How well do you know the common European wine-making regions?

There has been much talk over the years of an over-supply of wine in Europe, which has recently been exacerbated by the Covid-19 pandemic. However, it is perhaps less well-known that the European Union has been steadily reducing its vineyard area since 2007.

The EU currently consists of 28 countries (including the exiting one), although at various times, several other states have shown an interest in joining, some of which have since withdrawn their expression of interest, and some of which have never done so (although they have no current intention of proceeding).

The European Commission has a Directorate-General for Agriculture and Rural Development, which likes to keep tabs on what is going on within the member states; and it presents this information on its web pages. Of interest to this blog is the data listed for Areas under vine, which currently lists the vineyard areas for each year from 2001 to 2018, inclusive.

Those countries with officially recognized commercial wine-making industries are indicated on this map (the gray countries are not in the Union). The grape-growing climate is indicated by letters and colors, from coolest (A) to warmest (CIIIb) (described in Wikipedia). Note: you will need to click on each image in this post, to be able to read the labels.

The EU is estimated to have about 43% of the world’s vineyard area. The EU area reached its maximum back in 2007, at 3,645,043 hectares; and, since then, the area has slowly decreased by 11.8%. Most of the component countries have decreased their vineyards, but some much more than others, as shown in the first graph.

Notable declines have occurred in those countries with the biggest area (and therefore the greatest wine production): Spain (13.1%), France (7.8%), Italy (10.5%) and Portugal (20.2%). However, the biggest relative declines have occurred in Bulgaria (54.9%), Slovakia (27.1%) and Hungary (23.3%), in an attempt to rationalize their industries.

The data for the regions of Spain, which has the biggest area, are shown in the next graph. It emphasizes that the massive central plateau known as Castilla - La Mancha is where the majority of Spanish bulk wine originates. It had 458,304 ha of vines in 2018, which is 48% of Spain’s total vineyard area. However, this is of no great interest to drinkers even of bulk wine, since they mostly do not care where their wine comes from.

So, let’s delete this region from the graph, as shown next, so that we can see the rest of the regions properly. Note that most of these regions have had significant reductions in their vineyard area this century. Indeed, only La Rioja has shown any notable increase in area, having increased almost every year since 2001 — it is now 12.3% larger than it was back then. This region is, of course, home to Spain’s most popular bottled red wines. It has a reputation for consistency, due at least partly to its practice of blending grapes from across the region, and its interest in long ageing before release, often in old wood.

We can now move on to France, which may have the best-known wine regions in Europe, as listed in the next graph. There are 8 regions that comprise the bulk of the vineyard area, all bar one of which have shown declines in area. The main exception is the Charente region, which has increased 9.4% since 2001 — the neighboring Charente Maritime has also increased by 4.6%. These regions are better known as the origin of the specialist brandy called Cognac, rather than for their table wines.

The Gironde region has the largest collection of vineyards in France, and includes a very large number of wine appellations along all of the tributaries of the Gironde River, often labeled generically as Bordeaux wine (although this name actually refers to the main city). To see the smaller vineyard regions, we can re-plot the graph by including only those regions with <25,000 ha, as shown next. Even here, there are many more regions with decreasing area than increasing. The main exception is the Aube, which has increased by 36.7% — its grapes mostly go to make Champagne.

We can now move on to Italy, where things are perhaps not all that different, as you can see in the next graph. There are a number of regions that have undergone major losses of vineyared area, notably Sicily (29.1%), Puglia (20.4%) and Lazio (59.5%). Two of these regions have historically been the largest producers of bulk wine: Sicily and Puglia, both in the very south of the country.

The main increase in vineyard area has been in Veneto, which has grown consistently since 2008 (29.8%). This is almost entirely due to the boom in Prosecco wine, as an affordable alternative to the prohibitive prices of other sparkling wines. If things continue as they are, Veneto will now be the biggest vineyard area in Italy, surpassing Sicily as well as Puglia. However, there is some evidence that the appeal of Prosecco is waning internationally.

Finally, we can have a look at Portugal. Here, the vineyard regions are designed to confuse the non-expert, because a number of them have been re-named and others sub-divided in the past decade. The following graph therefore looks a bit of a mess.

In order to make sense of it, you need to know about the following changes through time:

Trás-os-Montes  →  Trás-os-Montes + Douro
Beiras  →  Beiras + Terras da Beira + Terras de Cister + Terras do Dão
Estremadura  →  Lisboa
Ribatejo  →  Tejo
Terras do Sado  →  Península de Setúbal

Also, the Atlantic islands of Madeira and the Açores were added only from 2008.

Once you’ve got that, you will note that the only region to show a consistent increase in vineyard area is the Alentejo. This has traditionally been simply “the huge non-descript area across the Tejo River (from Lisbon)”, but it has recently come into its own as a source of red wines made from old dry-grown vines. It is also, incidentally, quite a nice tourist destination, if you happen to like megalithic standing stones, or walled hill-top towns, or monasteries, or (especially) mamma’s home cooking when you visit a restaurant. It is also, incidentally, a major source of cork-bark for bottled wine.

Grape harvest dates and year-to-year climate variability (global climate change)

What we now call “climate change” used to be called “global warming”. The experts introduced the change in name in order to emphasize that there are actually two things that we need to be aware of:

1. the atmospheric temperature is increasing at an unprecedented rate
2. the weather is getting increasingly variable from year to year.

Both of these things are happening simultaneously.

Much of the evidence for both of these phenomena actually comes from agriculture, because we have good written records about harvest dates of various crops, often over centuries. These records show both of the patterns: harvest dates getting earlier and earlier on average, but also with erratic harvest dates from year to year.

I have written before about Grape harvest dates and the evidence for global warming. In that post I discussed several datasets from around the world, which all show the same patterns. In particular, the grape harvest dates for Burgundy are valuable, because of the 700 years over which they have been collected, from 1350 CE. I noted: “there has been a dramatic change in harvest date in recent years, with the earlier and earlier harvests since 1984 being attributed to global warming.”

The other weather pattern has also been emphasized in the wine industry recently (The dirt on wine):

“These days, you can’t say hot, cool, wet or dry vintage any longer. Weather has become totally unpredictable, with extremes even within one growing season,” began Diego Tomasi, director of the Centro di Ricerca per la Viticoltura e Enologia di Conegliano (CRA-VIT) in Italy. To emphasise his point, he projected onto a screen several graphs; one showing the increased variability of harvest dates in Burgundy in the past 15 years compared to the previous two centuries.

So, the obvious thing for me to do here is re-visit the Burgundy data, to show you the big picture.

I have used exactly the same dataset as in my previous post, containing a complete record of the official start of the Burgundy grape harvest for every year from 1370 to 2018 CE, inclusive. Last time, I calculated a running average of 9-year blocks of harvest dates, but this time I calculated the standard deviation of the harvest dates, instead. This calculation describes how variable the harvest dates were, across each 9-year period — a larger standard deviation indicates more variation from year to year (see my post on Statistical variance and global warming).

I have graphed the data above. Each dot represents one 9-year period. The horizontal line is simply the median value — half of the standard deviations are below the line and half are above it. The dashed lines show the inter-quartile range — half of the values are between the two dashed lines.

For our purposes here, I have highlighted the final 32 values — the final 16 are shown in red (since 2000) and the 16 before that in green. Note that red values are almost all above the upper dashed line (ie. in the top 25% of the variation) while the green ones are all below the lower dashed lines (ie. in the bottom 25% of the variation). This means that the recent harvest dates (this century) have been much more variable from year to year than were the ones immediately before that (the end of last century).

This emphasizes the quote above from Diego Tomasi — the Burgundy grape harvests are now much more variable than they have been within living memory.

However, as I noted in my previous post on the Burgundy harvests, the graph also illustrates that there have been recordings of previous large variations in the weather; indeed, on occasion even more extreme than we are observing now. In that sense, the current change in the weather is not necessarily unheard of, although it is definitely unusual.

This is what the climate-change skeptics are on about, and they are right when they point out that rapid changes in long-term weather have occurred before in our recorded history. This does not mean that the effects of the climate change will be any less, or that we do not need to respond to them. Our recent agricultural practices will have to change, irrespective of whether the current weather patterns have occurred before or not.

This point is emphasized by a recent study of soil moisture over the past 1,200 years (see Climate change: US megadrought ‘already under way’). The recent 20 years of relatively dry conditions is the fourth such period found by the study, so in that sense this is not unexpected (the previous megadrought ran from 1575–1603 CE). However, the authors also note that, while the current drought may be a natural event, it is being made much worse by climate change. That is, the effects of the natural event are being exacerbated.

The Wine Spectator Top-100 lists from 1988 to 2019

The Wine Spectator produces an annual Top 100 List, which is intended to include what they perceive to be the best 100 wines of those that they have reviewed during the previous 12 months “based on quality, value, availability and excitement”. A few weeks ago I asked: Is there value-for-money in the Wine Spectator Top 100 List? My answer was that there was both good value and poor value among the wines in the list for 2019.

It is now time to look at all 32 of the Lists from 1988 to 2019, inclusive. How consistent has the scoring system been? How has the cost of the wines changed? Has the same value-for money-pattern been maintained through time?

Let's start with the quality scores. The first graph shows the average scores throughout the 32 lists — each point represents the average of the 100 wines (vertically), for each of the 32 years (horizontally).

As you can see, these averages are not exactly random. There seems to be a distinct decrease through the first 9 years, followed by an increase until c. 2004, after which the average has remained steady. That is, with three exceptions (highlighted in pink: 1998, 2000, 2006), the pattern seems to be as shown in the next graph.

We should be wary of when studying time trends (Do winery quality scores improve through time?). We first need to ensure that the data are comparable between the different years, before we start comparing those years. This time pattern may have to do with exactly who provided the quality assessments for each year. The wine scores are a mixture from different tasters within each year, and obviously the group of tasters has also changed through time. [Addendum: Miquel Hudin has a suggestion in the Comments below.]

However, I have noted before that there is a distinct time trend in Wine Spectator quality scores that does not exist for most other wine publications (The Wine Spectator prefers modern wine styles). Indeed, for the Penfolds Grange Bin 95 wine that I analyzed in that previous post there is the same dip in the scores until 2005, followed by a plateau. Is this a coincidence?

Alternatively, it might be that the criteria for inclusion in the annual lists have changed through time. Currently, inclusion of a wine is “based on quality, value, availability and excitement” — the latter, in particular, is a bit nebulous, and may be subject to time trends.

We can now move on to the average prices of the wines, as shown in the third graph, where each point represents the average price of the 100 wines (vertically), for each of the 32 years (horizontally). Here, there is a clear increase through time, as shown by the dashed line on the graph.

The linear increase accounts for 48% of the variation in price, which is the sort of thing that might be expected from inflation. The price variation from year to year (the other 52%) presumably reflects the different inclusion criteria used in different years.

However, the increase in average price is less than the inflation rate during the 32 years. According to the US Inflation Calculator, the average inflation rate from 1988–2019 was 2.5% per year, whereas the wine prices in the graph increase by an average of only 1.5% per year. That is, based on inflation, the wine prices would have more than doubled during the 32 years: eg. average of $35 to $75. Instead, the graph shows a 50% increase (to c. $50).

Does this mean that wine has become better value for money over the past three decades? After all, value for money is probably more important than a wine score or a wine price!

We can look at this question in the same manner as I did in the previous post on the Top 100 Lists, by graphing the prices of all 3,200 wines versus their quality score, as shown in the final graph (one dot per wine). In all cases, I have adjusted the prices for inflation, so that they are all compared at 2019 prices. To keep the graph manageable, I have not shown one of the wines, costing $850 and scoring 100 points.

This graph is very similar to the graph for 2019 that I showed in the previous post. Indeed, the simple exponential economic model shown as the solid line has a correlation of 64%, compared to 69% for 2019 alone. This means that roughly the same value-for-money relationship has been maintained across the 32 years, which is quite remarkable.

So, the wines that are far above the model line are poor value for money, while those below the line are much better value. It seems that 98 points has a lot of good-value wines (ie. < $50). There are a couple of very poor-value wines: 92 points for $245, 93 points for $220.

The five outlying points at the top-right, plus the dot not shown, are in a world of their own, pricewise. As I have pointed out before, there are several different categories of wine price (How many wine prices are there?), and therefore trying to combine normal and luxury wines in the same analysis is not likely to work (Luxury wines and the relationship of quality to price).

Finally, there is another way to look at variation in value for money, which is to take into account the wine’s origin. Some time ago, Thomas Girgensohn posted on his blog a discussion of Price vs. quality - an international comparison, using the Wine Spectator summary data for 2018:

At the end of each year Wine Spectator publishes information about their ratings by country and average price. Below, I have graphed this information [for 2018] to show where the bargains are, and where you pay too much.

His results are quite interesting, so check out his graph.

Is Scandinavia currently the most attractive wine export market?

There has been increased interest recently in wine export markets. This has resulted from the down-turn of some economies, plus increasing trade disputes among some countries, and an oversupply of grapes in some regions. Exporting wine can thus be necessary in some cases, as well as unreliable in others.

In 2018, the ProWein Business Report announced that its surveys (of 2,300 industry experts) indicated China as the most attractive market, in terms of future potential as an export destination. Sadly, China has faded somewhat since then, amid a downturn in its overall economy, and trade disputes with the USA. In recent weeks, this position has been exacerbated by the Coronavirus outbreak, which has had effects on the wine industry worldwide.

At number 4 attractiveness in the 2018 report was Scandinavia (Denmark, Norway, Sweden), having moved up from number 5 the previous year. Well, in the 2019 ProWein Business Report, Scandinavia moved up to number 1:

Polled on the current attractiveness of markets, exporters and wine producers rate Scandinavia, with Norway and Sweden in the lead, as the world’s most attractive export market.

There is no explanation given for this choice by the experts consulted, and so we may well ask: is this expert ranking justified?

To answer this, we could look at the current alcohol market in Sweden, where I live, as the biggest of these three countries (10 million people) — as opposed to Denmark (6 million) and Norway (5 million); plus Finland (5 million) if you include all of the Nordic countries. However, you should recognize that the Scandinavian market is only the size of that of Florida, or New York state, or that of Texas if you include Finland.

Sweden

We can start by noting that Sweden has increasingly become a wine-consuming market. I have noted before in this blog that all four national governments took control of alcohol sales some decades ago, to deal with the historical Nordic binge drinking (Why are there wine monopolies in Scandinavia?). The idea was to get the people off spirits and into lower alcohol alternatives, such as beer and wine.

The first graph (from Kym Anderson and Vicente Pinilla: Annual Database of Global Wine Markets, 1835 to 2016) shows that the Swedish government has eminently succeeded — Sweden is now firmly a wine-consuming market. Note that the total consumption of alcohol stabilized at c. 7 liters per adult back in 1970, and so the graph shows changing drink preferences.

These data translate into an average of 29 liters of wine per capita (15+ years old) since 2010, when consumption reached its current stable level (data from the International Organisation of Vine and Wine). This is 1 bottle per person every 9 days. For comparison , here is a recent graph from the American Association of Wine Economists, in which Sweden ranks 12th:

Scandinavia is not, of course, much of a wine-producing market (see Swedish wineries — who'd have thought it?), so increasing wine consumption means increasing wine imports. This may change, of course, with increasing warmth in Scandinavia (Climate change and the most northerly vineyards in Europe). In the meantime, things look good for Swedish wine importers.

The main source of alcohol for consumers is retail liquor stores, all of which are the run by the government-owned by Systembolaget. The next graph shows the percentage of the total consumption for each of the known sources of alcohol (from Björn Trolldal, 2019: Alkoholkonsumptionen i Sverige 2018. Centralförbundet för alkohol- och narkotika-upplysning Rapport 184).

Traveler direct imports reached a peak back in 2004 (at 26%). Most travel for Swedes is within the European Union, where there is now free trade; so this is no longer necessary. Smuggled drinks reached a peak in 2005-6 (at 11%) — I have no idea where it is being smuggled from. Low alcohol beer is available for sale in supermarkets, and this is the only alcoholic product allowed to be sold there. This has slowly decreased through time — Sweden is well-known as a market for craft beers, and these are in the retail stores only. Restaurant sales have been constant through time — this is not a big market because Scandinavia has very restrictive drink-drive laws. Home-made products include beer and fruit wine — my wife makes wine from gooseberries and cherries, and sometimes cider from apples.

So, Systembolaget has increased its dominance to counter-balance the two main drops in source. I have noted before that this is generally not a problem for the locals (see Wine monopolies, and the availability of wine). Indeed, Sweden is one of the cheapest countries to buy wine (see Why is wine often cheaper in Sweden than elsewhere?). This does not mean there aren’t old-timers who can remember the Bad Old Days, last century; and I have a few current beefs of my own (My annoyances with my alcohol monopoly).

This next graph shows the percentage of Systembolaget’s wine sales by volume, for the top 14 importing countries in 2019 (see Systembolaget försäljningsstatistik). Italy dominates, with 28% of sales, followed by France with 14% and Spain with 12% — these three make up 54% of the sales. This is quite typical — according to European Commission data, 80% of EU wine production stays within the EU.

If you want to import wine into Sweden you need go through an importer, who will either supply the trade directly (restaurants, bars, caterers), or market the wines retail through Systembolaget. There is, of course, a lot of politics involved in trying to get wine into a foreign country (usually importers, distributors, and retailers). In this case, however, there is no separate set of distributors. Those of you familiar with the American three-tier alcohol-distribution arrangement can breathe a sigh of relief.

Much of the market is in the (notoriously difficult) “not cheap, not premium” retail space. The economics of the small indigenous wine-making industries mean that local wine is more expensive than the imported stuff, which is good for the importers. However, the market does not have $US3 wine, because it is not economic to import it; and in the modern world of premiumization this may not matter. The cheapest bottled wine is $US 5.50; and wines like Barefoot cost $US8, not $US7 (as in the USA). So, it is a mid to premium wine market. Wine can, however, be cheaper in Sweden than in its homeland (Can we trust between-country or between-state comparisons of wine costs?), although whether this will continue in the anticipated Coronavirus recession remains to be seen.

Swedes are notoriously concerned about the environment, and care about where their (many) imported products originate. Indeed, according to European Commission data, origin is slightly more important than cost when Europeans buy food products. The above graph, from the American Association of Wine Economists, shows the rising share of Organic Wine sales in Sweden (see also the market bulletin from Wine Australia). It will be difficult to compete in the marketplace if you turn up with dodgy goods (there is nowhere to dump it).

In a similar vein, a recent Wine Intelligence report noted that:

According to The Global SOLA wine opportunity index 2019, the biggest opportunities for lower alcohol wines are in New Zealand and Singapore, while for no alcohol wine it was Sweden, Hong Kong, Finland and Singapore. In Sweden and Finland, lower and non-alcoholic wines are relatively more popular as they are much cheaper than conventional table wine.

They are also more popular because of the tight drink-drive laws, and because there are lots of Millenials, who don’t drink wine like their Baby Boomer parents do.

Conclusion

In the current time of Coronavirus and trade wars, maybe Scandinavia really is a very attractive wine export market.