PROWEIN BUSINESS REPORT 2019

Commissioned by ProWein, Geisenheim University for the third time now surveyed more than 1,700 experts in the wine industry from 45 countries on international wine markets, marketing trends and the economic situation in mid 2019. This year’s survey focused on the effects of climate change on the global wine industry.

The study covers the complete value chain of wine. The respondents include both wine producers (wine-growing estates, wineries, cooperatives) and intermediaries (exporters and importers) as well as marketers (wholesalers, specialist retailers, hotels and gastronomers).

In the short term companies view the effects of the restrictive health policy with in part high tax rates and minimum prices made mandatory for wine and alcohol as the biggest challenge facing the wine industry. The less rosy global economic climate and increasing barriers to trade are considered as the second biggest challenge. The effects of a no-deal Brexit as well as the competition with other alcoholic beverages and the deregulated sale of cannabis are seen are comparatively negligible.

The degree to which climate change was felt by companies over the last 5 years varies by position in the value chain. Nine out of ten wine producers have already felt the effects of climate change while only six out of ten marketers have. The most affected wine producers are mostly the least capable of avoiding the effects of climate change due to being economically tied to their land and property.

It is over the last 5 years that the strongest effects were registered on viticulture. More than half the grape producers faced lower grape yields due to extreme weather events such as late frost, heavy rains, hail or drought stress. These extreme weather events have substantially increased the volatility of grape yields; at the same time, this volatility entailed strong price volatility for grapes and bulk wine. Due to existing yield regulations small harvests can only be compensated for by higher harvests in the following year to a limited extent. Almost one in two grape producers had to change their corporate processes by shortened time windows for harvesting and higher reception capacities.

Over the last 5 years climate change has brought about economic winners (23%) and losers (35%). For the coming ten years it is especially cooperatives (53%) and wineries (44%) that expect their efficiency to drop heavily or very heavily due to climate change. Declining profitability hinders the ability to increase adaptability to climate change by investment.
For the future, especially marketers and exporters expect the volatility of prices and availability of wine, so far in part compensated for by wineries, to rise significantly. By 2030 half to one third of the players expect rising risks which will lead to new forms of cooperation with producers but also lower profitability.

Retailers are already now noticing climate-change induced changes in consumer behaviour. In hot summers, for example, wine consumption drops, and demand for heavy red wines dwindles. In future, retailers also expect demand for other wines (63%) and other beverages (47%) to go up. This means production and demand will develop in an opposite direction. Climate change means the production of heavy wines richer in alcohol and at the same time fuels consumer demand for lighter and more refreshing wines. More than half the retailers (57%) therefore urge producers to apply new oenological practices to come up with the existing wine profiles despite climate change.

Improved sustainability in the wine industry meets with almost unanimous approval

86% of the players agree that the wine industry should focus more on sustainable production. Approval among retailers is highest in Scandinavia (96%) and Southern Europe (93%). Three quarters consider a reduction in the carbon footprint a necessary contribution to be made by the wine industry. Approval for this is highest in Italy (81%) and lowest in Germany (65%).