Is the Future of Wine Really in Trouble?
Doom-mongering about declining wine consumption has reached fever pitch in the press. Is there nothing more than hard seltzers and mocktails to look forward to?
Now we’re done with all 76 days of dry January, along comes the next burning issue. The last few months has seen a flood of articles and reports prophesying the demise of wine, due to a downward trend in sales over the last few years.
Much of the narrative concerns millennial and gen-Z consumers, who apparently don’t want to party like it’s 1999. Or even 2009. Could these more sober generations actually kill the future wine industry? Read the thousands of inflammatory headlines ignited in both specialist and generalist publications, and you might think so.
If you want to eyeball the sources, here are some links – a piece on why younger generations aren’t drinking as much wine as their parents, a recent NC Solutions consumer survey conducted in the US, and a very recent report on the state of the US wine industry from SVB. Then there’s Kara Daly’s considered take here on substack, or this 2022 piece from Eric Asimov, writing in the New York Times.
Who’d be a winemaker in 2024? But before getting too depressed, I want to take a closer look. Is it really as bad as people say?
Big is not Booming
If you scour the statistics, it becomes clear that the biggest losses in wine sales are in the mass-market sector. I use the phrase ‘commodity wine’ to describe what are usually budget priced wines sold in major supermarkets - €8 or under in the EU, $10 or under in the US.
This segment accounts for around 80-90% of the global wine market, as evidenced by the output of the biggest names. E & J Gallo, the world’s largest wine producer with brands including Apothic and Barefoot, is responsible for around 3% of the world’s total wine sales with sales of over $5 billion per year. The Wine Group, which owns another top brand - Franzia, manages about half that amount. Together, their production dwarfs any region in France.
I know – These aren’t the droids we wine lovers are looking for. But stay with me. It’s these massive brands, and others like them that are sustaining the biggest losses. For example, take a look at these figures for Constellation Wines, which owns brands such as Robert Mondavi, The Prisoner and Kim Crawford. Between 2016 and 2022, their annual sales of wine reduced by $1 billion, from $2,700,000 down to $1,700,000. See the SVB report for figures from all top seven players in the US wine market - all mostly down 2-3% in 20221.
Here’s the burning question: are the smaller, artisanal wineries that you and I actually care about seeing a similar decline? It doesn’t seem so. The SVB report points to sales in the premium sector actually increasing. Bear in mind that most analysts or wine institutions class bottles priced over 15 USD/EUR/GBP as premium.
My anecdotal evidence from visiting or meeting with hundreds of (mainly) European growers each year, and talking with importers, retailers and sommeliers is that the artisan or ‘craft’ end of the wine market is healthy in terms of sales. Its issues are not a lack of customers or declining consumption, but rather climate change, forest fires, shortage of harvest labour and the extraordinary rise in prices of commodities such as glass bottles and corks.
Kara Daly examines the assertion Young People Aren’t Drinking Wine in her piece, and I tend to agree with her that it is false. Young people continue to fall in love with wine, as evidenced if you visit specialist fairs such as Raw, Karakterre or La Dive. The people on both sides of the table are most often in their 30s, perhaps early 40s. You’ll find a similar cohort in the hippest wine bars of London, Amsterdam, Berlin, Paris, New York and so on.
What ‘young people’ do not do is fall in love after drinking a bottle of Yellowtail, Barefoot or Sutter Home. At least, not with the subject at hand. Arguably, the commodity sector does nothing more than allow people to get drunk at a cheap price, by imbibing an alcoholic beverage that vaguely had something to do with grapes. Is that what will help the romance of wine endure? I doubt it. The growth of E & J Gallo or Constellation may put a smile on the face of their shareholders, but it will not ensure the future of the sector.
Resilience not Growth
Let’s take a look at that word ‘growth’. Real wine, as in the noble beverage that continues to fascinate me (and, I hope, you) is essentially anti-growth. Vineyards produce one harvest a year2, and it isn’t possible to scale up their production in response to a seasonal rush on sales. The highest quality often hinges on reducing output, or on accepting lower yields from older vines.
In this respect, mass producing wineries such as those mentioned above inhabit a different universe than those that I normally write about. A winery business or group that has shareholders, executive boards or market capitalisation has to focus on growth. Investors want a return on their money, and to stand still in the market place is to be weak and vulnerable. This type of winery remains locked into what Jeremy Rifkin terms “the age of progress” in his book The Age of Resilience. That’s to say, their primary concern is efficiency - how to produce more, faster and cheaper.
Traditional independent family wine businesses, in contrast, don’t tend to have a growth plan. I’m talking here about estates that farm up to around 50 hectares (120 acres) of vines, or that produce under 100,000 bottles a year. These are businesses that typically provide the main income for one family, together with a small number of full-time employees. The more successful examples are frequently focused on export. A notable trend amongst many of the top achievers is that they reduce vineyard holdings as readily as they increase them. Sometimes, jettisoning a poorly performing parcel is the right thing to do. Le Puy in Bordeaux removed a hectare of vines for rewilding in 2019. Jurtschitsch (Kamptal, Austria) and Heinrich (Burgenland, Austria) both reduced their vineyard surface over the last decade, in pursuit of higher quality and more focus on their best plots3.
For these wineries, the touch points are not growth, but rather succession (will the younger generation want to go into the wine business or not?) and survival in the face of climate change. For many of the most revered names, juggling allocations and requests from all corners of the globe for a limited amount of wine is common. Here are some random examples for whom demand continually outstrips supply: Radikon, Ganevat, Gut Oggau, all artisan Bourgogne producers, all famed Jura producers, etc etc.
The Age of Resilience
To return to Jeremy Rifkin’s philosophy, it’s these wineries that might better fit in with his overarching concept of “the age of resilience”. Rifkin asserts that the only way forward for the planet and our species is to reorientate ourselves around this mantra. Growth is unsustainable, because the planet’s resources are finite and failing. Resilience means working in harmony with nature, rewilding, reusing, trying to get our heads around the fact that the earth will always win. And that we might just be a temporary fixture.
This is relevant to the discussion about wine consumption. Do we really want a future where ever greater lakes of industrial swill are consumed in the name of fermented grapes, whatever the cost to planet and people? Or would a more resilient wine industry that produces and sells dramatically less, but does it in a more environment-conscious manner be a better choice?
A recurring trope in all of the articles I referenced above is not just that millennials and Gen-Zs drink less - but also that they are more discerning about what and when they buy. So yes, the volume of wine being drunk is on the wane, but it’s a case of drink less drink better. Let’s put this into perspective: worldwide consumption of wine was 2-3% less in 2000 than it was in 2022. In the US, the volume of wine consumption almost doubled over the same period. The reduction in those numbers in the last few years should be viewed as a correction, not as some kind of impending disaster.
Positivity
The world has all the components to build a resilient wine industry, and to engage new generations. We just need to use those components more effectively. Wine production in the 21st century is more geographically distributed and stylistically diverse than it has ever been in history. Wine is produced on every continent, and in more than 50 countries. Wherever you live, someone is making or at least selling wine that didn’t have to travel too far to get to you.
Small really is beautiful. The best or most fascinating bottles are often those that are produced in tiny quantities, in a hand-crafted fashion. Inevitably, that means not every bottle is accessible to everyone. Scarcity, price or lack of local availability are the chief barriers. But wine isn’t toilet tissue or cat food. If it was nothing more than a commodity, it wouldn’t fascinate any generation.
I loved Kara Daly’s list of millennial and gen-Z wine professionals - although it would be great to see it extended to cover more (any?) Europeans. The challenge is that it would then be an incredibly long list. I don’t need to look far to see that I am surrounded by countless passionate individuals from these generations who want to share their excitement with all things wine.
I suspect that the doom-mongering conceals a few hidden agendas. Are growth and volume really the only way that the health of the wine industry can be measured? I don’t think so. What about a metric that looks at the number of families who support themselves wholly or partly from wine production? Or statistics showing the year-on-year increase in organic or otherwise more sustainable forms of viticulture?
Perhaps it is simply impossible to reconcile the concerns of ‘big wine’ with those of small grower-producers. Whether that’s the case or not, those of us who produce, drink or celebrate the good stuff probably have nothing to fear. Unless seeing a few percentage points knocked off the bottom lines of giant wine corporations is what keeps you up at night.
I make no apologies for presenting a simplistic argument here. Tackling the many related issues, such as the strength of the anti-alcohol lobby, or the rise of no-and-low alcoholic drinks, would have made it a dissertation instead of a newsletter.
This is where you come in. I’d love to read your comments. Do you agree with me, or would you like to set me straight?
I quoted US figures in this article because they are readily accessible. If anyone has a good source of similar figures for Europe or the UK, I’d love to see it.
Pedants corner: Yes I am aware that vines can produce two harvests when grown close to the equator, but this is never desirable from a quality point of view.
Admittedly all three examples I gave are slightly larger than my definition of “small”. Jurtschitsch and Heinrich both reduced their vineyard holdings from highs of around 100ha.
I've always thought the Geoegians gave done a great job at marketing because they use the small, boutique wines and qvevri wines speak for the country and that then gives the middle level and bigger producers a little more stay in the market since most people aren't going to be spending what the small producer wines cost. But also I think young people just care about source, environment, justice etc. Gallo isn't producing all that cheap wine with workers who are paid a living wage.
When Kendall Jackson Chardonnay is on the wine list at a cheap diner in the USA for over 20$/glass, no wonder people are turning away.
I personally would love to see this as a the metric
"What about a metric that looks at the number of families who support themselves wholly or partly from wine production? "
for success in the industry. That is true success.
The only rebuttle I'm sure the big guys would give is that they hire lots of employees for their industry. And that might be true, but the small guys are buying boxes, corks, glass and other materials as well. They too employ many by extension.