Adapt, Exit or Die: a Five-Year Action Plan for Six Different Kinds of Wine Business
If your wine business is doing fine, and you're confident that it's going to continue to do so for the next five years, please ignore this piece. If not, you'll hopefully find it thought-provoking
Introduction
I recently posted a study that compared the profitability (or lack thereof) of wine production across a range of regions. Inevitably, I received a certain amount of criticism from those who’d prefer that the wine industry continues to pretend that all is well, while the diggers busily uproot their or their neighbours’ vines.
Realistically, between 15-25% of the world’s vines are going to be uprooted. It is already happening, most dramatically in Bordeaux, California and Australia, but also in other parts of France, Spain and Germany. Anyone who imagines that this kind of contraction is going to leave them totally unscathed is probably deluding themselves. My main question is whether we are going to be left with a leaner, fitter, more profitable sector, or a smaller version of the financially dysfunctional one we’ve grown to know and love. The answer is probably a mixture of both.
Are we going to be left with a leaner, fitter, more profitable sector, or a smaller version of the financially dysfunctional one we’ve grown to know and love?
I do love wine and intend to continue to make my living from writing about the business on platforms like this, giving talks and keynotes and, perhaps most pertinently, producing wine in France and Georgia and possibly elsewhere. And I’d like to help other wineries get through these difficult times.
So, in a spirit of positivity, I thought I’d try to translate the findings of that profitability effort into a set of practical pieces of advice: what each kind of wine business might do over the next five years to improve profitability and, to be blunt, which kinds of businesses are better off being sold rather than restructured. These are my personal opinions and I’m sure many readers will choose to differ.
There will be blood
Many people are inevitably going to find the headline conclusion quite uncomfortable. The wine industry’s structural problems — falling consumption, premiumisation pressure, climate adaptation costs, labour shortages, water scarcity, US tariffs (15% on EU wines under the current US-EU framework, with rates up to 200% periodically threatened), the collapse of bulk markets, and the steady erosion of brand-building budgets across the trade — cannot be solved by every operator. Some have a genuine path to survival and success; many do not. For example, Bordeaux doesn’t need 4-5,000 estates selling the same kind of wine.
Pretending otherwise wastes capital and time.
The recommendations below are organised by business type: family/traditional estates, négociant businesses, cooperatives, brand owners without vineyards, virtual brands, and (briefly) corporate / PE-owned groups. For each, the report sets out priority moves, capital required, realistic timescales, and — where applicable — a brutal verdict on which sub-categories should be exited rather than fought for.
Wherever specific cost or timescale figures are given, they are sourced or flagged as directional. Wine is an industry where individual property economics vary by orders of magnitude inside the same appellation; these recommendations will, obviously not apply to everyone, and should be read as strategic direction, rather than a substitute for property-level due diligence.
As a consultant, I am all too aware that no two businesses are totally alike – thank goodness – but I hope what follows here will help spark some fruitful conversations in boardrooms and around family lunch tables. And possibly help a few wine producers navigate their way through these increasingly choppy waters.
Part One: Why We Need More Than Normal Restructuring
1.1 The simultaneous shocks
At the risk of further upsetting the Look-On-The-Bright-Siders, I thought I’d start by listing the challenges the industry faces.
James Bond and Jason Bourne regularly have to single-handedly deal with large numbers of similarly armed villains. What they don’t usually face is a coalition of 10 separate adversaries wielding different weapons. And that’s what the industry is facing right now.
• Demand collapse. OIV figures show global wine consumption having fallen by 3.3% between 2023 and 2024. IWSR estimates show a further decline of around 2.4% last year; French long-term domestic consumption is in structural decline; the US post-pandemic premiumisation thesis has narrowed to reveal that growth is concentrated in the very top tier. While wine industry boomers worry about WHO cancer warnings, observers like me focus on younger people who are far more concerned about well-being issues, including the impact of alcohol on sleep patterns. It is no longer unusual to hear people of various ages say that they no longer drink between Sunday and Thursday.
• Increased competition. For many, wine, beer and spirits used to be the default adult beverages. Those days are over. Today, they compete with a growing range of alcoholic – think RTDs – and non-alcoholic options, as well as functional drinks and cannabis (possibly in liquid form).
• Weight loss drugs. People taking GLP-1 treatments like Wegovy and Ozempic report losing their appetite for alcohol. They may also be less likely to want to pay restaurants high prices for the limited amount of food they want to eat. The number of users of these drugs is going to rise as other health benefits are identified, patents run out, prices fall and application shifts from needles to pills.
• Climate change. Earlier harvests (3–4 days per decade), higher alcohol levels, general unpredictability, yield inconsistency, increased disease pressure, rising frost/hail volatility, fire and associated smoke taint. These are operating-cost increases, not just narrative.
• Water shortages. In some regions such as California, producers and grape growers are having to fight for water rights. Elsewhere, including parts of Europe where irrigation is still illegal, their counterparts are struggling with unpredictable droughts that slash yields and halt grape ripening.
• Labour shortages. A growing number of people, from migrant workers to the sons and daughters of ageing winemakers, no longer see much appeal in vineyard work, or indeed in managing wine businesses. Wineries everywhere face wage inflation that mechanisation cannot always solve (steep slopes, organic constraints, narrow appellation rules)
• Tariffs and trade fragmentation. EU wines now face a 15% US tariff (Section 122, in force from February 2026 following the Supreme Court’s IEEPA ruling) with periodic 200% threats; Canada has banned US wine imports; the EU-Mercosur deal opens South America; UK alcohol duty changes have shifted shelf economics. Markets are no longer freely substitutable.
• Distribution decay. US distributor consolidation has reduced the number of paths to market; many distributors are declining to add new wineries and, indeed, are culling some existing ones; UK and European retailers are squeezing margins; the on-trade is shrinking as restaurants close or de-emphasise wine programmes.
• Capital cost pressure. Higher interest rates have made it more expensive to carry inventory — particularly punishing for any business holding multi-year-aged stock. Wineries that expanded during the low-rate era are now caught with debt service that exceeds incremental margin.
• Becoming uninsurable. Swiss Re data cited by Carbon Brief says wildfire-related insured losses have risen from roughly 1% of global insured catastrophe losses before 2015 to around 7% today. Fitch estimated the 2025 Los Angeles fires alone could consume over 30% of European reinsurers’ catastrophe budgets for the year. Inevitably, this is affecting premiums and the availability of cover.
A Napa winery owner recently told the Guardian their insurance rose from roughly $40,000/year to $300,000/year while providing far less protection. In France, Le Monde reported growers complaining that insurance provides “little coverage” for repeated climate disasters. Smoke taint is often excluded. This changes the economics for everyone downstream.
1.2 What this means for strategy
Cosmetic change will produce cosmetic results
The combination of these forces means that incremental improvements — slightly better marketing, slightly better viticulture, slightly better SKU architecture — will not move the needle for most operators. Most successful five-year plans will involve at least one decisive structural change: a fundamental shift in route to market, ownership, product mix, or geographic footprint.
Cosmetic change will produce cosmetic results.
It also means that 2026–2028 is, paradoxically, a buyer’s market for some assets and a near-impossible market for others. Generic Bordeaux land cannot be given away. Top Champagne and Burgundy land remains prohibitively expensive. The middle is where most of the negotiating room sits.
Part Two: Producers: Family and Traditional Estates
This is the largest category by number, accounting for the majority of European producers and a substantial minority in the New World. Within it, three sub-types behave very differently and need different prescriptions.
2.1 Premium prestige estates with strong existing brands
Examples: classified Bordeaux châteaux outside the very top tier; recognised Burgundy domaines; established Tuscan and Piedmontese estates; Napa names with wine club bases above 2,000 members; Margaret River and Coonawarra benchmark properties.
Priority moves (next 24 months)
• Build direct customer relationships aggressively. Even European estates that historically ignored DTC need to start. The route is normally: 1) cellar door upgrade; 2) build mailing list 3) create loyalty programme 4) create allocation/club. The model here reflects the one that has – until recently – proved successful in the US. European wineries will need to adapt it to accommodate the attitudes of their customers who may, for example, need extra persuasion before joining a subscription wine club.
Capital required: €100K–500K for hospitality upgrade; ongoing 5–10% of DTC revenue for CRM and customer acquisition. Realistic payback: 3–4 years.• Diversify export markets aggressively. Estates that earn 30%+ of revenue in the US under the current 15% tariff are exposed; estates that earn it via en primeur are doubly exposed. Targets: UK (post-tariff stable), Switzerland, Vietnam, Singapore, Hong Kong, South Korea, Brazil (post-Mercosur), Poland, Czech Republic. Avoid the temptation to chase China — the recovery is uneven and the discount required to enter is destructive. India is appealing, but volumes, while growing, remain small. Africa is of interest, especially for French producers in their country’s former colonies. Canada is unlikely to fall back in love with US wine any time soon, so this is a potential market too.
• Hospitality monetisation. If the property has unused buildings or land suitable for accommodation, develop. Wine tourism now contributes 25% of average winery revenue globally and 32% in non-Europe (Global Wine Tourism Report 2025). Profits are usually a few percentage points higher.
A 6-room boutique conversion in a recognised estate typically costs €1–2M, returns 25–40% gross operating profit, and creates bottle sales. Timescale: 18–30 months from planning to opening.
• Rethink En Primeur. For Bordeaux specifically: the 2024 en primeur campaign was the worst in living memory and, whatever its success for the top estates, 2025 will not magically return en primeur to what it was pre 2010. Continuing to release at modest discounts to a broken market validates the wrong price level. (See my recent post on the subject). Holding back stock and selling later in bottle to direct customers and selected international accounts protects the brand’s price architecture, even if it requires more working capital. This requires a conscious financial decision.
Innovation and line extension (years 2–4)
• Second/third labels for accessibility. An estate that sells its Grand Vin at €60 and has no wine at €15–25 has nothing to offer the new generation. A second label or sister-brand under €25 captures younger buyers and feeds them upward. Avoid the trap of cannibalisation: the second label must be visibly different in identity, not just a downgraded version of the main wine. Alternatively, while offering that €25 wine, consider the radical move reportedly considered by Bernard Magrez, of killing the existing second label and offering a larger volume of more attractively-priced top wine.
• White, rosé, and sparkling. Most red-focused estates are operating in the wrong colour for current demand. Adding a serious white or a high-quality rosé (where appellation rules permit, or even under no appellation), typically requires €100–300K of investment in new equipment and 1–3 years of vintage development. A serious traditional-method sparkling adds 3–5 years of ageing before first release. Both can be commercially launched faster via négociant or co-bottler arrangements. All this is happening at pace in Bordeaux, where some producers are now offering Blanc de Noirs white wines made from Cabernet or Merlot.
• No-alcohol or low/mid-alcohol parallel range. The market is real (CAGR estimates of 7–10% on alcohol-free wine to 2033 per Grand View Research) but technically demanding. Most premium estates should NOT build dealcoholisation in-house: the reverse osmosis or vacuum distillation capex is €500K–2M, requires technical expertise the estate doesn’t have, and risks brand damage if the product is mediocre. And the tech is improving rapidly, so there’s the risk of overpaying for yesterday’s model. The right approach is a co-pack arrangement with a specialist (there are now reputable contract de-alc producers in France, Germany, Spain, South Africa and California) under a sub-brand. Capital: €50–150K to develop and launch. Timescale: 12–18 months.
Land and capital decisions
• Buy adjoining parcels carefully. If neighbouring distressed estates can be acquired at meaningful discounts (which is now the case across much of Bordeaux outside Pauillac/Margaux, for example), modest expansion can be accretive — but only where the estate has the production capacity, sales reach, and management bandwidth to absorb. Most prestige estates do not have spare bandwidth. Inaction is usually the correct option.
• Sell non-core land. Many estates own peripheral parcels in lesser appellations that contribute disproportionately little to revenue. Selling those (or grubbing them up under whatever scheme is available — France’s €4,000/ha arrachage definitif is too low to be useful for most, but EU-funded conversion to other crops can work in the South of France) frees capital. Capital release could be as much as €200K–€2M for a 50-ha estate disposing of 10–20 ha of generic land.
2.2 Mid-tier family estates without strong brand recognition
This is the category in the most danger. A 30-hectare estate in a recognised appellation but without an internationally recognisable name; 10,000–80,000 bottles/year; selling 60–80% to négociants or through traditional importer networks; family ownership across 2–3 generations; rising debt; working capital eaten by ageing stock; no DTC infrastructure to speak of.
