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THE IMPACT OF WINE DECONSUMERIZATION ON VINEYARD VALUE:
15 July 2024
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15 July 2024
An Alarming Equation
Article written by Nathalie Parent Dumoulin, NEXT Edition
The late April data from the International Organization of Vine and Wine (OIV in French) reveal a concerning trend for the wine industry: a 10% reduction in production and a 2.6% decline in consumption.
The wine industry is confronting an unprecedented crisis that imperils its future. A sharp decrease in wine consumption presents a substantial threat, raising serious concerns about the continuation of this time-honored industry. The economic ramifications are troubling, with winegrowers and distributors facing significant financial setbacks. In light of this critical state, immediate and decisive action is imperative to safeguard wine production. The crisis is exacerbated by land devaluation, setting off a chain reaction that could have calamitous consequences for the local economy.
Jean Barot, a specialist in land matters encompassing agriculture, viticulture, commerce, and industry and a member of WI&NE Nouvelle-Aquitaine, expresses apprehension regarding the current state of affairs. The declining consumption exerts downward pressure on land prices and various related facets, prompting Barot to advocate for collectively recognizing this trend. This call to action seeks to avert the potential extinction of an age-old vocation, with the attendant repercussions for an irreplaceable cultural legacy.
“Many professionals in the wine industry are experiencing the real impact of a shrinking market. This is due to declining consumer spending, increased international competition, and the latest climatic hazards. As a result, numerous producers are exiting the business, rendering winegrowing operations increasingly unfeasible, and foreign investors are demonstrating diminished or, at least, attenuated interest in the sector.”
The wine industry, a vital sector of the French economy, is currently experiencing significant challenges. Due to a steady decline in wine consumption, wine producers find it increasingly difficult to stay afloat. Numerous factors contribute to this trend, including shifting consumer preferences, competition from international wine producers, and mounting concerns regarding health and the environment. French vineyards, renowned for their quality and heritage, are now facing a precarious situation.
The declining demand for wine affects the entire production chain, from winegrowers to distributors and wine merchants. Jobs are at risk, and winegrowing regions are in danger of losing their economic vitality. Some wineries are being forced to decrease production or shut down completely. This situation is causing a significant financial crisis in rural areas, with severe social repercussions. Without intervention, the longstanding identity and prestige of the French winegrowing landscape may be at risk of being lost.
The decrease in wine consumption is affecting the economy and causing a worrying drop in land value for the future of wine production. Vineyards, which have long been seen as symbols of prestige and profitability, are now at risk due to the decreased demand. This situation is leading to a decline in the price of wine-producing land. When vineyard owners are forced to sell their land, they can only do so at meager prices, as they can no longer cover the high production costs.
“The decrease in land value is hurting the winegrowing industry, deterring young winegrowers from entering the sector and hindering generational renewal. If we don’t take action soon to reverse this trend, the future of winegrowing could be at risk, along with an ancient cultural heritage,” explains Jean Barot. “Land values are dropping in regions like bordeaux, côtes-de-bourg, côtes-de-blaye, and médoc, and potential investors are hesitant due to economic and political uncertainties. However, isn’t a crisis the ideal time to invest despite the challenges?”
What steps can we take to guarantee a prosperous future for this leading light of French industry? Do we aim to have wines gracing our tables or residing in our museums in the years ahead?
The wine industry must find innovative solutions to capture consumers’ interest. Promoting and improving local products, diversifying offerings such as no- and low-alcoholic (NOLO) options, and raising awareness of wine culture are all measures that could help reignite interest in wine. Time is of the essence, and each day without concrete action worsens the situation.
Jean Barot effectively collaborates with other WI&NE members, including notaries Emmanuelle Galhaud and Christophe Lacoste, business and tax lawyer Philippe Bonnin, and David and Edward Lawton, for property sales and acquisitions. WI&NE is a valuable resource for investing in, buying, selling, or managing a French wine estate.
For agricultural or viticultural, real estate, commercial or industrial appraisal services, expropriation or damage assessment, and asset management, contact Cabinet d’expertises Jean Barot: https://www.wi-ne.net/en/nos_experts/jean-barot-2/
The article was authored and translated by Nathalie Parent Dumoulin, founder of NEXT Edition and a WI&NE Nouvelle-Aquitaine member. https://www.wi-ne.net/en/nos_experts/nathalie-parent-dumoulin-2/
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