Wine Industry Woes: Farmers Forced to Destroy Vineyards in Australia and France

From Grapes to Grief: The Dilemma Leading Farmers to Destroy Vineyards in Australia and France

If you are an expert in wine, you probably believe that there is never too much of it. The actual situation, however, is very different. It turns out that farmers are demolishing vineyards they have cared for for decades because there is too much wine in the world.

The worst affected country is Australia. Millions of grape veins are being destroyed by its growers, and tens of millions more will need to be removed. It's concerning that overproduction has driven down grape prices and is now endangering the incomes of grape producers and winemakers. However, this isn't limited to Australia alone.

Worldwide wine consumption is declining. Australia's largest commodity, cheaper reds, are seeing the fastest decline in demand. According to a Reuters article, the world's fifth-largest wine exporter has more than two billion liters—roughly two years' worth of production—in storage as of mid-2023.

The proprietors are in a hurry to get rid of the wine because some of it is going bad. The only option left to others is to eradicate the vines.

Wineries are being destroyed by Australian producers.

Tony Townsend, an Australian grape farmer, destroyed half of his 14-hectare vineyard last year. Although he thinks he would have lost approximately A$35,000 (Rs 19 lakh) to harvest them, the fields appear to be in good condition.

According to Bloomberg, Townsend stated, "I loved being in the wine industry, but it was just economically unviable to continue this way." He resides in South Australia's Riverland, which generates over one-third of the country's output.

James Cremasco, a fourth-generation grower with vines close to the town of Griffith in the southeast, has similar opinions. As he observed his grandfather's planted grape rows being removed by clanking yellow excavators, he told Reuters, "There's only so long we can go on growing a crop and losing money on it."

2020 saw the beginning of the downturn. According to Bloomberg, a combination of China tariffs and COVID-related cost rises has increased supply while lowering prices in the nation.

In irrigated inland regions like Griffith, wine grapes account for almost two thirds of the grape production in Australia. However, when demand declines and unpicked grapes continue to wither on the vine, they are currently having difficulty.

Third-generation vineyard owner and winemaker Andrew Calabria of Calabria Wines observed, "It feels like an era is ending." Growers find it difficult to glance out the rear window and see nothing but dirt instead of the vines that have been there for as long as they can remember.

Close by, piles of gnarled vine remnants, previously amounting to one of Australia's biggest vineyards, can be found.

Grape prices drop as ed wine prices rise.

Red wine has taken the biggest hit. According to data from industry group Wine Australia, prices for grapes in areas like Griffith dropped to an average of A$304 (Rs 16,647) per tonne last year—the lowest level in decades and less than A$659 (Rs 36,085) in 2020. Reuters reported on this development.

According to Jeremy Cass, the head of Riverina Winegrape Growers, a farmers' group, up to 25% of the vines in places like Griffith need to be pulled up in order to balance the market and raise prices.

According to Reuters calculations based on Wine Australia data, that would result in the destruction of more than 20 million vines spread across 12,000 hectares (30,000 acres), or around 8% of Australia's total area under vine.

This year, the administration has again predicted reduced prices. Though many think it can do more, it stated that it acknowledges the major difficulties growers face and is dedicated to supporting the industry.

From Bordeaux to California: Farmers' problems are getting worse. But Australia is hardly the only country experiencing hardship.

According to Stuart Spencer, executive director of the Lodi Winegrape Commission in the Central Valley, California is currently facing "one of the worst imbalances in demand and supply we've seen in 30 years." This information was provided by Bloomberg.

Federacion Espanola del Vino, an industry body, has director general Jose Luis Benitez saying that there is an excess of Rioja reds in Spain. The research does state that there is a significant demand for white.

It is impossible to turn red people into white people, therefore farmers "are going to have problems down the line in one to two years," he told Bloomberg.

In an effort to help struggling wineries and stabilise prices, the French government said last year that it would put aside €200 million (about Rs. 1,810 crore) to finance the destruction of excess wine production. It stated that the wine would be sent to be turned into ethanol.

France's major wine-producing regions have been impacted, most notably the Bordeaux region. Up to one in three winemakers in the Bordeaux region are facing serious financial difficulties as a result of overproduction, a steep decline in pricing, and a decline in consumer demand, as stated by the local farmers' association and covered by AFP in 2017.

Another significant wine producer that is experiencing an overstock is Chile.

The shift in consumer behaviour

Worldwide, consumers are choosing to drink less alcohol due to health concerns, and when they do, they are choosing to drink wine from more expensive bottles.

Instead of red wines, more individuals are consuming lower-alcohol sparkling, rose, or white wines, according to Bordeaux Wine Council spokesman Christophe Chateau. According to Bloomberg, Gen Z customers are also drinking less alcohol, which is causing a rise in non-alcoholic beverages.

In addition to shifting spending patterns, there are additional problems, such as the COVID-19 aftermath and the crisis in many countries' cost of living.

According to Richard Halstead, chief operating officer of consumer insights at alcoholic beverage research business IWSR, insurance premiums are rising owing to climate change, and costs for inputs like gasoline and fertiliser have increased as a result of the conflict in Ukraine.

"Wine's extremely delicate economic model has been destabilised by the recent sharp increases in input costs," he stated.

Geopolitical concerns are also involved. Australia lost its largest wine export market by value in 2020 when China halted imports due to a political conflict. And unlike Europe, it does not provide farmers with financial support to assist them eliminate overabundant wine and vines.

Reuters says that although imports are anticipated to resume this month in China, the country's demand has declined far more quickly than in other places, thus this will not be enough to offset the surplus.

The wine industry is a deeply traditional one. Additionally, it takes decades to complete, so making hasty adjustments is not an option. It is difficult to sell or recycle the grapes.

Growers are still attempting to adapt. Wineries were "all but giving it away," according to Bill Calabria of Australia's Calabria Wines, to create room for the next crop.

Cremasco is planting prune trees on his rubbed-up land in the hopes of making more money, and an adjacent firm, GoFARM, is planting more than 600 hectares (1,500 acres) of almonds in place of grapes.

"Family grape growers won't exist in the coming generations," Cremasco continued. "All the young guys from the area will be employed by these large corporations."

It's possible that fewer people consume wine. In what ways will a new generation of wine drinkers emerge, given the emphasis on luxury labels during a period of tight financial constraints?

"You will just leave wine and go into ready-to-drink cocktails, beer, or cheap spirit brands if there are not cheap, economical, reliable wine brands to go to," said Spiros Malandrakis, industry manager of alcoholic drinks at Euromonitor International, in a Bloomberg interview.


Then wine's future appears dismal. How depressing.

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