s a double whammy,” said Jones, the climatologist. “And while it’s pretty easy to adapt to the temperature gradually going up, variability is very hard to adapt to.”

That said, the wine industry, spooked by harvests like this year’s, is beginning to change how it does business. Jones said some vintners are changing their vineyard practices to accommodate varying rainfalls and shorter growing seasons. Others are beginning to plant varietals in places that were previously thought unsuitable, said New York University wine economist Karl Storchmann.

Pinot noir or chardonnay in Quebec? One day, it could happen.

Until it does, however, winemakers and wine-drinkers should anticipate some uncertainty in the market, Rannekleiv said. There’s no telling where the next spring frost will strike, after all. And not all wineries are willing to take it on the nose when they suffer grape losses.

In 2016, for instance, Argentina suffered severe, El Niqo-related rainfalls that wiped out more than a quarter of its harvest. Consumer prices for domestic wine went up, and many Argentines stopped drinking it.

There is a silver lining, though: Beer consumption in the country swelled.

“So this year has been difficult for wine,” Rannekleiv said, “but maybe there’s good news for beer- and spirit-makers.”