How Scarcity and Climate Change are Reshaping Wine Prices

Two powerful forces

Traditionally, fine wine pricing has been shaped by a combination of reputation, tradition and consumer demand. However, there are two other powerful forces which are accelerating change in the global wine market: scarcity and climate change. They can reshape supply, redefine value and ultimately alter how investors think about wine as an asset.

Appellation Laws

As an agricultural product, wine is finite and time-bound – each vintage is only produced once (sometimes in limited quantities) and once it has been consumed, it is gone forever. Global demand for fine wine has significantly expanded, driven by wealth creation in Asia as well as the monetisation of wine as an asset.

Concurrently, production from some of the most prestigious regions – Bordeaux, Burgundy and Champagne to name a few – has remained constrained by appellation laws and vineyard sizes. In Champagne, the maximum yields per vintage are set annually by the Comité Champagne to manage supply and demand and fluctuate annually.  In Burgundy, there is no realistic ability or opportunity to expand vineyard area (land here is amongst the most expensive in the world) and so when scarcity meets global demand, prices respond (sharply) accordingly.

For investors, scarcity is no longer occasional or vintage specific – it is becoming systematic.

The role of climate change

Climate change is only accelerating scarcity in ways that the wine world has not previously seen. Unpredictable weather patterns, rising temperatures and extreme weather events directly affect both yields and consistency (not to mention ABV, which is a whole other topic).  

Recent extreme events include;

• Severe frosts in Burgundy and Chablis in 2017, wiping out as much as 90% of crops.
• Heatwaves and droughts across southern Europe.
• Extreme wildfires wiping out entire vineyards in Australia and California

Is there such thing as too much stress?

It is true to say that some warmer regions have benefited from a longer ripening season – in Southern France, for example, Grenache as an early budding and late ripening variety requires more sunlight and a longer growing season to concentrate the sugars and fully develop flavours. But the longer-term picture is far more complex – heat and water stress increasingly threaten both quality and quantity. Yes, vines need some stress from the environment. However, too much is detrimental to their approachability and ability to produce balanced wines.  

Quality over quantity

Top tier producers may respond with lower yields and stricter selection and therefore prioritise brand integrity over volume and, although this protects the long-term reputation, it only reduces the total number of bottles released into the market. The result? Whilst climate change can enable regions to make good wine, it is simultaneously making great, age-worthy wines rarer, and therefore more expensive.  

Vintage Dispersion vs. Price

Climate volatility has also paved way for vintage dispersion – whilst exceptional years are still produced, weaker and/or irregular vintages are becoming more common in some regions. From a pricing perspective, this has two effects;

• Top vintages appreciate faster - collectors and investors concentrate demand.
• Producer reputation becomes more critical – consistent estates outperform the broader market.

In summary

Ultimately, this reinforces the importance of selectivity within a portfolio. Why? Because not all wines benefit equally from scarcity, but only those with proven track records, global recognition and secondary-market demand.  

Climate change is having a real impact on scarcity – vineyards cannot be replanted overnight, appellation rules (particularly in ‘investable regions’) limit adaptation and climate patterns will only become more volatile. In practical terms, this results in several long-term pricing outcomes;

• Pressure on release prices as producers offset lower volumes.
• Stronger secondary-market performance, particularly for iconic wines.
• Greater price differentiation between elite producers and the wider market.

This also increases the appeal of wine as a diversifying asset – its value is increasingly influenced by physical constraints and environmental factors,

For investors, the combination of scarcity and climate change underpin some core principals;

• Provenance matters more than ever.
• Data and transparency are key.
• Long-term goals are essential and reward patience.

Unless an investor has buying power with their merchant through their purchase history and relationship with their account manager, fewer are gaining exposure to these assets and the long-term performance they provide. Climate change is only intensifying scarcity of wines and therefore reshaping and reinforcing the investment case for the most sought-after bottles.  

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