France has once again lowered its forecast for this year’s wine production, citing the region’s rainiest September in the past 25 years. It is expected that 2024 will be one of the smallest vintages in recent history for renowned wine regions like Burgundy, Champagne, and Bordeaux, while the impact on Burgundy prices remains uncertain.
Agreste, the statistics and forecasting department under the French agriculture ministry, estimated that due to the poor weather, the wine production would be 37.5 million hectoliters, revised from an already reduced forecast of 39.3 million hectoliters from last month. The previous forecast has accounted for bad weather conditions and indicated an 18% decline in production from earlier levels.
According to Agreste, the latest estimate is 22% lower than the previous year’s crop and 15% below the average of the past five years. This is at the same level as the subpar 2021 vintage, which was significantly affected by severe frost damage.
“This drop is due to unfavorable weather conditions which impacted all wine-growing areas,” Agreste stated in its monthly report.
Agreste indicates that all types of wines have been impacted, especially wines from the Burgundy, Bordeaux, and Champagne regions. Champagne production is expected to decrease by 33% compared to last year and 14% below the five-year average, while production in Burgundy and Bordeaux will decrease by 35%, respectively.
According to the department, unfavorable conditions during flowering in cool and humid weather led to millerandage and coulure . This resulted in small grapes or the dropping of young grapes and flowers from the vines. Additionally, losses were exacerbated by frost, mildew, and hail.
Generally, a decrease in production tightens supply and demand, often leading to price increases. However, this year’s circumstances may not necessarily result in such hikes, potentially bringing relief to some wineries and wine growers.
“In the past two years, French wine production has been high; however, on the other hand, market demand hasn’t been as strong, especially in key markets like France and China,” said Li Yanjun, the Chief Executive Officer of Merveille Business, in Shanghai. “Therefore, with Bordeaux representing the French wine industry and holding large inventories, this year’s production decrease may not lead to price hikes. Instead, the reduction in supply alleviates the oversupply situation, which is a positive development.”
The analysis aligns with the willingness of producers to reduce harvest. In July, Champagne producers called for a 12% cut in grape harvests in response to a 15% decrease in wine sales during the first half of 2024. Earlier, Bordeaux winegrowers had also proposed pulling out some vines to reduce excess capacity. France proposed uprooting altogether 30,000 of the nation’s 800,000 hectares of vineyards in the Nouvelle-Aquitaine region and Bordeaux.
However, the result in price change can be different for Burgundy, which is reported to be the region most severely affected in 2024.
“In first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, many consumers exclusively drink Burgundy wines. Given Burgundy’s already limited production, the reduced output caused by the calamity may lead to price increases for some entry-level and mid-range products,” Li said.
While Burgundy wine prices have also seen declines, consumer sentiment towards Burgundy has consistently been positive. Recently, Alibaba’s chairman, Tsai Chung-Hsin, and LVMH have both acquired vineyards in Burgundy, reflecting confidence in the region.
However, Wu Xianghua, the CEO of Fine West, one of China’s top wine importers who has been selling Bordeaux and Burgundy wines for many years, holds a different view.
“From a market perspective, we haven’t observed significant sales growth in Burgundy’s mid-range and entry-level wines. While the popularity of white wines has indeed increased, the acceptance of Burgundy’s white wines, due to their higher prices, seems lower compared to German and New Zealand white wines.” Wu said.
“With the current intense competition in the Chinese market and a global decline in wine consumption, I believe there is no justification for price increases in any wine category,” he continues.
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