Shannon Gunier doesn’t mince words. “We’ve reached a saturation point, with too many grapes,” she says. Gunier runs North Coast Winegrape Brokers with her husband, Rick. She continues, “Too many people have planted too many grapevines, and they didn’t think about the consequences of their actions when they planted them. But they’re thinking about that now.”
By Gunier’s estimation, there’s a two-year oversupply of grapes in California’s North Coast, which includes Napa and Sonoma Counties. She says, “Working this out is going to be painful, and a lot of people could be going out of business.”
The North Coast is just one small area among the world’s winegrowing regions, but what’s happening there is not unique. The International Organisation of Vine and Wine (OIV) reports that wine consumption has lagged behind production for almost 30 years, and the industry has finally reached what one analysis calls an inflection point. The current economic model is unsustainable. Growers can’t make a living growing grapes; the cost of production exceeds what they’re paid for the grapes.
There is, in particular, an excess of red grapes, especially Cabernet Sauvignon, Syrah, and Merlot. Most agree that this can be traced to a worldwide planting spree in the 1990s, which would have had repercussions even without the current slump in demand. The supply of white grapes is probably in balance, say those interviewed for this article, but replacing red with white isn’t the answer. Jeff Bitter, the president of California’s Allied Grape Growers, says, “Just because Albariño has been successful in Spain doesn’t mean everyone should replace their red with something like Albariño.”
To restore some sort of equilibrium to the market, 10% to 15% of the world’s vines need to be pulled, equivalent to 750,000 to 1.1 million hectares (1.9 to 2.5 million acres). Despite general agreement on these figures, the specifics are unclear. Which regions need culling? Do some need more than others? Which varieties should be pulled? And do pricier plantings need to go, in addition to the less expensive grapes that most agree must be torn out?
In other words, how does the industry “right-size” plantings? Bitter says, “The easiest thing to do would be for everyone to pull out 10% of their vines, but that’s all pie in the sky. It will never happen.”
Instead, viticulturists, growers, and winery owners must somehow decide what to pull in a worldwide business that is fiercely independent and operates under a variety of legal, financial, and cultural frameworks, and that includes both multibillion-dollar international behemoths and small family farms.
A survey of wine news reflects tales of woe—unsold crops, canceled contracts, and grapes left on the vine—in regions such as Napa Valley, California, and Rioja, Spain, which traditionally haven’t had overproduction problems, as well as the Riverland, Australia, which has been grappling with this issue for years. The grape glut that has emerged since the end of the pandemic is affecting all wine-producing regions but is most significant in Europe, the US, and Australia. The problem doesn’t seem to be quite as dire in South Africa and South America, but there are worrisome signs that too many grapes in the rest of the world could hurt those markets, which depend heavily on exports to wine-drinking countries that are facing overproduction issues.
Daniel Tugaw, the strategic information and IT manager at Turrentine Brokerage, says, “The US market has not likely ever been this unbalanced. We have been in oversupply situations in the past like we are currently experiencing, but consumer sales were growing, and wineries viewed their current inventory as more of an asset than a liability. It is the historically low demand that is more unusual.”
In California, less than 100,000 tons of Cabernet Sauvignon were crushed in 1990. In 2023, that number had increased almost sevenfold to 647,486 tons. Meanwhile, according to the OIV, consumption of red wine has declined by five points worldwide over the past two decades. Also in the US, the states of Oregon, Washington, and Texas are struggling with sales.
The news in France has been so bad for so long that each day seems to bring another plan to cut production. As early as 2006, the Plan Bordeaux scheme called for taking out 8,000 to 10,000 hectares (19,800 to 24,700 acres); nevertheless, by one estimate, there is still an excess of 500,000 hectares (1.2 million acres) in Bordeaux. This fall, the French government told the European Union that it wants to remove almost 30,000 hectares (about 74,100 acres) of vineyards, worth €120 million. According to the proposal submitted to the EU by the French government, growers would be paid €4,000 per hectare pulled, but they would be allowed to replant later with different, lighter grape varieties that will more likely meet market demand.
In part of the Rioja region, reported local media, there are about 200 million liters of unsold wine, equivalent to just under three years’ worth of production. Meanwhile, the 2024 harvest was expected to add another 70 million liters. In Australia, the glut was described using an Olympic swimming pool analogy: there is enough excess wine to fill 875 swimming pools.
In Italy, despite what looks like one of the worst harvests in years, the government estimates that some 60,000 hectares (148,300 acres) of vines will need to be pulled. Additionally, says Andrea Sartori, a fourth-generation wine producer at Sartori di Verona and a former president of the Valpolicella consorzio, the oversupply has put more financial pressure on some of the country’s largest regional co-ops. Bankruptcies are possible, which would leave thousands of growers without a place to sell their grapes.
There’s no vine-pulling czar who can order specific cuts in specific regions. If the French, who have been struggling with overproduction for decades and whose system is more top-down than most, can’t solve the dilemma of the wine lake that is Entre-Deux-Mers, how can growers in California, where the various regions are as independent as small countries in terms of what they grow and how they grow it, come to an agreement?
In Australia, for example, Accolade Wines, a major buyer in the Riverland region, offered its growers A$4,000 per hectare to pull vines if the growers would allow the company to restructure its grape contracts with them. The growers rejected the company’s proposal.
Some analysts hope that China, which seemed to be the answer to wine overproduction before the pandemic, will begin importing in large numbers again. But this seems increasingly unlikely; Chinese imports remain at half of pre-Covid levels, and the domestic Chinese wine business has its own problems with declining demand and increased competition from other alcoholic beverages. Darren Oemcke, the former chair of Riverland Wine and the director at Hydra Consulting, says one potential market is India, where consumption appears to be growing as middle- and upper-class Indians adopt wine in the way the Chinese once did, and the domestic market isn’t especially big.
But that doesn’t necessarily help producers in countries such as the US, which sells most of its wine domestically and where most wineries don’t have large enough production or the financial resources to export their wines. Only a handful of the largest US producers, such as GALLO, have made inroads into foreign markets.
Most important, the export argument presents the classic chicken-and-egg conundrum: if one country does manage to export more wine, it seems likely that this would cause a bigger slump in demand in the country importing it. In the US, for example, Stuart Spencer, the executive director of the Lodi Winegrape Commission, parsed the numbers this summer and found that the amount of bulk imports into the US from 2017 to 2022 roughly matched the US oversupply each year.
Spencer wrote, “Clearly, bulk and bottled imports have had a profound impact on the demand for California winegrapes. What is frustrating to growers is that many of the largest buyers of California winegrapes are also the largest importers of foreign bulk wine. This situation is exacerbated by a global oversupply of wine which allows wineries to source incredibly cheap foreign bulk wine to reduce their cost of goods sold.”
There’s a considerable body of thought that notes that boosting demand needs to be part of any vine-pulling formula. Paul Tincknell, a partner at the wine marketing firm Tincknell & Tincknell, who also grows a small amount of Cabernet Sauvignon in Sonoma, explains, “One of the primary drawbacks of reducing vineyard acreage is that it doesn’t address changing consumer preferences and behavior that are contributing to the slump in demand.” He continues, “Reducing vineyard acreage will simply lead to a smaller overall market, without addressing the fundamental shifts in consumer demand.”
Many of the regions most impacted by oversupply issues have an aging farming population, with the current generation likely to leave agriculture entirely if they’re forced to pull vines. This is especially true in Australia’s Riverland as well as parts of France, such as Languedoc and Bordeaux, and Italy, including Sicily and Abruzzo.
Oemcke says, “The average age of the grapegrowers [in the Riverland] is very high, and if their children don’t want to take over the business—and many don’t—then they’ll get out of it. And [then] you’ve lost families who may have been doing this for generations.”
Additionally, growing grapes is not like growing corn or wheat, where the land can support different crops—soybeans one year, corn another. Vineyard land in much of the world is suited only for vineyards. In Abruzzo, says Sartori, grapes are one of the few crops that will grow and can be easily harvested on the mountainous hillsides. If those growers must pull vines, they will be out of work, and a unique social and cultural part of Italian life will be lost.
Even in regions such as California’s Central Valley, where alternative crops are possible, there are problems. Many of these crops, such as almonds, require more water than grapes, which is impractical given the state’s current water crisis. Grapes were once thought to be an ideal crop for many water-short regions, such as Texas’s High Plains, because they required less water. Some High Plains growers who switched from cotton to grapes have now returned to cotton.
Beyond the details of possible solutions, it is unclear how costs would be covered as growers pull vines, seek alternative crops, or find other work if they can’t grow grapes.
The EU, working with its member countries, can discuss this subject because there’s a legal framework and social tradition that make it possible, says Sartori. This doesn’t mean it will happen, and Sartori doesn’t expect it to. But at least it’s possible.
Elsewhere, though, that framework doesn’t exist. In California, for instance, the US government was conspicuously absent during the state’s agricultural fire insurance crisis of the past several years, despite calls for it to intervene and establish a fire insurance scheme comparable to its offerings for terrorism and flood insurance. To expect the government to lend a helping hand, despite a long history of federal agricultural aid that includes price supports, is probably unrealistic.
The best-case scenario would involve various factors: an increase in demand (Bitter holds high hopes for the Wine Institute’s 2025 marketing campaign as well as for independent efforts, such as the wine journalist Karen MacNeil’s Come Over October); a boost in exports to places such as India; and vine pulling accomplished with a minimum of pain, whether with government aid or not. One consensus estimate: a market in worldwide equilibrium by the end of the decade, if all works out.
Gunier says, “There are always glitches and blips in the grape business, and maybe, if wine can be on the rise again, we won’t be seeing people throwing good money after bad.”
And that is something everyone, everywhere, would like to see.
Burgen, Stephen. “Spain’s Vineyards Destroy Record Harvest as Wine Sales Crash.” The Guardian, August 15, 2020. https://www.theguardian.com/food/2020/aug/15/spains-vineyards-destroy-record-harvest-as-wine-sales-crash.
Hall, Casey. “China’s Crowded Wine Market Offers No Lifeline for Struggling Global Industry.” Reuters, April 4, 2024. https://www.reuters.com/markets/asia/chinas-crowded-wine-market-offers-no-lifeline-struggling-global-industry-2024-04-05/.
Hobson, Peter. “Australian Farmers Rip Out Millions of Vines amid Wine Glut.” Reuters, March 10, 2024. https://www.reuters.com/world/asia-pacific/australian-farmers-rip-out-millions-vines-amid-wine-glut-2024-03-09/.
International Organisation of Vine and Wine. “Focus: Evolution of the World Wine Production and Consumption by Colour.” December 6, 2023. https://www.oiv.int/press/focus-evolution-world-wine-production-and-consumption-colour.
International Organisation of Vine and Wine. State of the World Vine and Wine Sector in 2023. April 2024. https://www.oiv.int/sites/default/files/2024-04/OIV_STATE_OF_THE_WORLD_VINE_AND_WINE_SECTOR_IN_2023.pdf.
IWSR. “What’s Driving Wine’s Structural Decline?” July 22, 2024. https://www.theiwsr.com/whats-driving-wines-structural-decline/.
Spencer, Stuart. “Imported Foregin Bulk Wine: The Dirty Secret No One in California Is Talking About.” Lodi Winegrape Commission, March 18, 2024. https://lodigrowers.com/imported-foreign-bulk-wine-the-dirty-secret-no-one-in-california-wine-is-talking-about/.
Styles, Oliver. “Rioja Drowning in Excess Wine.” Wine-Searcher, October 6, 2024. https://www.wine-searcher.com/m/2024/10/rioja-drowning-in-excess-wine.
Thompson, Hannah. “Wine Crisis: France Looks to Tear Up 30,000 Hectares of Vines.” The Connexion, September 20, 2024. https://www.connexionfrance.com/news/wine-crisis-france-looks-to-tear-up-30000-hectares-of-vines/679713.
Wine Institute. “California Cabernet Sauvignon.” Accessed November 2024. https://wineinstitute.org/our-industry/statistics/wine-fact-sheets/cabernet-sauvignon.
Wright, Keira, Celia Bergin, and Ilena Peng. “The World Has Too Much Wine, and Farmers Are Ripping Up Vines.” National Post, March 9, 2024. https://nationalpost.com/news/world/the-world-has-too-much-wine-and-farmers-are-ripping-up-vines.
– We could benefit from a clearer discussion of what market segments are involved. Is is just bulk wine?– If "vineyard land in much of the world is suited only for vineyards", then one solution would be benign neglect. Abandon the hillside vineyards for years or decades, like Mencia in Bierzo or old mixed black vineyards in California, until demand makes them economical again.
Thank you for a very interesting article. I have trouble understanding the following sentence: "As early as 2006, the Plan Bordeaux scheme called for taking out 8,000 to 10,000 hectares (19,800 to 24,700 acres); nevertheless, by one estimate, there is still an excess of 500,000 hectares (1.2 million acres) in Bordeaux." It is the 500,000 ha excess that seems very high, given that the whole of Bordeaux had 114,000 ha of vines in 2020 according to Jane Anson. Am I misunderstanding the sentence in some way?