Bordeaux Sales Hitting The Wall

The bankers in Bordeaux are rubbing their hands, covertly, of course, about the prospects of picking up bargain real estate at the expense of some great wineries.

The sky seems to be falling, according to reports, on a quarter of the wineries in the world’s greatest wine region.

It's been a tough haul for French winemakers, with exports for all except the ultra-luxe wines dropping 11% this year: Australia, California, Chile and South Africa, once France’s main customers are now producers, aggressive rivals, carving into France’s export markets.

Meanwhile, the robust euro has tied France's hands on export prices and the Iraq conflict has brought U.S. boycotts. At home the French are drinking less wine, down 5% last year, and half what they drank in the 1960s (from a heroic 115 liters annually to 60). Tough times for an industry with $9.3 billion of exports and 300,000 workers.

New drunk-driving laws have had a damping effect. Faced with heavy fines, loss of licence and prison, drivers have cut back and restaurants lost one-fifth of their wine sales. Anti-alcoholism campaigns blocked wine ads and last year half the population drank no wine at all.

Another problem is US wine critic Robert Parker, with a palate for big, fruity un-French wines, whose scores can kill a wine’s US chances. The châteaux that make "Parker wines" sell better and for higher prices.

France’s share of US wine imports fell by half, despite good recent vintages. [Aussie exports hit US$600m last year, second to Italy, a 29-fold increase since 1990. The Aussies have also overtaken France in Britain, the big market for Bordeaux.]

In the first half of 2004, French exports stalled 4.2% in volume, 8.4% in value. Although Burgundy grew, Bordeaux dropped 11% and 25%.

Bordeaux’s performance is partly attributed to the popular 2000 vintage, released in ’03, a hard act to follow. Champagne showed a 14.2% increase on the first half. However, French exports to the UK and US are down 15.3% and 26.8% in value. [Forecasts for production in 2004, meanwhile, are 58.5 million hectolitres, up 20%.]

Apart from the top 5%, Bordeaux's 10,000 small wineries have been hit hard. Prices for the elite wines are up but lesser wines are barely selling, even with tiny margins. And the crisis could force 2,500 estates out of business, according to observers.

"We’re seeing the beginning of the end of the négociant system. It’s crumbling," says Corinne Bonne, owner of Château Meyre, an up and coming Cru Bourgeois in Margaux.

"The small producers have always relied on the trade, La Place de Bordeaux. The big names are still there but they sell their own wines first and forget the rest. Things are very different now, and it’s especially tough in categories like Entre-Deux-Mers and Bordeaux Supérieur."

Corinne is her own distributor in key markets like Hong Kong and Tokyo (her degree is in Asian studies) where she also represents 25 producers from Spain, Italy and Portugal. In Canada, her agent is Gisèle Trubey of Vinplus.

Business is good but she reinforces it with an upscale accommodation sideline offering de luxe suites at the château as a tour base for Bordeaux. "The reasons we bought the estate in ’98, from Lenôtre, the Paris patissier family, were they had made improvements and the old château was perfect as a tourism destination."

In the big picture, however, even if retail prices fall dramatically, it might not help all that much. Grapes cost too much to grow. One vineyard owner told London's Independent his crop costs 5,000 euros per hectare to produce, but fetches 3,000 when sold in bulk.

Well established properties will survive but France’s onerous regulations – based on place of origin – hinder modern marketing and brand creation. Unlike New World wineries, producers can’t use the recognizable grape names – Merlot, Chardonnay, Pinot Noir, for example – on the label and at the same time say Bordeaux or Burgundy.

It’s impossible to match the brand-creation power of less-fettered New World producers: Two Buck Chuck in California just sold its 10 millionth case, at $1.99 a bottle, Yellow Tail from Oz is close behind, Southcorp just launched The Little Penguin, and Canada’s Vincor has had success with Sawmill Creek and, especially, Jackson-Triggs.

Ironically, a new French brand, Bad Dog (Vin de Pay Dog), sourced from the Languedoc, has been created by Canadians, Lloyd Evans and Terry Milne at Vin Passion.

Fortant is a notable example of strong brand-building by an innovatvie French firm.

Against strong international brands, well financed, with heavy promotion, it’s hard for small producers to compete, especially when they’re limited to the production of a finite area.

Production techniques in France, too, are limited to whatever Nature decrees: outlawing irrigation and the use of oak chips in favor of costly barrels.

So, the squeeze is on, and competition and the status quo are likely to crush producers who can’t or won’t adapt to today’s global wine biz.

New efforts are being made to promote France’s good value regional wines. A recent presentation in T.O. premiered 200 wines that would sell briskly in Canada in the $9.50-$35 range. The wines, from the Midi, Rhône, Alsace, Beaujolais, Gaillac, Corsica and Bordeaux had already met with enthusiasm in Tokyo, Seoul, Warsaw and New York and were en route for Moscow.

Sales, Share for Ontario
The story’s the same in Ontario. Here’s an LCBO wine sales summary (by 12-bottle case, with market share in parenthesis) for the 12 months to Aug. 16 vs previous 12 months:

Ontario      2,729,008 (28.72) vs 2,513,774 (28.60) up 5.73%
Italy            1,624,923 (17.10) vs 1,584,733 (17.56) up 2.54%
France       1,520,839 (16.0) vs 1,614,602 (17.89) down 5.8%
Australia   1,201,887 (12.64) vs 910,227 (10.08) up 31.95%
US              817,257 (8.60) vs 821,728 (9.10) down .5%
Chile          470,884 (4.96) vs 439,042 (4.86) up 7.25%

[Share based on % of market when all producing countries are included]

Château Meyre
The winemaking is traditional at Château Meyre, but the innovative owner does her own international distribution/marketing and has established a successful wine-tourism destination.

"Our enologist, Jacques Boissenot, does everything by the book, including racking (clarifying) the wines using the light of a traditional candle (to monitor the sediment) and fining with egg whites!" says owner Corinne Bonne. Boissenot, a Left Bank specialist in Bordeaux, known for the finesse and elegance of his wines, is also enologist for Margaux and Lafite, Latour, Margaux and Palmer. He was the business partner of legendary Bordeaux enologist Émile Peynaud.

"Bordeaux has always been resistant to women in the trade and I was not top of Jacques’ list but he was sold on the Meyre project itself and now Jacques’ son, who’s more my own age, is preparing to follow on in the family business, which is great.

"As opposed to many estates owned by out-of-towners, we wait patiently and monitor for perfect maturity before picking. I spend lots of time in the vineyard and we employ the same picking team every year, older ladies from nearby villages.

As for the wines themselves, the ’96 Meyre is lovely now and the ’98 is starting to drink well. The 2000, similar to the ’98, will benefit from three or four years of cellaring and last about twelve years.

The 2000 is tauter than ’99, which was a more successful Merlot rather than Cabernet vintage, perfumed and voluptuous, smoky and plump. [It’s showing mocha, plum blueberry and smoky cedar. Delicious, due here in April at $22. "2000 was an easy vintage to make! The color was intense, with terrific sugars and perfect acidity levels. It was so good, that the winemaker and I just stood there and laughed and said: ‘What do we need to do"’ The ’01 and ’02 are also very good."

The tiny-production L‘Enclos Gallen, "our fun project", is a more upscale Appellation Margaux, and some 2000s are still around from the June release. They’re marked down from $59 to $49.

The 2001 Gallen is a vibrant claret with intense mocha-cassis and subtle raspberry notes and oak nuances (91). It’s 80/20 Merlot/Cabernet Sauvignon.

Check out the wines and the beautiful Château at www.Châ

New World Finesse At Napa’s Cakebread
For finesse and consistency, Cakebread Cellars’ Napa Cabernets are hard to equal. And, happily, they’re defying a powerful New World trend towards ever higher alcohol.

Over 14% is commonplace in California. From 1971 to 2001, the average in Napa rose from 12.5% to 14.8%! But, says Karen Cakebread: "Our Holy Grail is to get the alcohol lower, for elegant wines you can enjoy with food! It’s all about balance.

"Long hang-time (late picking) dehydrates the berries without proper grape maturity. We think removing alcohol in the cellar hurts the wine, and our focus is on maturity at lower sugar levels. Then, in our winemaking, we never allow the oak to overpower the fruit.

"Even in a hot year, we’ll have high sugars not from dehydration but thanks to grape maturity. We’re not looking to move from 14% to 11% but a .5% drop would be a success to us. We’ve been moving in this direction over the last three years."

The winery uses aerial imagery to harvest the most uniformly ripe sections of a vine block at any one time. Proper alignment of the rows to the sun’s path puts equal light on both sides and uniform shoot density also helps. Soils are kept healthy without herbicides or chemical fertilizers. "We use fish emulsions and liquid compost, and mechanical methods to control the weeds. This keeps the microbe population active and diverse. Healthier plants ripen the fruit earlier," adds Karen.

Karen CakebreadMoisture is measured to 5 feet down and judicious irrigation keeps the berries small for better flavors and maintains the vines at full output, without drought spikes, to mature the grapes early. The fruit comes from Oakville, Rutherford and the Stag’s Leap area from growers who replanted during the ’80s/’90s when the phylloxera infestation hit. They get premiums to limit the crop through "green harvest". "Even so, pruning off good grapes, for them, is like seeing dollar signs hit the ground."

The pickers use small baskets to avoid squashing the grapes en route to the press house. In winter, fans, space heaters and helicopters guard the fruit from frost.

At Ontario’s Deerhurst Resort in Muskoka for a rare vertical tasting of her Cabernets, Karen explained that 5% of Cakebread’s 95,000-case production goes for export – mainly to top restaurants where travelers can find it. Except for the 2000 "we drank it all!".

The ’94 Cab shows rasp-blackberry, blackcurrant aromas with a palate of bacon bits with sour cherries, and soft tannins. A balanced, still youthful wine from Cab Sauvignon, 90%, Merlot, 6%, Cab Franc, 4% and Petit Verdot, 1%. "We serve the young wines last so they won’t blow out your palate."

The ’95 has youthful color, and a cherry-apple bouquet with a vegetal note. There’s less black fruit, more new leather, earth, mushroom, and the tertiary aromas of a more evolved, softer, rounder wine (90). Cab 93%, Merlot 7%.

"That was a wild ride of a vintage," recalls Karen. "Frost and hail in April/May when the tender buds got whacked, though we ended up with a warm fall and a large crop!"

The ’96 is also youthful, with whiffs of elderberry and as you swirl it the wine reveals mocha, jam, fruity wood spices and a kind of dustiness, Cab 78%, Merlot 15%, Franc, 5%, Syrah, 2%. Refreshing acidity, a good year (89).

California ’97 is widely considered the vintage of the decade, a hot year with very ripe wines. The Cakebread Cabernet, Cab 83%, Franc, 15%, Merlot 3%, is super-ripe and jammy with big tannins, wood spice, and high alcohol, 14.2% (92).

The much-maligned ’98 turns out to be a vintage to remember. An El Niño year, cool and wet, rescued by a miracle October. "It was a slow-mo ripening, we were all sitting around worrying and then, suddenly, we were very happy. The ’98s were panned by the media but the winemakers all love it. It’s more evolved than the ’97, more elegant, better balanced (93)." Cab 78%, Merlot 15%, Franc 7%, and 14.2% alc.

The ’99, late picked after a long cool season, shows deep color, spicy black fruit notes, plum, black cherry, oaky toasty notes and racy acidity, and it’s still a baby (89).

The ’01 survived frosts and a mild summer to become delicious, showing black cherry, cedar, currant, elderberry and a spicy smokiness with good depth (93). Cab 78%, Merlot 16%, Franc 4%, Malbec 2%.

Meanwhile, the ’04s began with "summer in March and April!", a mild summer with few temperature spikes and the jury’s still out.

For more, or Lifford Agencies, 416/440-4101, Currently available and highly desirable: Sauvignon Blanc ’03, $44.30, Chardonnay ’02, $66.54, Cabernet Sauvignon ’01, $99.90. En route, Merlot ’01, and two 2000 Cabs, Three Sisters and Benchlands.

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