British Champagne? The U.K.’s wine industry is an unlikely winner as its European peers reel from extreme weather

As dynamics in the wine industry begin to change, one country has become a surprise winner. Britain has had a long viticulture history, some estimates going back to the 11th century. Still, it never rose up the ranks as a wine capital alongside its European peers, which offered higher quality and more variety—and Britain’s less-than-ideal grape-growing weather was one reason why. 

As global temperatures have increased, however, the conditions in the U.K. have become better-suited to grow certain grape varieties, paving the way for a sprawling winemaking industry. Warmer temperatures have enabled better ripening of Britain’s grapes and therefore, better qualities of wine. 

“Historically, English wine hasn’t had a very popular or positive reputation,” Jonathan White, marketing director at Gusbourne Estates, which has vineyards in Kent and West Sussex, told Fortune in an interview. The property planted its first vines nearly two decades ago. 

“The wine just typically wasn’t very good and wasn’t produced by wine professionals and fantastic viticulturists and viticulturalists who knew what they were doing,” he said. But, White added, planting the right mix of grape varieties, with help from warmer temperatures, has given the winemaking business its new-found fame.  

“Interest in the British wine sector is as strong as we can remember–over the past 12 months the number of calls we have received from people interested in either buying a vineyard or establishing a new one has tripled,” Nick Watson, the head of viticulture at Strutt & Parker, a U.K.-based real estate advisory, wrote in a June report. 

The number of vineyards in the country have risen by 80% in the last six years to over 900, while the acres in production have seen a similar growth, the group found. Even though that dwarfs in comparison to some of the EU’s wine capitals, Britain is carving out a space for itself in an industry long dominated by the historic hubs.   

Boom and bloom

The impact of climate change on the wine industry has been gradual, yet significant. In France, for instance, erratic weather patterns have been reshaping the wine industry for a few years now, altering the quality of grapes yielded. And last month, data published by Copa-Cogeca, a European farming lobby, saw wine harvests drop 8.6% and 11.92% in Portugal and Italy, respectively. 

(Don’t worry about wine shortages, though. There is a long-standing glut of European wine, known as the “wine lake”. This year, the French government said it will set aside $200 million to destroy excess wine and offer the proceeds to producers amid collapsing prices and falling wine demand.)

While climate change is nothing to celebrate, the slow decline in wine production in some regions has been Britain’s gain. Linda Johnson-Bell, a wine expert and the founder of consultancy The Wine and Climate Change Institute (TWACCI), told Fortune that Britain’s climate now resembles that of Bordeaux or Champagne in the 1970s and 1980s. 

“Now, it’s just a potluck, every month brings a new disaster,” she said in reference to those French regions today.  

Aside from climate conditions, the informal nature of regulation has helped the British wine industry expand. Europe follows specific regulations governing the production of wine, including the type of varieties that need to be used to make specific formulations and the use of certain caps on sparkling wine bottles. 

“We don’t have those constraints,” Strutt & Parker’s Watson told Fortune. Earlier this year, the U.K. said it would cut out the EU requirements on wine production, which it said were stifling innovation, and it could unlock £180 million in the local wine economy. 

“Good planting land is relatively cheaper than it is to buy in the established wine growing regions of the old-world wine producers. So, it’s quite attractive from the point of view of cost of entry and the potential to produce good quality wine,” Watson said.

The shift in temperature in the U.K. has been especially helpful for growing some varieties, and Chardonnay, Pinot Noir and Pinot Meunier—the three grapes used to make traditional Champagne—are currently Britain’s most-planted, according to data from industry body WineGB.

“As the climate changes there’s an opportunity right now for excellent sparkling wine,” Martin Lukac, professor of ecosystem science at the University of Reading, told Fortune. He added that this has been lucrative for those in the winemaking business as margins are higher in the sparkling varieties over their still counterparts. 

“Farmers are the same as any other business; they have to make a profit in order to sustain their livelihood,” said Lukac, adding that the returns have piqued interest in recent years. WineGB expects wine production to double in the next 10 years from 12.2 million bottles in 2022 to 24.7 million in 2032.

Even though the U.K. is a fairly new player in the mainstream wine industry, it doesn’t compete in the market for cheap or low-quality varieties of the drink. TWACCI’s Johnson-Bell told Fortune that winemakers in England, Scotland and Wales are not interested in supermarket wines.

“A lot of them are artisanal, they don’t want to do mass-produced, commercial [wine],” she said. 

Gusbourne is one example—the estate keeps its yield targeted and low to ensure the quality of wine isn’t compromised. 

“We’re very focused on the art of winemaking being really craft-led,” Gusbourne Estates’s White said, adding that Gusbourne valued quality over quantity. The estate exports about 30% of its wines to 35 international territories including Norway, Japan, and the U.S. Britain is now also home to several award-winning wines.  

Making every vine count

Being in the wine business is no easy feat—it takes years of tending to vines before their grapes can be harvested and turned into the alcohol ready to consume. The work is also incredibly capital intensive, Watson points out, and involves expenses including the buying and managing thousands of acres of land to make sure it’s suitable to grow vines. 

“By the time you overlay all these criteria, actually the areas that are perfect for viticulture are quite a lot smaller than one would imagine,” he said. “So the cash flow is very demanding and therefore it’s quite an expensive business to get into.” 

The phenomenon catalyzing the British wine industry’s growth—climate change—is fast evolving. Johnson-Bell, who works on projects internationally surrounding climate change’s impact on wine production, sees a huge window of opportunity, but also one that’s shifting given the rapid pace of climate change. 

“The biggest problem here is that the window during which a grape variety is viable is getting shorter and shorter,” she said, adding that she’s been advising clients to grow grape varieties that can adapt to warmer weather. “The real issue will be how to future-proof this industry.”

Despite these hurdles, British wine is in a better place than it’s ever been. Exports and foreign interest have been steadily growing—as has recognition for the industry. 

“The U.K. viticulture has become a much more professional, well capitalized, well invested business,” Watson said. And as the weather conditions continue to provide fruitful wine yields, the industry looks poised to flourish. “We are now very capable of producing excellent quantity of quality grapes.”