In January, hundreds of people gathered in New York City for a glittering, sold-out celebration of German wine. Rieslingfeier, an event modeled on La Paulée, filled an elegant hall with collectors, consumers, and trade. As they elbowed for pours from icons like Julia and Klaus Peter Keller and Katharina Prüm or selfies with Julian Haart and Lara Haag, everyone was in full agreement: these producers—and their peers—have ushered in a golden age for German wine. But amid the buzz of enthusiasm, no one talked about what was happening back in Germany, where the broader wine industry is in crisis.
“We are facing a transition of a magnitude not seen since the Second World War,” says Simone Loose, Ph.D., a professor of wine and beverage business administration at Geisenheim University and one of Germany’s leading researchers in the field. A combination of economic pressures and shifting consumer habits has left many producers struggling. Climate whiplash has slashed yields in some areas, while in others, producers are saddled with oversupply, trying to sell their surplus to a saturated bulk wine market. As a result, industry experts forecast a long, painful period of adjustment before the German wine sector returns to viability.
The impact on producers
“It’s very, very tough times right now,” says Christine Pieroth, the proprietor of Piri Naturel in the Nahe region. “In Germany, there’s only been one direction in the wine market for the past years: more efficiency and more volume! That this will collapse at some point was to be expected. To be honest, I don’t think there’s anyone not really affected.”
But the crisis is not hitting all producers equally. In the U.S. market, the focus is largely on the 25 percent of German wine production that comes from independent estates. It also skews to export-driven regions like the Mosel, which sells close to a third of its wines outside the country. In this segment, there is still plenty of good news. According to Dr. Loose, last year, one in three independent producers improved their sales volume, benefitting from planning, adaptation, and strategic exports. As such, most of what is playing out in Germany will not impact what U.S. consumers see of—or pay for—German wine.
This accounts for the “invisibility” of the crisis to outsiders. But inside Germany, two-thirds of independent wineries are in trouble. Worst off are Germany’s bulk wine and cooperative producers. In the bulk wine segment, which accounts for 50 to 55 percent of production by volume, and among co-ops, which account for 25 percent, many wines are sold below cost, per Loose.
How did Germany get here?
Germany’s economy, still the world’s third largest, has stalled. Since 2019, German producers have been hit by 30 to 40 percent higher labor, energy, packaging, machinery, and repair costs, Loose calculates. The start of the Russia-Ukraine War in 2022 jolted German energy prices, which remain high. Inflationary pressures have cut into consumer purchasing power. Moreover, German labor prices are significantly higher than those of other EU countries.
Health consciousness around alcohol is increasing and other beverages have entered the market. Underlying all of this is the exceptional price sensitivity of German consumers, who buy roughly two out of three wines at discount supermarkets. Although Germany could meet domestic demand with its own wines, it is a net importer, as German wine consumers tend to favor cheaper imports and the diversity of international wine styles.
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