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European wine industry suffers another blow in beleaguered year

Despite demand for alcohol, including wine, surging during the pandemic, the global wine industry has been suffering as a result of trade restrictions, labor shortages, and now, weather woes. In Italy’s northern Veneto region, a violent storm at the end of August ravage 5% of the regions vineyards, causing €6 million worth of damage and a wine season to go up in smoke for many vintners, Forbes reported.

This blow to the European wine industry, within which Italy is the top producer, comes only weeks after Tuscany announced its grape harvest was at risk due to limited seasonal workers arriving, most of them from Eastern Europe to whom many borders are closed. To help combat this looming threat, Tuscany's Fedagripesca Confcooperative petitioned the Italian government for agricultural vouchers to lure students, restauranteurs and the unemployed to work short-term on the vineyards for harvest.

These strains in the European wine industry build on an already troubled outlook. In 2019, Italian wine production fell 15% compared to 2018, CNBC reported. Numbers from IWSR forecast Italian still wine volumes to drop yet another 9.54% in 2020. Sparkling wine volumes from the country are predicted to fall by 16.86%.

While it may stand to reason that the increase in at-home wine consumption will help buoy a battered industry, the numbers do not support this hopeful prediction. In the U.S. shuttered restaurants and bars previously made up the majority of American’s alcohol indulgence, and as a result of limited capacity for dining out, domestic wine sales dropped 5% to $48 billion between June 2019 and June 2020, according to data from market research firm Wines Vines Analytics. In Italy as well, over 50% of the country’s still wine consumption happens in bars which have remained shut during the country’s strict lockdown, per IWSR data reported by CNBC.

This economic crisis is not unique to the European wine industry. Production in the U.S., where California accounts for 50% of the nation’s wine industry revenue, suffered dramatically due to wildfires and labor shortages. The result is that the loss of wine revenue for the U.S. is anticipated to ring up at $5.94 billion, according to a report from the Sonoma State University School of Business and Economics. In 2019, the national wine economy generated $8.5 billion in revenue. Individual wineries are expected to lose between 36% and 66% of their revenue this year