As B.C. vineyard owners face financial strains, a surge in winery sales emerges amidst the frosty aftermath of crop failures.
In the wake of two catastrophic years for wine grapes in the Thompson Okanagan, some believe the industry is no longer viable. They are putting up the “For Sale” sign.
An extreme cold event between January 11 and 15 wreaked havoc on the region’s vineyards, with temperatures plummeting as low as -27°C, destroying the buds destined to become wine grapes.
Losses for the B.C. wine industry are near 100 percent, except for roughly three percent of grapes grown in the Lower Mainland and Island regions.
Last year, a similar cold snap destroyed roughly half of the crop and many vines were severely damaged or killed.
“People are reeling; it’s devastating news,” says Miles Prodan, president and CEO of Wine Growers British Columbia. “For all intents and purposes, we’re not going to have any wine grape crop this fall.
“Without grapes, you can’t make wine.”
Although Prodan admits the industry faces a daunting challenge, he also stresses, “While this may be the collapse of the 2024 vintage, it is not the collapse of the B.C. wine industry.”
B.C. Minister of Agriculture and Food Pam Alexis, shares that sentiment.
“In the years ahead, I believe B.C. winemakers will continue making world-class wines, enjoyed by locals and those visiting from near and far,” she says.
Sustainability-focused Off the Grid Organic Winery is one of several wineries currently up for sale in the Okanagan.
However, grape growers, wineries, suppliers and distributors currently face significant revenue losses. The complete loss of the crop is calculated to result in a $346 million loss to growers and wineries, another $99 million to support industries, and an untold amount from job losses that will occur as work dries up for farm workers, winemakers and hospitality staff throughout the region.
The wine industry is among the most significant drivers of tourism in the Okanagan and Similkameen Valleys. Prior to the pandemic, the Okanagan Valley alone logged 1.2 million wine tourists in 2019, which fell to just 254,000 in 2020 during the COVID-19 lockdowns. Those numbers were recovering, but crop failures combined with the 2021 heat dome and devastating wildfires over the past few years have dampened that part of the business.
Experts in agriculture say the shift in weather patterns due to climate change is prompting many winery owners and growers to rethink their future.
Realtor, Scott Marshall, who specializes in agricultural real estate and is part of a fifth-generation farm family, says some people are selling their wineries and vineyards because costs are rising and revenues are being crushed by crop failures.
“I have multiple wineries listed right now, and I know there are more than 40 wineries for sale throughout the Central and South Okanagan,” he says. “That number is projected to increase to closer to 80 as the year goes on.”
Marshall says owners face a triple whammy of factors that will drive some out of the business. The most significant is crop damage and reduced overall production. Still, farmers and wineries also face higher interest rates, increasing their debt payments. Finally, many are heavily leveraged as they borrowed to get through crises like the pandemic and the crop damage in 2023.
“When you’re looking at a year when the entire crop is wiped out, that can be the tipping point where being in the wine industry just doesn’t make sense anymore for people in that position,” says Marshall.
Yet, he shares the conviction that the 2024 crop loss won’t spell the end of the overall industry. He believes that while some operators with fewer financial resources behind them may decide to sell and move on, large operations with significant reserves will likely take advantage of falling land prices to snap up some of the best vineyards in the region.
For example, when the organic vineyard at St. Hubertus Estate Winery on the South Kelowna Slopes went up for sale, it immediately attracted multiple buyers.
Marshall foresees a general consolidation in the vineyard and winery industry.
“Basically, the smaller guys who don’t have financial firepower, who’ve gotten beat up over the last few years, I expect some of them to exit the industry,” he says. “Some of the bigger guys in a good financial position will be on the lookout for deals on good vineyards and frankly, a good deal of vineyard land should be coming up for sale, especially if there has been a full wipeout.”
Those considering replanting will have the support of the B.C. government. The agriculture minister says the message she’s bringing to growers and winemakers alike is that the province will stand behind them.
“I’ve been meeting with representatives from B.C. wineries to let them know we are committed to working collaboratively with them so we can ensure their long-term sustainability and success, which is the future I see for them,” says Alexis.
Included in that support, she says, will be money for a replant program.
“As part of our government’s historic $200 million investment in B.C. food security in 2023, we are working hard to develop programs that support innovation, climate resiliency and increased production for all crop producers in B.C. This includes a perennial crop renewal program to help revitalize the tree fruit and grape sectors with projects that remove unproductive or damaged crops and replace them with new varieties that are heartier to a region’s climate conditions.”
On March 12, the ministry announced a $70 million replant program.
Last year, the province also provided $27 million in production insurance claims for grape growers for the previous winter’s cold damage.
Alexis says the government is convinced the industry will not only survive this crisis but will go on to thrive.
“There is no doubt producers are currently facing challenges in the wake of a changing climate — and those losses have been significant both in the vineyards and for the people working in them — but I also believe, without a doubt, we will overcome the challenges by working together.”
