October 16, 2017
American Wine Industry Faces Major Challenge
The tragic wildfires in the Pacific Northwest have continued to move south, and now they are ravaging America’s most beloved wine country, Napa Valley. That means the American wine industry is struggling to find a way to keep America’s growing appetite for wine sated. At present, though, the news is not any better elsewhere. American wine drinkers and the wine industry overall can’t expect too much help from Europe. France, Spain, and Italy are currently reporting some of the “worst harvests in decades” thanks to “extreme weather” that hurt grape yields.
Speaking to CNN, global beverages strategist Stephen Ranneklieiv said, “We still foresee a dramatic decline in wine availability going into 2018… We expect the decline [in consumption] to be felt most tangibly in the lower-priced tiers.”
How bad will the European wine yield really be? According to the European Commission, next year’s wine crop will be “the worst since 1982” with double-digit losses in production, on average. This is because all three of Europe’s most popular wine regions are suffering “bad years” at the same time. In previous years, one place or another will have an off year that is offset by others. Not this time. While fire is the destroyer out in Napa Valley, the issue in Europe has been the cold. Major frosts and widespread hailstorms have blasted wine-making regions across the continent, followed by a summer drought that starved wines of the water needed to make it back from the winter frosts.
Harvests are being conducted earlier, and grapes are smaller and fewer than in previous years. On the consumer front, relative scarcity is driving prices up, and some consumers are already seeing the hit. Prices, so far, have gone up as much as ten percent, and they don’t seem to have leveled off quite yet. And that’s only the beginning of the challenge. While much of Napa’s grape harvest is already in, the vines have been damaged, and many of the remaining grapes cannot be used for wine. That means further domestic wine crops are in danger of being drastically reduced in future years. No one is saying, yet, how many years it will take for Napa to make a comeback … and the fires are still burning.
The shortfall is both a challenge and an opportunity. Someone may have the reach and resources to bridge that major gap. Any brand that is able to grab a piece of that lost market share will have the inside track on keeping it, once the vines start producing again.