The grape harvest has already begun, so what now?

Understanding the reality of wine surplus and the economic reality for winegrowers and the wine industry.

The grape harvest has already begun in many parts of the world: France, Italy, Spain, and Portugal. The harvest season is a particularly important time for the winegrower: it represents the culmination of a year of effort and dedication to grape cultivation.

This year wasn't particularly difficult. It rained when it needed to rain and it was sunny when it needed to be. There wasn't much mildew or powdery mildew, and it was a particularly favorable time for new plantings. The heat arrived in the last few months, and now a little rain was needed to enhance grape ripening, allow the berries to grow, and enable the vine to capture water for its future reserves.

The difficult part wasn't the growing season, and it shouldn't be the harvest period either. Despite the labor shortage, with greater or lesser effort, everything will eventually go according to plan.

The difficult part will be whether or not some winegrowers will have to decide whether to leave grapes hanging on the vines .

Choosing to take everything to the producers/wineries without a price or with a ridiculously low price that doesn't even justify the harvest day, or choosing to leave the grapes on the vines, avoiding further expenses and hoping for a different outcome next year. But it is extremely painful for the winegrower to leave the grapes on the vines, even without knowing if they will even be paid for them.

In the Douro region, there is talk of grapes under the so-called "benefit" system, which will be paid 900 euros per pipe, a far cry from the previous price exceeding 1000 euros, while grapes outside the benefit system will be paid 300 euros. (I mention the Douro because it's the reality I know best and serves as a reference for other regions).

Based on the facts and what I have been analyzing for some time now, using reports, companies specializing in wine sales, and experts in the field, I predict that the difficulties faced by winegrowers are not limited to this year. I foresee these difficulties for the next 3 years . If this is true, once again we will witness a progressively greater abandonment of the land. Once again, the ghosts of effort and sacrifice that our parents and grandparents endured have returned to haunt us and will demand our resilience to endure and hope that things will change.

Inventory stocks in warehouses are full, and not only here in Portugal. The measures adopted long ago in France regarding wine distillation, which are only now having some impact here, have already shifted to uprooting vines. But these measures are short-term. I understand the logic: the law of supply and demand. If I reduce the amount of wine I have on the market, it will be more sought after because there will be less of it, and the price will probably increase.

However, I regret to inform some theoretical engineers and eventual representatives of the sector that these measures do not solve the problem. I usually call this the " carpet theory ." The carpet theory consists of pushing the dirt under the carpet so that it is not visible to the naked eye. The goal is to show a tidy house, but in reality, the problem only diminishes or moves from where it was, but is not actually solved.

As long as we don't focus on truly understanding the problem, the measures will always be short-term and lack concrete results. And what are the problems?

New Countries:

If the "old world" countries withdraw their products from the market, there are other "emerging" countries that will replace them. And when I say countries, I mean England, Bulgaria, Romania, Mexico, Uruguay, or even Sweden. That is, countries that have never or almost never produced wine in their history, but due to current climate change, they have begun to favor the longevity of vines, or globalization through access to the internet (e-commerce and social networks) has allowed them to create more favorable business strategies. However little these countries may be selling, they are taking away a share of our market share.

Commercials:

We've gone from street vendors going door-to-door looking to acquire new clients, mostly restaurants, to order takers . Today, they've replaced the commercial name with "account sales manager ," but in reality, only the name has changed; the skills remain the same or even diminish. Understanding the restaurant owner's business isn't as important; what matters is distributing catalogs and constantly reducing profit margins or extending payment terms to ensure products get into the restaurant. These techniques are called manipulation, and they worked, and have worked, for many years. But the market has changed.

Restaurants:

Restaurant owners no longer have the patience to listen to a new salesperson walk in and tell them about new products. They're fed up with being wasted time on things they don't want at a price they don't want. It's become difficult to schedule a meeting with the owner, who always ends up making excuses about not having time that day. The truth is, most salespeople aren't prepared to hear "no" in an increasingly instant-gratification society.

But restaurants are also partly to blame. There are several that don't pay their suppliers for the wines they buy. They don't realize that they are contributing to the increasing devaluation of the industry and the difficulties that a winegrower faces with their grapes and wines.

The vast majority of restaurant owners manage their restaurant as a profession, not as a business. Either it's a family business inherited from parents, or it's someone who worked in restaurants and decided to go into business independently. In short: they know what to do operationally, but lack an understanding of fundamental business aspects like accounting and management. They face the problem of a lack of staff and don't know how to solve it. They forget that the market has changed.

Producers:

The producer faces a problem: they have more and more wine in their warehouses, and to solve this, they are constantly creating new wine ranges. They went from one white and one red wine to 10 whites, 10 reds, a sparkling wine, a rosé, a late harvest, and so on. Today, a producer easily has 10 different wine references. Diversification is one aspect of the marketing mix, but diversification isn't about adding products identical to those already on the market. Diversification means adding value and innovation. For the average consumer, wine is simply wine. The best wine is the one that tastes good. They don't care if it has been bâtonnage or if the wood used for aging is Hungarian or French.

Taking examples, Portugal has never been known for single-varietal wines, partly because our national grape varieties are unknown abroad and difficult to pronounce. Suddenly, one or two producers decide to create a single-varietal Touriga Nacional wine, and everyone else follows suit, creating Touriga Nacional wines. Not long ago, there were only a handful of white wines using skin contact; then others followed suit, and today there are hundreds of options.

Ultimately, diversification is about inventing new categories, some of which have always existed, and then copying all the others. And there's one culprit... distribution. Distributors pressure producers to create a single-varietal wine because that's what's popular now, that's what's fashionable for consumers. The question we should be asking is: which consumers? The consumers of Sogrape, Borges and others, or our consumers? Do producers really know who their consumers are?

Has the market not changed?

Things have changed, and the trend is for them to change even more each day. Society increasingly prefers other alcoholic or carbonated beverages. Newer generations opt for beer or spirits at parties, while in social settings they choose water or juices, and these juices are increasingly less fizzy, contain fewer artificial colors, and less sugar.

Society today is more conscious of food, more inclined towards vegan, natural, and biodynamic options. There is greater environmental and social responsibility. The wines consumed are increasingly lower in alcohol content, less structured, less tannic, fresher, and with some sugar content. The market has changed, but the sector has not, or tends to change slowly.

The sector has not adapted to the changes in the purchasing process itself. Today, almost all industries are required to have a digital strategy, based on e-commerce and social media, because people (I remind you) want immediacy : everything faster, simpler, and easier to obtain. And, as we know, the industry tends not to adapt to the digital market. There are several producers who refuse to put their wines on a website and have a digital strategy because "it doesn't make money." The problem is that those who do not adopt a digital strategy will fall behind, losing market share, experience, notoriety, authenticity, and influence.

The market has changed, but the industry hasn't .

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WRITTEN BY:

Pedro Fernandes

Pedro Fernandes is a Portuguese winemaker who has been involved in viticulture since he was 11 years old, where he started making his first wines with his father and doing tasks such as pruning.

Since then he has never stopped and in 2018 he decided to dedicate himself to the wine sector, starting by doing "everything backwards". He began by taking wine specialization courses such as WSET (Direct Wine) and Wine Expertise (ISAG) in 2018/2019. Then he graduated from the University of Nebrijia in Madrid, obtaining an MBA in Oenology (2020). In 2021, at the age of 39, he decided to pursue a Bachelor's degree in Oenology (UTAD), and against all odds, he finished the course in 2024.

Along the way, he created his first personal wine brand - Chãos - and completed an internship at the prestigious Chateau Latour (in Bordeaux).

Currently, he works as a consultant in the wine sector, where he plays a role not only as an oenologist, but also in creating business strategies for wine producers, with a current vision of the market, which includes resources from Digital Marketing and Wine Tourism.