This year’s wine harvest is in full swing on the perennially popular Greek island of Santorini, but for local winemaker Yiannis Paraskevopoulos, the prospects do not look good.
Extreme temperatures are threatening production of the indigenous Assyrtiko grape, critical to the island’s internationally recognized fine white wines. Last year’s output at Paraskevopoulos’s Gaia Wines was around one-third of 2022 production. This year’s harvest is estimated to fall to one-sixth of 2022 levels.
“We thought we had seen the worst. But no, we hadn’t: 2024 has gone beyond all expectations,” Paraskevopoulos told CNBC over the phone.
According to Gaia Wine’s 2023 estimates, Assyrtiko could face extinction by 2040. Now, that timeline looks optimistic.
“It brings the trend line even closer to the present,” Paraskevopoulos said.
Falling wine production
The Assyrtiko grape is not alone. Global wine production fell 10% in 2023 to 237.3 million hectolitres, the lowest level in over 60 years, as “extreme climactic conditions” weighed on harvests, according to the International Organisation of Vine and Wine (OIV).
The issues facing wineries prompted the European Union to last month launch a high level group on wine policy to discuss the “challenges and opportunities for the sector.”
Production in Greece plunged more than one-third in 2023, while output from Italy and Spain dropped by more than one-fifth, according to OIV, as wineries in southern Europe increasingly experienced adverse weather effects including heavy rainfall, drought and early frost.
Such weather events can impact not only a given year’s harvest but also production in following years.
“We are absolutely affected by climate change,” a guide at Castello di Volpaia told CNBC during a recent tour of the 12th century winery in Tuscany, Italy.
“Climate change is significantly influencing wine production and its quality,” Marco Fizialetti, commercial director at nearby Castello di Querceto, said via email. “This situation has created difficulties for all producers who already had to manage high temperatures in the past.”
Weaker output and more challenging production conditions are pushing up costs in an already largely price sensitive consumer market. Wine consumption was down 2.6% annually in 2023, hitting its lowest level since 1996, due to higher production and distribution costs which led to higher prices for consumers, OIV estimates showed.
That’s champagne prices. When a bottle is more expensive than a Burgundy, what will a buyer do?
Yiannis Paraskevopoulos
co-founder of Gaia Wines
As of August 2024, one kilogram of Assyrtiko grapes cost eight ($8.9) to 10 euros, around double 2022 prices.
“That’s champagne prices,” Paraskevopoulos said, noting that Gaia Wines has not yet reflected the heightened costs in its final bottle price. However, he said it will have to do so eventually, and that will hurt business.
“When a bottle is more expensive than a Burgundy, what will a buyer do? We will lose market that we have struggled to be in,” he said.
Changing production methods
Some winemakers are now altering their production methods to adapt to the shifting environmental landscape.
At Antinori nel Chianti Classico, the newest in a collection of estates belonging to Marchesi Antinori, one of Italy’s oldest and largest winemakers, vines are now being planted in new directions to take advantage of the increased sun exposure.
“Until a few years ago, you would plant the vineyards southwest facing. Now you can plant them northeast facing because of the extreme heat you get exposure” from both directions, President Albiera Antinori told CNBC over the phone.
Other techniques the estate is employing include raising trellises to increase air circulation and planting grass in between vines. Antinori said that has helped the estate improve production quality over recent years even as quantity has fallen.
However, she described the boost as “la vittoria di pirro,” or Pyrrhic victory, a feat which incurs such a cost it is barely worth winning.
Sergio Fuster, CEO of Spanish wine group Raventós Codorniu, noted that many of the regions in which it owns vineyards are in a state of emergency and, as such, they have needed to become “increasingly efficient” with water usage, for instance by using buried irrigation systems.
Elsewhere, other winemakers are working the fields in the height of summer to respond to earlier harvests. At Domaine Skouras in Greece’s Nemea, this year’s harvest started a record 20 days early. Winemaker Dimitris Skouras said a reduction in fungal disease had improved grape quality, however he still expects lower yields overall.
We cannot predict the changes to come or the extreme weather we might face.
Dimitris Skouras
winemaker at Domaine Skouras
“This year has been exceptionally hot. The winter was unusually short, and temperatures rose rapidly afterward, with July being the hottest on record. In our vineyards, we’re seeing lower production levels than last year, which was already quite low, especially for Agiorgitiko,” he told CNBC via email, referring to the grape variety used in the region’s red wines.
Skouras is now planting vineyards at higher altitudes, where temperatures are generally lower, and he is identifying areas with better water supply to help the vines withstand the heat.
“There are no definitive solutions yet, as we cannot predict the changes to come or the extreme weather we might face. Our strategy is to adapt to this new reality in viticulture as best we can,” Skouras said, referring to the study of cultivating grapes.
Elsewhere, however, the hopes of adaptation are less clear. On Santorini, where grapes are grown in traditional “koulouras,” or baskets, to protect them from the island’s strong winds and intense sunlight, the vines risk becoming even more exposed to harsh weather conditions.
“These vines have root systems that go back three, four, five centuries, and they’re dying,” Gaia Wine’s Paraskevopoulos said.
Tourism to blame?
Extreme weather is not the only issue afflicting Europe’s vineyards. Increased tourism has also seen investment and manpower shift traditional agricultural work to the hospitality sector.
For so-called agritourism destinations, such as Tuscany’s Castello di Volpaia, which houses a small accommodation complex on the estate, guest stays can offset the costs associated with weaker production output. At Marchesi Antinori, cellar tours and cookery classes are all part of the offering.
“We are fortunate to be in a region and a country where we don’t see a reduction in tourism – quite the opposite,” Antinori said.
But Paraskevopoulos said he fears that places like Santorini, which have ridden the wave of rising tourism, could ultimately become victims of their own success.
“Climatic change is surely very alarming, but tourism is also to blame,” he said. Young Santorinians don’t invest in wineries anymore because they have other ways of making money.
The shifting landscape will now see EU representatives and industry stakeholders gather for wine policy discussions, with their first meeting due next month. The group is due to meet at least three times this year, before presenting their recommendations at the start of 2025.
It is hoped that such measures could reduce some of the biggest risks facing the industry, which across the bloc alone employs around 3 million people and contributes an estimated 130 billion euros to EU gross domestic product.
“That’s the trend line if you do not intervene,” Paraskevopoulos said of the Assyrtiko extinction forecast. “And this is the question: will we intervene in time and will we be successful?”
