In Bordeaux, the wine presale system is virtually bankrupt

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Sophisticated sales methods brought enormous wealth and prosperity to the almost mythical wine region, but now Bordeaux is in turmoil; has been for some time. Indeed, the world’s most famous wine region is no longer succeeding in marketing their red wines. For now, this does involve the somewhat simpler Bordeaux wines – AOP Bordeaux and Bordeaux Superieur. But it won’t be long before the more luxurious segment, the premium wines, have to go too. A wine region in decline.

Serves you right

And the blame for the crisis, according to the wine producers, lies, of course, with the consumer. Their changed drinking and buying habits would be the cause. But is that right? Or is it different, and does the sector lack self-reflection?

The wines of the big famous châteaux such as Margaux, Latour, Mouton Rothschild and Haut-Brion have been selling their wines through merchants for decades. And through pre-sales, the so-called en primeur wines. You pay now, often at a substantial discount from the final sale price, and get the wines delivered a year and a half to two years later. Then another year or so in your own wine cellar to reach maturity, and you make good friends and acquaintances with a unique, often rare, because no longer purchasable bottle of precious Bordeaux.

The pre-sale system was devised by and for the winemakers. They receive their money shortly after the harvest and are assured of purchase. It gives consumers a sense of exclusivity because the wines are already reserved and it remains to be seen whether, by the time they hit the market, they will still be available in stores. Indeed, scarcity makes desirable.

A beautiful system that brought great prestige and wealth to the Bordeaux region. But it is over. Consumers no longer have a wine cellar, no longer want to pre-sell and do not want to wait another five years for the wine to be drunk. Pre-sales have had their day.

The consumer rules

It is possible that the producers saw this development coming, but did not anticipate it. Arrogance or “it won’t happen that fast”? Who knows? In any case, it seems they were taken completely by surprise.

On top of that, needs have changed. A major – global – shift from red to white. German wine magazine Vinum recently reported that for the first time, white wine and rosé together account for more than half of global wine consumption. The same can be seen in France. There, too, there is a clear shift from red to white. And yes, Bordeaux is predominantly red.

What comes into play is that consumer consumption behavior has changed. That is constantly changing anyway. Meal times are more unstructured, fewer and fewer French people drink wine with lunch. Family compositions are smaller and few French people open a bottle of wine on their own. In addition, what is also hampering wine sales in France is the stigmatization of wine by the French government: the changed approach; from moderation to that of abstinence.

And on top of that, French wine consumption has fallen from 120 liters per person per year over the past 60 years to less than 40 liters per year by 2020. Then it comes as no surprise that less wine – even in Bordeaux – is being sold, right?

But there is another interesting trend. NoLo: no or low alcohol. Consumers want less, little or even no more alcohol in drinks and in wine. Unfortunately, climate change is not helping wine producers do this. In fact, it is actually working against them. Because of more sugars in the grapes, alcohol percentages are skyrocketing. In Bordeaux, alcohol levels of 14.5% or 15.0% have become the rule rather than the exception. Winemakers are having a hard time keeping the wines from becoming unwieldy and plump. Another reason not to buy Bordeaux.

Gen Z – the young consumers born roughly between 1997 and 2012 who are already legally allowed to drink alcohol – have a very different relationship to alcohol than their predecessors, the Millennials, according to market analysis firm IWSR . In a recent survey (May 22, 2024) , ISWR sees that 63% of young people in Japan, 54% in the U.S. and 44% in Canada, claim not to have consumed alcohol in the past 6 months.

The end of an era

Emeritus professor of philosophy Dwight Furrow and wine connoisseur writes about the end of an era in his Jan. 2, 2024 column. In doing so, he quotes Jeff Seigel – who, by the way, is quitting his daily wine blog. Seigel writes about expensive wine that appeals primarily to older wine drinkers. Younger people don’t drink enough to make up for the losses in the wine market. According to Siegel, the wine industry has very deliberately pursued a strategy of premiumization. Essentially, the idea was that people want better and better wine and are willing to pay more for it. A Furrow friend responded by saying that “wine will be sold to baby boomers until the last one is dead.

Much of wine drinking was linked to French, Spanish and Italian cuisine, because that was pretty much the image of the wine world. But … young people are flying all over the world and have come to know a multitude of food cultures. And wine doesn’t always fit in with that by a long shot. Furrow sees the end of an era because it is becoming very difficult to get the younger generations to become sufficiently attached to wine.

In addition, it seems that consumers are going for less but better and immediately drinkable wine. This ties in with my article that the British save on going out and prefer to enjoy quality at home.

Pride again comes before a fall

These are all market movements that apparently passed Bordeaux by. And the traditional and conservative French culture is not helping either. Of course, there are wineries in Bordeaux that now make wines that can be drunk earlier. Many major wineries also already have a “second” wine. These often cost half of their top wine. This way they are still trying to save the market a little bit. But whether that is possible?

The French government has allocated 220 million euros to save the Bordeaux region (160 million of which, by the way, comes from Brussels but that aside). Vintners can grub up unprofitable vineyards for 5 to 6K per acre and surplus wine is made into alcohol.

Pre-sales, sales through trading houses, sky-high prices, the industry has killed itself. They are the last convulsions of a system that is actually already bankrupt. Once again, pride proves to come before a fall. So Burgundy, Champagne and Piedmont: be warned. Maybe you can turn the tide, but you have to start now.

More than hairline cracks in the Bordeaux bastion

In the first half of 2024, several major Dutch importers of wines from Bordeaux have sharply reduced their prices for En Primeur wines. Château Sociando-Mallet’s 2023 wines from Saint-Seurin-de-Cadourne, for example, are already 22% cheaper than those from 2022. Château d’Issan of Margaux reduced prices by 27%. And that of Château Cos d’Estournel from Saint-Estèphe as high as 38%! The end is not yet in sight. We will see if the Bordeaux is able to reverse the decline.

Brisant article in Wine-Searcher of July 16, 2024

The article in Wine-Searcher is about the failure of the 2023 Bordeaux En Primeur campaign. These include the imbalance between producers and négociants, price problems, changing consumer preferences and significant wine stocks.

You can read the full article here.


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