Once the darling of the wine world, Bordeaux now looks tired and some might even dare to say, “passed its prime”.
This year, Bordeaux looks particularly forlorn even with gradual cooling down of its En Primeur campaigns with previous vintages. Slowing demand from China, unrest in Hong Kong and punitive tariffs in the US added to its lengthening list of worries.
In China, the profitable and fast-growing wine market, wine merchants are cautious about buying amid slowing economy and prolonged US-China trade war. Last year, Bordeaux wine exports to China dropped by 31.02% in volume and another 21.64% in value, according to official figures released by Business France.
Even in Bordeaux-loving and tax-free Hong Kong, the famous French wine region is struggling. Many merchants in the city spoke of the year as the worst year since 2008, as monthslong anti-government protests virtually upended on-trade wine sales and dented off-trade sales. An increasing number of merchants are also complaining about dwindling profits from selling En Primeur compared with selling Burgundy.
In the US, Trump administration slapped 25% punitive tariff on French wines except Champagne and sparkling wines in mid-October, compounding the woes for Bordeaux.
Winemakers who are usually not in direct contact with negociaint and sales are starting to feel the knock-on effect of a cooling Bordeaux market.
“As a winemaker, we are not directly exposed to the market variations because we have negociants which are like little buffers for us, but now it’s starting to impact our market,” admit Laurent Lebrun, winemaker at Château Olivier in Pessac-Léognan, when interviewed at this year’s UGC tasting for Bordeaux 2016 vintage in Hong Kong.
“From the En Primeur, there’s a lack of interest and lack of visibility in the evolution of the market not just in China but in the US, and political unrest everywhere,” he fears. “US market is difficult with the tax now and the Asian market generally speaking is also challenging with China and Hong Kong. Economically speaking it’s a bit uncertain.”
The latest release from Bordeaux available on the market is 2016 vintage, and 2017 and 2018 vintages are already sold to negociants. This means, it leaves limited room for Chateaux to manoeuvre stocks even if they want to hold back some more bottles.
“We already sold the wines to negociants to En Primeur, but it will slow down their business that’s why I am saying there’s a ripple. Negociants will feel the economic drawback first, and then knock on effect. we are not in the front of the business. We just keep drink wine…and hope for the best,” says Lebrun from Château Olivier.
The new rule might propel some chateau to increase alcohol contents as the tax is only levied on wines below 14% abv when selling to the American market. “Depending on their US market, if they really need to sell and don’t have other markets to sell, they probably will,” speculates Cynthia Capelaere, manager of Château Villemaurine in Saint-Emilion, which produces only 3,000 cases a year.
For the fifth growth estate Château Grand-Puy Ducasse in Pauillac, the winery dismisses the idea of tweaking alcohol level to suit American market, though most of its wines are below 14% alcohol level. “It will probably affect us, as we are below 14%. America is a very big market for us as well, we will just have to invest in the market,” David Launay, sales director at Château Grand-Puy Ducasse.
“For us, we want to control alcohol and stay faithful to Bordeaux, which is about balance,” he continues, refuting the idea of manipulating alcohol to fit certain market.
At Château Gazin in Pomerol, its winemaker Mickaël Obert suggests it’s not a matter of manipulation but due to climate change wines tend to have higher alcohol content naturally.
“From the technical side of the business, we try to control alcohol degree in the vineyards…and alcohol increased between half and one point in the past 14 years, and we were 13% abv and 13.5% abv, with maximum being 14% abv. Now we are 13.8% abv and 15% abv. For the 2019 vintage, the average alcohol level at the cellar is 14.8%,” says Obert, who has been its winemaker since the 2005 vintage.
At the moment, the chateaux interviewed for the article largely adopt a wait-and-see attitude for the new rule in the US.
“For the moment, it’s not so clear and we need to wait and see,” says Launay of Grand Puy Ducasse. “Hopefully, we will have a new president from the next election and will change the rules.”