this year's The wine harvest is in full swing on the perennially popular Greek island of Santorini, but for local winemaker Yiannis Paraskevopoulos, the outlook is not promising.
Extreme temperatures are threatening production of the local Astico grape, which is crucial to the island's internationally recognized premium white wines. Paraskevopoulos' Gaia Wines produced about a third of its 2022 output last year. This year's harvest is expected to drop to one-sixth of 2022 levels.
“We thought we had seen the worst. But no, we didn't: 2024 exceeded everyone's expectations,” Paraskevopoulos told CNBC by phone.
According to Gaia Wine's predictions for 2023, Assyrtiko could face extinction by 2040.
“It brings the trend line closer to now,” Paraskevopoulos said.
Wine production declines
The Assyrtiko grape is not alone. Due to “extreme weather conditions” affecting harvests, global wine production fell by 10% to 237.3 million hectoliters in 2023, the lowest level in more than 60 years. according to International Organization of Vine and Wine (OIV).
Problems facing wineries prompt E.U. last month A high-level group on wine policy has been set up to discuss “the challenges and opportunities for the industry”.
Production in Greece fell by more than a third in 2023, while output in Italy and Spain fell by more than a fifth, OIV data showed, as wineries in southern Europe increasingly suffered from heavy rains, drought and early frosts and other adverse weather effects.
Such weather events can affect not only that year's harvest, but also production in subsequent years.
“We are definitely affected by climate change,” a tour guide at Castello di Volpaia told CNBC during a recent tour of the 12th-century winery in Tuscany, Italy.
Chianti Classico wine is stored in vats at Castello di Volpaia in Tuscany, Italy.
CNBC
“Climate change is significantly affecting wine production and its quality,” Marco Fizialetti, commercial director of nearby Castello di Querceto, said by email. “This situation creates difficulties for all producers who have already had to deal with high temperatures in the past.”
Weaker output and more challenging production conditions are driving up costs in an already price-sensitive consumer market. The OIV estimates that wine consumption will fall by 2.6% annually in 2023, reaching its lowest level since 1996, as rising production and distribution costs lead to higher consumer prices.
This is the price of champagne. What does a buyer do when a bottle of wine costs more than Burgundy?
Yannis Paraskevopoulos
Co-founder of Gaia Winery
As of August 2024, a kilogram of Assyrtiko grapes costs between 8 euros ($8.9) and 10 euros, about double the 2022 price.
“That's the price of Champagne,” Paraskevopoulos said, noting that Gaia Wines has yet to reflect the increased cost in its final bottle prices. However, he said it will eventually have to be done and it will hurt the business.
“When a bottle of wine costs more than Burgundy, what are buyers going to do? We're going to lose the market we've been trying to enter,” he said.
Change production methods
Some winemakers are now changing their production methods to adapt to the changing environmental landscape.
Antinori nel Chianti Classico, one of the newest wineries owned by Marchesi Antinori, one of Italy's oldest and largest winemakers, is now planting its vines in a new direction to take advantage of the increased sunlight.
“A few years ago, you would plant vineyards in the southwest. Now you can plant them in the northeast because you're exposed to extreme heat from both directions,” President Albiera Antinori told CNBC by phone.
Close-up of vines in Korora style on Santorini island in Greece.
Erica Ruth Neubauer | Erica Ruth Neubauer Stock | Getty Images
Other techniques used on the estate include erecting trellises to increase air circulation and planting grass between the vines. Antinori said this has helped the winery improve the quality of its production in recent years, despite a decline in production.
However, she describes this ascension as “la vittoria di pirro,” a Pyrrhic victory, a feat that came at such a cost that it was hardly worth winning.
Sergio Fuster, CEO of Spanish wine group Raventós Codorniu, pointed out that many of the areas where the group has vineyards are in a state of emergency and therefore they need to “increase water efficiency”, such as using underground irrigation systems.
Elsewhere, other winemakers are working in the fields in mid-summer to prepare for the early harvest. At Domaine Skouras in Nemea, Greece, this year's harvest started a record 20 days early. Winemaker Dimitris Skouras said the reduction in fungal diseases has improved grape quality, but he still expects overall yields to decline.
We cannot predict upcoming changes or the extreme weather we may face.
Dimitris Skouras
Winemaker at Domaine Skouras
“This year has been exceptionally hot. The winter was unusually short, followed by a rapid rise in temperatures, with July being the hottest on record. In our vineyards we are seeing lower yield levels than last year, which was already quite low, especially for Agiorgitiko ,” he told CNBC via email, referring to the grape varieties used in the region's red wines.
Skouras is now planting vineyards at higher elevations, where temperatures are typically cooler, and he's looking for areas with better water supplies to help the vines withstand the heat.
“There are no clear solutions yet because we cannot predict the changes that are coming or the extreme weather we may face. Our strategy is to adapt to the new realities of viticulture as best we can,” Skouras said, He was referring to growing research grapes.
Elsewhere, however, the promise of adaptation is less clear. On Santorini, grapes are grown in traditional “koulouras” or baskets to protect them from the island's strong winds and intense sunlight, but the vines are at risk of being more exposed to harsh weather conditions.
“These vines have root systems that date back three, four, five centuries, but they are dying,” said Gaia Wines' Paraskevopoulos.
Is tourism to blame?
Extreme weather is not the only problem plaguing European vineyards. The growth of tourism has also led to investment and manpower shifting traditional agricultural jobs to the hospitality industry.
For so-called agritourism destinations, such as Castello di Volpaia in Tuscany, which has a small accommodation complex on its estate, guest accommodation can offset costs associated with weak yields. Marchesi Antinori offers activities such as cellar tours and cooking classes.
“We are lucky that our region and our country have not experienced a decrease in tourism – quite the opposite in fact,” Antinori said.
Winery in Tuscany, Italy.
CNBC
But Paraskevopoulos said he worries that places like Santorini riding the wave of rising tourism could ultimately become victims of their own success.
“Climate change is certainly a big concern, but tourism is also to blame,” he said. “Young Santorini people no longer invest in wineries because they have other ways of making money.”
As the situation changes, EU representatives and industry stakeholders will come together for wine policy discussions, with the first meeting taking place next month. The group is expected to meet at least three times this year before making recommendations in early 2025.
It is hoped that these measures will reduce some of the biggest risks faced by the industry, which alone employs and contributes to around 3 million people across the EU. estimated Bringing 130 billion euros to the EU's gross domestic product.
“This is the trend line if you don't intervene,” Paraskevopoulos said of the prediction of Ashitiko's extinction. “The question is: Will we intervene in time? Will we be successful?”