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Bordeaux vintners rethink business model

Bordeaux vineyards’ harvest has started in the grey. Sombre weather reflects the mood of many vintners as an economic crisis hits small producers much harder than top names.

Since the start of the new millennium, the world’s best-known wine-growing area is suffering from overcapacity, the rise of new producers such as Chile, South Africa and Australia and lower consumption in France.

If at some vineyards the crisis is passing by the chateau gates, many more modest producers have difficulty making ends meet. Big Bordeaux wines, which make up five per cent of the vineyards, may be the strong trees that hide a miserable forest.

“There is a decline in buying. The fierce competition with the ‘New World’ wines means that even for the prestigious names nothing is for granted,” said Alain Raynaud of Chateau Quinault-Lenclos at Saint-Emilion.

In nearby Medoc, the situation is similar. At Chateau Meric, manager Pierre Laroche admits that with just 40 acres of vines, the effects of the crisis are tangible.

“Since the fall in sales at the start of 2000, we have returned to a level of sales volume that is correct but it is on the prices that we are feeling most of the negative effects,” Laroche said.

The reaction, he said, had been to modernize production and work on quality – raising costs. The uprooting of vines – nearly 4,000 hectares between 2005 and 2007 – and the distillation of some wine from the 2005 and 2006 vintages into liquor have allowed the sector to find some economic balance.

“We have absorbed our excessive stock and the situation is healthy again,” said the president of the CIVB Bordeaux wine association, Alain Vironneau, in springtime.

But in smaller vineyards, where the sale in big volumes is more important, the sentiment is different.

“The crisis started in 2004 with a barrel of 900 litres of red at 844 euros (US$1,147), with a yield of 58 hectolitres per hectare. In 2007, we had 950 euros per barrel with a yield of 50 hectolitres per hectare,” said Patrick Vasseur, secretary general of the FDSEA Gi ronde growers association.

“Many have either stopped, or pulled up the roots, or have taken a second job on the sides. One survives, but for how long?” he said.

FDSEA reckons a third of the growers in the Gironde have problems and 1,000 of them have gone since 2003.

Wine traders in Bordeaux, however, are more confident. Allan Sichel, president of the Bordeaux dealers’ union, said he believes the future lies on the export markets as world wine consumption remains on the rise.

“We’re getting close to 1,000 euros per barrel in Bordeaux red, and that is the price of the equilibrium. Three years ago we were at 750 euros.”

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