Robert Russell: The Headwinds of Wine
July is upon us, we wonder how the harvests of the northern hemisphere will unfold. France had its worst production year in modern history in 2021. In France in particular, in Burgundy, the culprit was a damaging early frost. This phenomenon is exacerbated by a hot month of February when the vines bud much earlier than usual, and when the typical early spring frosts hit, the buds can be damaged beyond the point of no return. The problems of 2021, which affected around 80% of French wine estates, have returned this year.
This year has hit Burgundy hard, particularly in the cooler northern part known as Chablis, where Chardonnay grapes produce wines with more acidity and less fruity flavors than in Chardonnay wines, known as Chablis. name of Bourgogne Blanc, grown in a warmer climate. In Puligny-Montrachet, Vignerons used torches and heated buckets to quash freezing April 3 temperatures by more than $2,000 an acre, to stave off another 75% crop loss, as the last year, although it appears that this frost caused little damage.
This region has experienced three devastating frosts in the past 6 years. About two weeks ago, numerous hailstorms damaged many vineyards and last week the French meteorological office issued a heat wave warning which could last for several weeks. Although it seems that the majority of winegrowers have escaped the frost season this year, the regions, including the Rhône, have a low reserve of water in the soil and reservoirs.
Vineyard growth in the area is ahead of schedule for the growing season, due to recent warm weather. With prolonged dry weather throughout winter and spring, it looks like other major French wine regions will also face drought conditions unless more rain falls. Regarding other problems in the European wine trade, there are still questions about COVID-19. it now appears that many consumers have embraced wine with meals at home. Wines are generally more expensive than those purchased in the past.
Personally, when eating at private homes in France, we know from experience that the French drink relatively inexpensive wine, usually in 1.5 liter bottles or cardboard boxes. This trend towards finer wines has led to market growth in price volume. However, do not believe that all is sweets and nuts in the world of wine, otherwise all winegrowers will have a Merry Christmas. The current supply chain has issues associated with price inflation related to all goods and services in the chain from grape growing, wine production, wine bottling and shipping wine to various markets. One of the most worried producers includes high-end champagne houses.
Their holiday deliveries typically account for what can be the majority of the year’s profit. With all of this, it is likely that wholesale buyers will seek out smaller distributors who can pay more attention to product delivery. Restaurants have already turned to boutique wholesalers who offer tasty alternatives to many of the usual suspects. The economics of it all have also allowed niche wines, such as natural winemakers and Garagistes from France and California, to fill the voids left by supply chain issues.
These wines are no longer marginal products. They have developed many mainstream customers who are willing to work a little harder to find quality wines on the market. Younger generations of wine drinkers are engaging by learning about wines, other than those from the grocery store, at eye level. It may also slow the trend towards sparkling waters, canned wines and non-alcoholic wines. The world has reopened since the pandemic began to subside, at least the deaths, if not the infections. However, online wine sales remain strong, and these marketers are doing their best to standardize their marketing techniques with buyers’ clubs and virtual tastings. They create value with email addresses, interested club members and communicate via Facebook and Instagram. Most of our businesses and industries have changed; the wine industry too!
Mike Veseth, known as The Wine Economist online, wrote: “Wine has become one of the most globalized consumer goods in the world. The OIV, or the International Organization of Vine and Wine: estimates that 45% of all wine crosses at least one international border on its way from producer to consumer”. He notes, “It is significant that wine today faces headwinds, obstacles and distortions that make global wine a risky business.” As Georges de la Jungle once said: “Watch out for that tree!”
Stay healthy and cheers
You can contact Robert Russell at [email protected]