Wine production: Winemakers in crisis – harvest lower than it has been for a long time

Rising costs, less consumption and overproduction: winegrowing in Germany is in crisis. In addition, due to extreme weather conditions, there will be a significant decline in the harvest volume in 2024, which will particularly affect the east and the Ahr. The German Wine Institute expects a harvest of around 7.9 million hectoliters of wine must nationwide, around ten percent less than the average for the past ten years. The last time there was a similarly low yield was in 2017, at 7.5 million hectoliters.

The price of draft wine is 70 cents and less

“Despite a smaller 2024 vintage, price pressure on the German market remains high because there are still large wine stocks in many places,” says Professor Simone Loose from Geisenheim University in the Rheingau. The price for cask wine in the Palatinate is currently around 70 cents per liter – depending on the grape variety it is even lower. The winegrowers’ production costs are at least 1.20 euros, but about twice as high.

Demand is also falling among companies that sell their wines directly to end consumers and retailers, says the business economist. Despite their strong market position, the current situation has not left its mark on the wineries of the Association of German Prädikat Wineries (VDP). This is particularly noticeable in Germany and can also be attributed to the catering industry, says VDP spokesman Max Rohde.

“Rotational wastelands” could quickly bring relief

In order to prevent a further drop in prices, the production volume in Germany must be “adjusted,” says Loose. It must also be about which cultivated areas no longer have a future due to advancing climate change and which are indispensable for tourism.

The Secretary General of the German Winegrowers Association, Christian Schwörer, believes that the concept of “rotational fallow land” is a means of achieving relaxation in the market relatively quickly. After a vineyard has been cleared, planting rights remain in effect for another six years and winegrowers can use this time to create flowering areas for biodiversity. So far, the EU has provided funding of around 200 euros per hectare for flower strips from winegrowers, but around 3,000 euros are necessary just to cover the winegrowers’ fixed costs.

Companies have to reduce costs

But companies also have to look carefully at where they can save costs, says Schwörer. “It is important to develop a clear future strategy together with consultants and tax experts,” warns Loose. All products would have to be examined closely and the question of succession in the company would also have to be considered. Politicians are also asked for some tax relief, adds Schwörer. “Each individual building block doesn’t help much, but a variety of measures do help one or the other to ease the situation.”

Loose: What matters is a well-maintained digital customer database

“The winemaker of today and tomorrow doesn’t just have to be a good winemaker – he also has to have entrepreneurial qualities,” emphasizes Loose. “A well-maintained digital customer database is actually more valuable today than the vineyard itself.” Because: “The cut-throat competition in the industry for older and fewer customers is fierce.”

Higher prices are difficult to enforce

At least part of the increased costs can be offset with higher prices for bottles of wine, says Loose. “We won’t be able to get people who are now spending two or three euros in the supermarket to suddenly spend eight or nine euros on a bottle,” says Schwoerer. In the current economic situation, for some people a bottle of wine is already a “luxury good” that they forego when in doubt.

“We need a market spread.” In the lower price segment in retail, Italian and Spanish wines are much stronger than German ones. Around 90 percent of the marketing of German wines was through quality and predicate wine.

Grassroots movement for wine culture

Wine consumption is declining overall and new sales markets are in demand. Young people drink less wine, older people are often said to drink less for health reasons. In addition, there is abstinence for religious reasons, for example – as well as the new recommendations from the German Nutrition Society to avoid alcohol altogether, Schwörer lists the most important reasons. According to the wine industry’s umbrella organizations, there was a lack of clear scientific evidence for this recommendation.

“Companies need a clear commitment from politicians and civil society to wine culture and moderate drinking consumption in Europe,” says Schwörer. He refers to the Europe-wide grassroots campaign to protect wine culture and moderate wine enjoyment (Vitaevino), which Rhineland-Palatinate wine minister Daniela Schmitt has also signed as patron.

Appeal to consumers: Drink more wine from Germany – but in moderation

Wine is not just an important agricultural product that contributes to value creation, says the FDP politician. Wine “is also a valuable part of our cultural heritage and rural identity.” Schmitt appeals to consumers to “pay attention to quality and origin when purchasing and to pay attention to moderation when consuming.”

Ernst Büscher from the German Wine Institute adds: “Since twice as much wine is consumed in this country as is produced, it should actually be possible to sell German wines on the domestic market.” Currently, out of 100 bottles purchased, only 42 came from German regions.