Vineyard values have sharply declined over the past year, as a combination of oversupply and diminishing global wine consumption takes its toll on key wine-producing regions. A recent Knight Frank report underscores this downturn, revealing that several major vineyard areas across the globe are feeling the effects of reduced demand.
Global wine consumption has dropped by 12% from its peak in 2007, with some regions experiencing even steeper declines. New Zealand’s Marlborough region has been particularly hard-hit, with vineyard values plummeting by 33% after a peak in 2023. Similarly, in California’s Napa Valley, values in the Los Carneros area fell by 15%, while Australia’s Barossa Valley and France’s Côtes du Rhone both saw a 10% decrease in vineyard prices.
One key factor driving this downturn is a generational shift in alcohol consumption. Younger consumers, particularly in France, are drinking significantly less wine than previous generations. Gen Z in France, for instance, consumes only half as much wine per capita as older Millennials. In addition to changing drinking habits, reduced demand from China, a major wine export market, and the effects of climate change are further straining the industry.
Despite a 20% reduction in global wine production over the past two decades, winemakers are still grappling with excess stock, which has caused bulk wine prices to fall. In Marlborough, bulk wine prices have dropped from NZ$7 to NZ$3 per liter, while in Chile, the price for the país grape has fallen to just 9 US cents per kilogram, well below production costs.
The decline in demand is also affecting major wine producers. US-based Constellation Brands reported a 16.4% drop in wine and spirits shipments in its third quarter, blaming weak demand, particularly for lower-priced wines, and overstocking by retailers. Similarly, Australia’s Treasury Wine Estates saw a 5% decline in sales of both its premium and commercial portfolios during the six months ending December 2024.
In response to the financial strain, some grape producers are shifting to alternative crops. In Chile’s dry regions, producers are considering olives, while others in the Curico area are turning to cherries. In Argentina’s Mendoza region, vineyards are being replaced by vegetables, with garlic now becoming a significant export. Similarly, in Bordeaux, France, lower-tier wine producers are pivoting to olives or even solar panels to sustain their businesses.
Despite these challenges, premium wine-growing regions have largely maintained their value. The Champagne region in France has remained stable, and in the UK’s Essex, vineyard values rose by 20% over the past year. Knight Frank attributes this resilience to changing weather patterns that have benefited certain regions, with Essex growers experimenting with new grape varieties to produce still rosé and red wines, further boosting vineyard values.
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