Europe’s wine industries continue to muddle in low demand due to COVID-19 induced lockdowns

Published 2021년 3월 24일

Europe is one of the largest wine producers globally and had a share of 67% in the total wine production during 2018, with the majority of the wine production happening in Italy, France, and Spain. The wine industry in the EU is tangled in thorny problems due to COVID-19 and repetitive lockdowns. Social distancing has reduced the domestic demand for wine, increasing stocks of wine and pushing down the prices. Prices in France fell by approximately 17%. Due to a bumper harvest in the crop, the Spanish government is spending 90 million Euros to distill the freshly harvested grapes into brandy and industrial alcohol.

The European Union (EU) has one of the most significant shares in global wine production since 2008. The region produced 182 million tonnes of wine in 2018, which is about 67% of the worldwide production in the same year. Within the EU, wine production is concentrated in a few countries like Italy, France, and Spain, with about 81% of the total production. These three countries are also the most prominent wine exporting countries during 2020 globally, with France being the largest exporter, followed by Italy and Spain.

High wine stocks and low domestic prices in Italy due to lack of demand

The wine industry in the EU is tangled in thorny problems since 2020, mainly from COVID-19. Repetitive lockdowns and social distancing have reduced the domestic demand for the popular “social” drink.Domestic prices of wine in Europe’s largest wine-producing region, Italy, fell by approximately 17% compared to the last year. The price for one hectograde of wine in March 2020 was recorded as USD 4.67, which fell to USD 3.84 per hectograde in March 2021.High wine stocks and a small demand due to the ongoing pandemic are the leading cause for wine prices to decline in the top producing country. The one stocks are running at an all-time high in all leading wine producers of Europe, which has raised concerns regarding the upcoming harvest and wine processing season.

Price of Wine in Italy March 2020 - March 2021

Vineyards in Spain were forced to destroy their bumper harvest

Spain witnessed a bumper crop for grapes which had the potential to turn into millions and millions of extra bottles for wine sipping or swelling in the domestic market home and abroad.With the ongoing and prolonged COVID-19 pandemic, there has been a catastrophic drop in wine sales across Spain. The wine industry is facing overproduction in a shrinking market, which has pushed down the wine prices to an all-time low.To support the farmers and processors, the Spanish government offers the local grape growers subsidies to destroy part of this year’s record grape harvest.The suppliers are concerned about harvesting bumper supplies at rock bottom prices in the coming few weeks. Approximately 90 million Euros are being spent to either or distill the freshly harvested grapes into brandy and industrial alcohol.

On top of that, the wine cooperatives in leading countries like Italy, France, and Spain recently requested the European Commission to provide them with additional support to sustain the chaos. Producer cooperatives expect that the concerned department should take measures that increase the demand for wine, at least in the domestic market. With the COVID-19 vaccine drive picking up space, it will be interesting to see how the domestic market revives in these European countries.