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In vino veritas: The truth is, much more wine is produced than drunk – worldwide. The industry is looking for solutions: reduce vineyard areas, clear out vineyards, distill old wine into industrial alcohol.
It’s only the beginning of April and the vine buds are already swollen and woolly. Budding is imminent – far too early, and winegrowers are concerned about this. If there is another frost in April, the tender shoots could freeze and the vintage and therefore the wine could be at risk; the product from which the winemaker lives.
But there is a problem here too: there is too much of it. What used to be the Milk Lake and the Butter Mountains is now the Wine Sea – a world ocean. Significantly more is produced around the globe than is drunk. Germans are also drinking less than before; according to the German Wine Institute, consumption fell for the second time in a row last year. And: Wine drinkers look at the price.
Discontinued Model Barrel wine production
“People have become significantly more price-sensitive, we have noticed this extremely since the beginning of the year,” confirms Sebastian Volz. The winemaker from Essingen in the southern Palatinate grows wine on 20 hectares. He markets the majority of it as bottled wine; sold to end customers, specialist retailers and the catering industry. His company is well positioned, he says.
But: “The bulk wine business is currently more than unlucrative.” Barrel wine is wine that winemakers produce but do not market themselves but sell to large wineries. “The costs of production have risen by 20 or 30 percent in the last two or three years, but if you’re lucky, you get just the producer price for bulk wine. If you’re unlucky, less – then you make a loss.”
Standstill forces you to stop
Especially in the Palatinate and Rheinhessen there are many wineries that specialize in bulk wine and supply large wineries – around 40 percent of German wines are marketed this way. This was once a viable business model, but prices have been plummeting for years; The producer currently receives a maximum of one euro per liter of wine. What to do?
The proposal to clear vineyards to curb the overabundance recently caused a stir. It came from Jens Göhring, winemaking president of the largest German wine-growing region, Rheinhessen, and member of the board of the German Winegrowers Association. “We are calling for a kind of rotational fallowing to be introduced so that we can make certain areas fallow for six years. And after six years, when times have improved or sales have leveled off, we can plant the vineyards again,” he told the SWR.
Invest in distilling
There is too much wine not only from Germany. In the Bordeaux wine-growing region, winemakers receive government bonuses when they clear their vineyards. Around 10,000 hectares of vineyards are to be shut down. In order to remove unnecessary quantities of wine from the market, the EU supports the processing of alcohol into industrial alcohol, known as crisis distillation. Since the beginning of 2023, it has approved more than 105 million euros for this purpose. France received the largest part – around 68.5 million euros – while more than 18 million euros went to Portugal and around 15 million euros to Italy. In Germany, no wine was processed into industrial alcohol using EU money during this period.
But the crisis distillation is just a drop in the ocean. At least the wine doesn’t have to be thrown away. “The product still has a use – even if industrial alcohol could be produced much more cheaply using cellulose,” explains Simone Loose, professor of wine economics at Geisenheim University. “So this is a very uneconomical process.” In the long term, however, it makes more sense to put the money into repurposing vineyard areas – for example for other agricultural products, biodiversity areas or alternative energy production.
Local wines included Competitive disadvantage
The German Wine Institute also sees the trend towards reducing vineyard areas. “You can currently see that companies are going out of business and some of the areas that become free as a result are no longer being taken over by the successful companies. Because they say, ‘Okay, we’ll first see how the situation on the wine market develops,'” says Speaker Ernst Büscher.
He sees no reason to panic, despite the enormous price pressure that German winemakers are exposed to: “We just have the problem that, as one of the largest wine importing countries in the world, we also have to compete with prices from countries where, for example, the minimum wage is significantly lower Ours. Accordingly, last year people noticed that foreign wine was 75 cents cheaper. That was the purchasing criterion for many – to say: ‘Sorry, I would like to buy regional and sustainable, But the wallet doesn’t allow for that at the moment.”
Sustainable viticulture with new varieties
Regional, sustainable, soon even organic: winemaker Volz sells these wines to his customers. He is already restructuring his business, clearing old areas of thorn fields in order to plant them with red wine vines that can cope better with climate change – or with new, fungus-resistant varieties, Piwis. They require less effort when it comes to plant protection and thus save working time and costs. With his parents and his partner, Volz manages his land almost entirely alone.
He also feels the cost pressure when it comes to bottled wine. He cannot simply pass on the 20 to 30 percent increase for bottles, closures, labels and packaging to customers – so his margin will be smaller. Nevertheless, he sees his company in a good position. “I think there will be an upswing again. Of course, it won’t come as quickly as the downswing came. The decline was faster than it went up again.” His vision for the industry: “We don’t need huge quantities. We have to go down significantly. Fewer, but higher quality wines. And then you’ll have fewer problems in terms of sales.”
Incidentally, one of his best-selling wines is not made from a traditional grape variety such as Riesling or Pinot Blanc, but from the Piwi variety Cabernet Blanc – he sees great potential in this. “A light, delicately fruity wine with floral notes, not completely dry, that is very well received by people. And if this sustainability story is added to that, then people are quite willing to pay a little more for the wine.”