Dr Vino's wine blog

June 6, 2006

Bordeaux exports are rallying and distillation should be liberalized the executive director of CIVB, the Bordeaux wine trade group said today.

Commenting by phone from his office in Bordeaux, Roland Feredj spoke of an about-face for Bordeaux wine exports. “I just attended a meeting of our economic committee and some of the leading Bordeaux exporters said that exports have been strong for the past six to eight months,” he said.

Recent accounts from France have focused on the crisis among wine makers so this is surprising news that must come as a relief in the region.

The statistics confirm the trend with all exports of Bordeaux wine up eight percent in volume over the last six months. Exports to the United States were up 21 percent, Canada 20 percent, and Hong Kong 15 percent.

Prices have gone down while the quality of the 2005 vintage is up, two factors that have spurred demand. Feredj also pointed to the return to popularity of “traditional” wines in important markets such as the UK. “We were in fashion and then out of fashion. Now people are rediscovering our wines,” he said.

The market for Bordeaux wine falls into three categories: the grands crus, where demand regularly outstrips supply; the middle tier, which has seen the reversal in exports; and bulk wine sold in huge containers.

On the market for bulk wine, Feredj agreed with the direction of European Union reform proposals.

Where supply outstrips demand, a surplus popularly known as a wine lake, producers are eligible to receive “crisis distillation” funds from the European Union that the member states can match. The wine is then distilled into a fuel additive or industrial alcohol.

Mariann Fischer Boel, EU Agriculture Commissioner, floated the idea of removing EU subsidies for distillation at a meeting of EU farm ministers last month as part of a “bold reform.” Her proposals will be formally announced on June 22. Bulk wine producers in France and Italy are bracing for potentially tough new reforms from the European Union regarding distillation. But not Feredj.

“Rather than pay for distillation, offer a premium for ripping up vines,” Feredj said. “If a winemaker takes a premium for ripping up vines and then can’t sell his wine–too bad. You have to make people responsible. On an open and liberal market, you need to find your niche in the market.”

The current EU premium for uprooting vines is €6,300 per hectare (2.47 acres). The current distillation premium from the European Union is 3.35 euros per degree of alcohol per 100 liters. About 1.8 million liters of wine was distilled in Bordeaux last year.

-Tyler Colman