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The world has too much wine/ Gen Z gets drunk on cannabis, farmers are plucking vines

2024-03-09 11:05:20Lifestyle SHKRUAR NGA REDAKSIA VOX

The world has too much wine/ Gen Z gets drunk on cannabis, farmers are plucking

Australian grape grower Tony Townsend destroyed half of his 14ha vineyard in 2023. The fields were healthy and vibrant, but he estimates he would have lost about A$35,000 to harvest them. While the heat wave is preventing him from removing the rest, he plans to finish the job once the weather cools – losing all the vines he's had for the past decade.

"I loved being in the wine industry, but it was just not economically viable to continue that way," Mr Townsend said from his farm, where a pile of discarded plants is waiting to be burned.

He lives in the Riverland, a region in South Australia that produces about a third of the country's crops. Since 2020, a convergence of cost increases driven by Covid-19 and Chinese tariffs has increased supply and depressed prices domestically. While Mr Townsend was never entirely dependent on growing grapes for his income and works part-time in wine and food tourism, not every farmer has been so lucky.

"There are a lot of people who don't see a future in the wine industry," said Ms. Lyndall Rowe, chief executive of Riverland Wines, an industry group representing growers and winemakers.

It is a problem that is emerging all over the world. Although global production hit a 60-year low in 2023, a summer glut is continuing, meaning demand is falling even faster.

While data from the International Organization of Vine and Wine show that global consumption has lagged behind wine production since at least 1995, the industry has hit an inflection point as changing drinking patterns and weak economic conditions look set to continue. they differ.

California is currently experiencing "one of the worst supply-demand imbalances we've seen in 30 years," Mr. Stuart Spencer, executive director of the Lodi Winery Commission in the Central Valley.

Meanwhile, Australia produced its lowest amount of wine in 15 years in the 2022-2023 season but continues to struggle with historically high inventory levels, according to a November report from industry group Wine Australia.

After Covid-19, costs for inputs such as fuel and fertilizer have risen because of the war in Ukraine and insurance premiums are rising because of climate change, said Mr Richard Halstead, chief operating officer of consumer insights at the spirits research company. IWSR.

"The recent sharp increases in input costs have destabilized the very delicate economic model of wine," he said.

Young people don't drink

Secular changes in drinking habits are also taking root, with red wine feeling the pain most acutely.

More people are drinking sparkling, rosé or low-alcohol white wines instead of reds, said Christophe Chateau, spokesman for the Bordeaux Wine Council. Generation Z consumers are also consuming less alcohol, fueling a boom in soft drinks.

In the Riverland, for example, Ms Rowe does not expect many red wine producers, who account for almost all of the region's production, to be able to sell at a profit this season, while some farmers are replacing vines with other crops such as almonds or watermelons.

According to Mr. Jose Luis Benítez, director general at industry group Federacion Espanola del Vino, has a surplus of Rioja Reds in Spain, while demand for white wine is high.

Farmers "are going to have problems down the line in one to two years, because they can't transform red wines into white wines so suddenly," he said.

Destruction of vineyards

The French government initially allocated 200 million euros (S$291.2 million) to help farmers across the country uproot their vineyards and send their wine to be turned into ethanol, promising each farmer 75 euros per hectolitre. Bordeaux, a major red wine-producing region, received additional funding to uproot 9,500 ha of vineyards.

But the destruction of the supply does not have a great effect. France overtook Italy to become the world's biggest wine producer in 2023. Entries for the ethanol scheme were so large that each farmer could only download half the volume they wanted, according to Mr Chateau.

Bordeaux growers took part in the largest protests by French farmers in January, blocking roads across the country over the removal of fuel subsidies and the European Union's green policies. Grape farmers earned another 150 million euros for uprooting vines and planting alternative crops.

But adjustments are particularly difficult to make for an industry like wine. Many winemakers go back generations and are steeped in tradition, while the nature of grape growing means long production times and the grapes themselves cannot be easily sold and reused.

"What you plant today will finance your children's wages - or even your grandchildren's," said IWSR's Mr Halstead.

"So when markets change, it can be incredibly difficult to respond quickly."

A well-maintained vine can last for more than 50 years, meaning investment cycles tend to be measured in generations, he added.

Brands have also not done enough to meet the new changes, said Spiros Malandrakis, spirits industry manager at Euromonitor International.

For example, focusing on developing premium brands at a time when people's budgets are being squeezed means the industry is failing to cultivate a new generation of wine drinkers.

"If there are no cheap, economical and reliable wine brands to go to, you're just going to leave wine and just go to ready-to-drink cocktails or beer or cheap spirits brands," Mr Malandrakis said. adding that Gen Z's use of cannabis has also lessened the appeal of wine.

This leaves many farmers with no option but to leave the industry altogether. A study conducted by Riverland Wines in 2022 found that around a quarter of the region's growers are planning to end wine production in the next three years.

For Mr. Townsend, once he finishes removing his vines, he plans to repopulate the barren land with native plants.

"The money that would have been lost from our vines will eventually return our joy tenfold when we see the native animals and birds returning to our land," he said. Bloomberg


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