Europe's wineries battle to survive as extreme heat hurts production

This year'swine harvest is in full swing on the perennially popular Greek island of Santorini, but for local winemaker Yiannis Paraskevopoulos, the prospects do not look good.

Extreme temperatures are threatening production of the indigenous Assyrtiko grape, critical to the island's internationally recognized fine white wines. Last year's output at Paraskevopoulos's Gaia Wines was around one-third of 2022 production. This year's harvest is estimated to fall to one-sixth of 2022 levels.

"We thought we had seen the worst. But no, we hadn't: 2024 has gone beyond all expectations," Paraskevopoulos told CNBC over the phone.

According to Gaia Wine's 2023 estimates, Assyrtiko could face extinction by 2040. Now, that timeline looks optimistic.

"It brings the trend line even closer to the present," Paraskevopoulos said.

The Assyrtiko grape is not alone. Global wine production fell 10% in 2023 to 237.3 million hectolitres, the lowest level in over 60 years, as "extreme climactic conditions" weighed on harvests, according to the International Organisation of Vine and Wine (OIV).

The issues facing wineries prompted the European Union to last month launch a high level group on wine policy to discuss the "challenges and opportunities for the sector."

Production in Greece plunged more than one-third in 2023, while output from Italy and Spain dropped by more than one-fifth, according to OIV, as wineries in southern Europe increasingly experienced adverse weather effects including heavy rainfall, drought and early frost.

Such weather events can impact not only a given year's harvest but also production in following years.

"We are absolutely affected by climate change," a guide at Castello di Volpaia told CNBC during a recent tour of the 12th