Bad times in Bordeaux

[malcolmjolley]

From the NY Times. Says big names are doing fine from the 2003 vintage, but the smaller ones are losing the farm.

[Brad Ballinger]

The linked article is specifically about Bordeaux, but I think there are implications beyond Bordeaux, not all of which are mentioned in the ariicle.

These wine producers and grape growers are the casualty of other trends in the industry, IMO. In particular, the consumers who buy on ratings and preconceptions, and those who feed that consumer behavior, are adversely impacting these producers and growers. The industry has become more competitive. I doubt most producers and growers anywhere in the world would view other producers and growers as competitors, but the marketplace isn't playing by those rules. There is no longer room for everyone in the sandbox.

As some of the larger wineries buy smaller ones and as any get bought out by mega-conglomerates, it's all about the money.

You can see a parallel phenomenon in the restaurant business, in nearly any retail sector, in agribusiness in general.

Some reactions to points in the article itself...

They talk with awe of the explosion in the American market of the Australian label Yellow Tail, whose sales in the United States have gone from 200,000 cases in 2001 to a projected seven million this year.

People can't be buying this for quality. There's no way you can get quality with a 7M case production.

The abyss between the generic business and the tight, small world of the famous classified growths is vast. "There are two Bordeaux," said Jean-Guillaume Prats, the managing director of the renowned Château Cos d'Estournel, in the commune of St.-Estèphe. The top chateau owners, he said, "sold out our 2003's at outrageous prices, while right next door there are people who are not surviving." Staring glumly out a window at the chateau's vines stretching down to the muddy Gironde River, he said one case of his wines sold for as much as 100 cases of generic Bordeaux. (In New York, futures for the 2003 Cos are now bringing $165 a bottle.) And even then, he said, "there is no interest in the generic wine."

Generic wine, being wine labeled simply as "Bordeaux<" generally isn't exported -- people outside of France generally look for something more, usually with a rating (and these wines don't get rated). That means they have to sell more inside of France, where consumption is down.

Why higher prices would help when demand is already low is not clear.

One reason might be the perception issue -- higher prices give a perception of higher quality wine, as evidenced by the pricing practices of a majority of newer labels coming out of California. You are either going to make money on higher margins or volume. And small producers don't have a choice on the latter.

The issue is certainly mor complicated. In Bordeaux, there are eral estate loan issues. In France, there are many factors driving down consumption and exports. But I think we also have to look to consumerism.

[CtznCane]

While political boycotting may have some effect on France's lower end bordeaux market sagging, perhaps it is not the quality of the Australian imports or California wines so much as the perceived value and quality per dollar spent. The upper tiered Bordeaux's are insanely over-priced. Yes people will buy it if money is no object and probably a good deal of those will not really be wine lovers.

The overly inflated prices on the top-end probably has a great deal to do with the perception that an affordable generic Bordeaux is just trash. That part of it is a shame as just because it is a generic Bordeaux does not mean it can't be good. Raising its price to imply it is better will simply put it beyond where those looking for a good value will find it to be one. Certainly a catch-22 situation for sure.

I don't know of any statistics but how much, if any, of a drop in sales in the US have they had over the past years/decades? Also, what have they done to cultivate this market? What have they done to heighten the consumers awareness or to fuel their desire to purchase French wine?

With more and more domestic wine to choose from, not to mention the Austrailan wine, and now (for those of us in Calfiornia) wines from other states it becomes more confusing has a clear idea of what they are looking for. I can only view this issue from a Carlifonia/East Bay perspecitve when asking myself where I"d go if I did want to find some better low end Bordeaux purchases.

The only places I know of off the top where I would trust there judgement are Kermit Lynch Wine Merchants and Paul Marcus Wines. Now 20 years ago there were actually more people whom I could go to and trust to point me in the right direction. While I'm sure there are probably more wine shops I"m not aware of, this is my perception and in an area that has a lot of good resources. I can't imagine how much more limited it would be in other areas of the country.

You can't go to the local Safeway or other large markets to talk to a real butcher and find a good steak anymore(Damn, California and we don't even have a Byerly's) so why should there be someone to give good guidance for lower end French Bordeaux's? I think the French's big mistake though has been in taking a holier than thou attitude about being superior to California and Australian wines rather than trying to cultivate the market based on their own merit.