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Italy has long been a leader in the wine industry, producing the world’s highest volumes of one of the most widely consumed alcoholic beverages. But weather vagaries from dry winters to floods have cost the country its crown, paving the way for some of its neighbors to occupy the top spots.
For the first time in seven years, Italy slipped to second place in 2023’s wine harvest season, with France becoming the number one producer, according to data published by Copa-Cogeca, a European farming lobby representing nearly 22 million farmers and their families. French wine production rose 1.47% from the previous year, while Portugal saw an 8.6% increase during the same period. At the same time, Italy’s harvest fell 11.92%.
Overall, the group found that European wine production had fallen 5.5% compared to a five-year average, with big drops in key locations including Spain and Germany. Other notable declines were in Croatia and Greece, where production was down 31% and 23%, respectively.
Copa-Cogeca pegged the drop to climate change, as a confluence of dry winter, hailstorms, floods and rains in the spring season dragged down the wine output.
“For several years now, the sector has been confronted with major challenges, not least the consequences of the Covid pandemic, climatic events, and the sharp increase in production costs, to which, I must add, a significant increase in interest rates,” Copa-Cogeca’s Wine Working Party Chairman Luca Rigotti said in a statement Wednesday. “Nonetheless, European growers continue to perform and showcase their resilience.”
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— COPA-COGECA (@COPACOGECA) October 25, 2023
Europe’s wine conundrum
While a weak wine harvest doesn’t bode well for producers, that’s not the only problem they are grappling with. A COVID-19-linked wine supply glut made worse by easing consumer spending has led to high stock of wine with few takers. Wine drinkers are holding back non-essential expenses, resulting in fewer bottles leaving producers’ shelves. In Italy, the situation is especially dire as inventory levels have reached a six-year high, according to Liv Proietti, agriculture institute ISMEA’s extraordinary commissioner.
“The issue is not so much the loss of Italian leadership in terms of volumes produced, but rather the slowdown in domestic and foreign demand, which is lowering prices,” Proietti told Reuters last month.
Adding to the existing pressures faced by wine producers are the supply chain snarls and higher production costs as a result of the Ukraine war. These factors have caused wine prices to fall, impacting producers’ revenues.
Wine manufacturers have had to resort to desperate measures as a result of low demand and high supply. In France, for instance, the government plans to pour $215 million to distill surplus wine into ethanol used for industrial purposes. Farmers are being compensated if their vineyards are destroyed as part of the program, helping to boost income and prop up wine prices.
This isn’t Europe’s first rodeo dealing with excess wine inventory—in the mid-2000s, the EU put a farm policy in place by offering subsidies to cut down on overproduction of wine.
