Can Eastern Europe top up the world’s wine glasses?

Can Eastern Europe top up the world’s wine glasses?
Change in areas suitable for growing wine grapes through 2050.
By Clare Nuttall in Bucharest October 27, 2017

2017 has been a bad year for wine producers, as new data compiled by the International Organisation of Wine and Vine (OIV) showed production is forecast to plummet to an estimated 246.7mn hectolitres — the lowest level in half a century. 

The slump in production is mainly a result of unfavourable climate conditions in Western Europe’s key wine growing countries. Production levels were at a historic low in Italy — the world’s top producer for the last three years — at 39.3mn hl, as well as France (36.7mn hl) and Spain (33.5mn hl). The data showed a dramatic fall in production in all three countries compared to 2016, of 23%, 19% and 15% respectively. Smaller West European wine producers such as Germany also recorded declines. 

“In the European Union (EU), extreme weather events – from frost to drought – significantly impacted 2017 wine production, which was historically low,” said the OIV report. 

Countries in the region were hit by the Lucifer heat wave, which saw temperatures soar to over 40°C in July and also impacted parts of Southeast Europe. This was the main factor behind the anticipated 8% y/y fall in global production this year to the lowest level since 1961. The situation has sparked fears of a future wine shortage and a corresponding rise in prices. Wine consumption is estimated within the range of 240.5mn to 245.8mn hl, slightly lower than estimated production, but most of the wine produced this year will be laid down and drunk in future years. 

Speaking to bne IntelliNews, however, a spokesperson for the OIV pointed out fluctuations in wine supply are not unusual. “Every year production is different and there is still a big stock from previous years before, so for the moment it is hard to say there is going to be a wine shortage. We have to wait until next year to see how it’s going to be,” she said. 

And forecasting future wine production is virtually impossible since it “depends mostly on weather conditions, we cannot say its going to be like this or like that,” she continues. “Sometimes unexpected weather happenings interfere so much …. that’s what happened in France, Spain and Italy and why production had this fall. It’s very, very hard to predict something for next year.”

Better news from CEE

There was more positive news from some of the main wine producers of Central and Southeast Europe. Countries from the region make up seven of the world’s 22 main wine producers although they are generally among the smaller entries, with the top of the list being dominated by West European and New World producers. 

The OIV anticipates a robust 64% increase in production in Romania, which has emerged as one of Eastern Europe’s top wine producers this year. Elsewhere in the region there are encouraging figures from Hungary, where production is anticipated to rise by 3% this year, and even more so for Moldova, which the OIV says is set to hike production by 20%. 

Meanwhile, production is expected to be flat in y/y terms in the region’s top producer Russia, and no change is anticipated in Serbia — whose agriculture sector was hit badly by drought this summer weighing on GDP — or Georgia, while production in Bulgaria is forecast to decline by 2%. 

 

 

Volumes are still low in absolute terms; 5.6mn hl were produced in Russia, which is less than one sixth of the level in Italy, but countries in the region benefit from a long history in wine production in many cases going back thousands of years. States like Romania, Moldova and Serbia are on the same latitude as major west European wine-growing regions such as Burgundy and Bordeaux. While in the earlier transition years East European wines were viewed as cheap plonk in markets like the UK, vineyards from the region are increasingly earning their place on West European and other international supermarkets on the basis of quality rather than cost. 

Romania, for example, has good conditions for vines across many parts of its territory from the Moldovan border to the Black Sea coast to the valleys of Transylvania. A country with a long tradition of wine drinking, it produces local wines such as Fetească alongside international wines like Sauvignon Blanc and Merlot. 

However, some within the industry question the stellar figures reported by OIV. “Many of our wine makers don’t agree with the statistics,” Ioan Stefan, executive director of the Wine Exporters and Producers Association in Romania told bne IntelliNews. Stefan added that the association has contacted the Romanian agriculture ministry to clarify the situation. 

In neighbouring Moldova, Gheorghe Arpentin, director of the National Office for Vine and Wine, points out that this year’s revival follows three years of very low harvests, which amounted to only around 60% of the record crop produced in 2013. As a result, “we cannot call this increase exceptional,” Arpentin says. 

This year, Moldova — unlike many other countries — benefitted from weather conducive to grape growing. “While other regions, especially Europe, have faced numerous natural calamities ranging from spring frosts to drought (in Spain) and fires, Moldova has enjoyed excellent weather conditions throughout the growing season of the vine, which led to a considerable increase in production,” Arpentin told bne IntelliNews

Moldova’s wine industry was also badly hit by a trade embargo imposed by Russia in retaliation for Chisinau’s signing of its Association Agreement with the EU in 2014. At the time, Ludmila Gogu, general director of Chateau Vartely, warned that even after the lifting of the embargo Moldovan vintners would face a struggle getting their bottles back onto the shelves of Russian shops. However, the country has increasingly been reorienting exports (not just of wine) towards EU markets, and its overall export figures recently returned to double-digit growth

Meanwhile, many Moldovans are staunchly behind the local wine industry, as demonstrated by the overwhelming response to a social media campaign to rename Chisinau airport “Wine of Moldova” airport. 

Arpentin stresses that wine is “our country’s most unique and strategic product” and says experts from his office “thought that “Wine of Moldova Airport” would make an original and inspirational name for the only international airport of the country.” They want to redesign the airport to give a snapshot of the Moldovan wine industry. “The waiting area would become the “tasting area”, departures would be transformed into “bottling”, other spaces would become ‘underground wine galleries’, ‘ageing area’, ‘decanting area’,” he explains.  

Wine in unusual places 

But while countries including Moldova, Argentina and Brazil saw a strong increase in production, this year’s global figures raised alarm bells as extreme weather events from drought in Europe to wildfires in California’s Napa Valley reinforced existing fears about the longer-term impact of climate change on wine production. 

Indeed, a 2013 study commissioned by NGO Conservation International shows just that. The main finding of the research is that “climate change will dramatically impact many of the most famous wine-producing regions in the world today and prompt the opening of new areas to wine production in unusual places”. 

“Climate change is going to move potential wine-producing regions all over the map, commented Dr. Lee Hannah, lead author of the report. 

Published in the Proceedings of the National Academy of Sciences (PNAS) journal, the study shows the area suitable for wine production will shrink by as much as 73% by 2050 in some parts of the world. At the same time, new areas will become more productive, including parts of and northern Europe and north America. “These places at higher latitudes and higher elevations will become increasingly suitable for wine making and sought after by vineyards as they search for the climatic conditions that are ideal for wine grape growing,” Conservation International said at the time. 

This shows that large parts of France and Italy, along with much of the Balkans, Turkey and Ukraine will no longer be conducive to wine production. At the same time, rising temperatures will mean countries such as Poland, Lithuania, Latvia and western Russia in the east and the UK, northern France and Benelux in the west could become the wine growing areas of the future.

 

 

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