Crisis in Bordeaux

The Grandfather of wine regions is teetering on the brink of financial ruin, and it’s going to get a whole lot worse before it gets better. Bordeaux is the greatest and most revered of all the great wine regions of the world. Ensconced in history, anointed by poetry and honored by kings, Bordeaux is the stuff of legends. But now the region is facing its greatest crisis since the phylloxera louse nearly destroyed it in 1878. How does a place that has been producing wine since the third century B.C. get to such a point?

Wine sales in Bordeaux are down some 28% since 2002. Adjusted to $U.S., a barrel now sells for half of what it did just three years ago. Some estimates put the number of growers going out of business this year at 1,000. For the first time in history surplus wine classified A.C. Bordeaux, the highest classification for a region, can be sold for industrial distillation. Bordeaux wine will be distilled and used for fuel and the pharmaceutical industry. This practice has gone on in France for many years, thus guaranteeing income from wine that will not sell, but never in Bordeaux. The thought is sacrilege. But tough times call for tough measures.

Bordeaux for years has been a victim of its own fame. History has bred a strict legal framework and a firm resolve against change. Notoriety has brought rampant overproduction and complacency. Add this to factors such as rising global competition and declining national sales and what is left is a rapid loss of a market share. In the coming year the situation will worsen. Much of the 1999 through 2002 vintages still remain unsold while the lauded 2003 vintage awaits in barrel. The 2004 crop was one of the largest in recorded history. Where will all of this wine go?

How is this possible when the great Châteaux charge a fortune for bottles that haven’t even been released yet? While there are 10,000 growers in Bordeaux, these sky high prices relate to only a select few, called the “golden circle.” The rest are left to deal with archaic laws regarding advertising, varietal selection and winery management. Production has increased while demand has decreased. Countries such as Australia and the U.S. have taken a bite out of the French market. Worldwide there is an ever increasing desire for fruit-forward “new world” style wines. Winemakers in Bordeaux have relied on the name Bordeaux instead of embracing new techniques and ideas for too long.

New world wines rely on more than just style. Marketing has become a crucial point to wine sales. Large firms are recording record sales with so-called “mega brands” such as Yellow Tail or Blackstone. A mere five companies supply 80% of Australian wine to the rest of the world. In the new world Blackstone is a household name. The grape varietal and region are printed in big letters right on the label. Compare this to hundreds of small Châteaus with hard to pronounce names, no grape information and erratic levels of quality. What you have left are dwindling sales and wines that are not consumer friendly.

The problem starts at home as sales in France have dipped dramatically in recent years. Pundits attribute this to tough new drinking and driving laws as well as an overall drop in wine consumption. Per capita wine consumption in France is roughly half of what it was in 1961. Beer is the drink of choice among the younger set as wine is associated with older generations. These problems are not limited to Bordeaux. Burgundy is thought of on a global stage as too small and pricey. The Loire too few good vintages and the Beaujolais Nouveau is the loudspeaker for the Gamay grape, not the great village wines. Only Champagne has seen an increase in sales.

Global economic and political factors are to blame as well. Sales of French wine in the U.S. plummeted during the ideological standoff over the war in Iraq. The rise in value of the Euro has made the price of lesser vintages the same as the great ones. Wines sold in massive numbers have taken over in grocery stores all over the world, as consumers turn to inexpensive brand name wines.

So what is left for Bordeaux? Is this the demise of the great Château? Hardly. There will always be a clamor for the classified growths of Bordeaux, even though the 2003s are priced at double the 2002s. But lean times are ahead. There will be consolidation of vineyards, liquidation of stocks and merging among the small producers. A new philosophy will need to set in. A philosophy of catering to the consumer in the world market. New ideas on marketing, blending and labeling will need to be implemented. The French government will help with mandates on crop size, subsidies, tax breaks and the removal of unproductive vineyards. The market for new world wines will balance itself out, and wines with earth and a sense of place will flood back into prominence. But without aggressive marketing and large brand success this will only help a little. Changes in France need to be wholesale and intensive.

This may be where the salvation of Bordeaux lies. The large firms can afford to wait for rock bottom when the vineyards will be at fire sale prices and change will come quickly. Not so good for the small growers, but better in the long run. With each successive crisis in Bordeaux has come a better and more unique crop. From these troubled times a new Bordeaux may come. A Bordeaux that embraces new ideas and combines them with storied history and winemaking expertise. A stormy dawn lay on the horizon, but a beautiful day may come from it. Any region so perfectly immersed in experience, soil and climate is sure to rise from the ashes and triumph once more.

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