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Vineyard values have tumbled by as much as a third in the past year as oversupply of wine weighs down on the industry amid sinking global consumption, according to a new report.
In its latest wealth report, published on Wednesday, Knight Frank said “few of the world’s key vineyard regions remain unscathed” by a drop in demand for wine, adding that consumption has fallen 12 per cent globally from its peak in 2007.
New Zealand’s vineyard values have suffered most, with prices in the country’s Marlborough region falling 33 per cent last year, according to Kurt Lindsay of Bayleys, Knight Frank’s local partner, after hitting a peak in 2023.
Values in California’s Napa Valley region of Los Carneros fell 15 per cent, while vineyard prices in Australia’s Barossa Valley and France’s Côtes du Rhone were both down 10 per cent.
Wine producers are battling shifting tastes, with younger generations increasingly opting for different beverages or shunning alcohol altogether. In France, the youngest generation, Gen Z, consume about half as much wine per capita as older Millennials, according to Nielsen.
The industry is also grappling with a sharp fall in demand from China, one of its main export markets, and the impact of climate change, as well as grape gluts in some regions.
Wine production has fallen by a fifth over the past 20 years, according to Knight Frank, but many winemakers are still sitting on excess stock. This has especially dented bulk wine prices — wine that is transported in large containers and bottled at its destination.
Lindsay said excess inventory in New Zealand’s Marlborough region had caused bulk wine prices to fall from NZ$7 (US$3.90) to NZ$3 per litre.
Eduardo Jordán, head winemaker at Miguel Torres, told the Financial Times that in Chile, prices for bulk wine grape país fell to 9 US cents per kilo last year, roughly half of production cost.
Sinking demand has hurt listed wine producers, including US-based Constellation Brands and Australia’s Treasury Wine Estates. In an earnings call covering the six months to December 2024, the latter’s chief executive Timothy Ford said sales of “our premium and commercial portfolio declined approximately 5 per cent”, with the company pointing to “continued softness in demand around the globe for wine at lower price points.”
In a January earnings call, Constellation Brands’ chief financial officer Garth Hankinson said that weak demand, particularly for “the lower-priced [wine] segments”, and retailers struggling to shift inventory were behind a 16.4 per cent fall in wine and spirits shipments year on year in its third quarter.
Jordán said some grape producers were switching to fruit or vegetables because of sinking demand for wine. “In the north it’s very dry, for example, so one can switch to olives. Near us in Curico, cherries are the best option.” Knight Frank said that in Argentina’s Mendoza region, vines were being replaced by vegetables, with garlic now one of its biggest exports.
Crop switching, to olives and even solar panels, has also become increasingly common in Bordeaux, where lower-tier wine producers have struggled in recent years. To the east, Côtes du Rhone vineyard values fell a tenth over 12 months.
Despite falls in value across many global vineyards, premium sites for wine-growing have held their value, including France’s Champagne region.
In the UK, vineyard owners in Essex benefited from a 20 per cent jump in values last year, according to Knight Frank, which added that shifting weather patterns were boosting some regions.
“We are seeing vineyard values rising more rapidly in . . . counties such as Essex . . . where growers are experimenting with different grape varieties to create still rosé and red wines,” the report found.
