The fondue dilemma and the Swiss Franc surge

The Swiss franc surged in foreign currency trading yesterday as the central bank decided to stop defending the 1.20 floor with the euro. Last trade in the EURCHF was 0.99, so that’s a 20% surge for the Swissie. The CEO of Swatch was appalled at the currency move will likely send prices higher in foreign markets for the “Swiss made” watches. James B. Stewart, one of my favorite financial journalists, has an article in today’s Times examining the role of currency moves on various luxury products (and was kind enough to include a quote from Dr. Vino).

So, because I know you loooove talking currency moves even more than uncorking a good white wine from Neuchatel, what does the Swiss franc surge mean for wine?

Well, Swiss wines will likely get more expensive. Yes, by the way, there are 15,000 hectares (37,000 acres) of vineyards in Switzerland. Most are consumed locally but some make it to the wine list at Artisanal (which features more than a dozen) for patrons to have with fondue. While the wine trade may be slow to pass on foreign currency declines, we should check with the wine buyer at Artisanal in a few months and see where Swiss wine prices are.

swiss_car_wine_250For the Swiss, imported wines just got 16% cheaper. Unlike European wines in the US that have to filter through the three-tier system, this price decline will be much quicker since a Swiss resident could hop in his or her car and drive to Barolo or Burgundy and fill up the trunk. (Note Swiss plates on the car at right with 189 bottles of wine in it.)

But one wine aspect that hasn’t gotten a lot of attention is Swiss-based buyers of vineyards. A big game in France recently has been for high-net worth individuals to move their assets to Switzerland–or move themselves, taking Swiss citizenship. These include Bruno Prats, formerly of Cos d’Estournel. Maybe there are others from the wine world. Some Swiss also own vineyards in France, including Domaine Paul Jaboulet Ainé (owned by the Frey family), and then there’s the globetrotting Donald Hess. These, or others, could see the time as ripe to scoop up some euro-denominated vineyards.

So which wines will you be having with fondue this winter?

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9 Responses to “The fondue dilemma and the Swiss Franc surge”

  1. The erosion of the Euro is now locked in. It has crashed to 115 and will likely fall back to 104. There is no rush just yet to fill up those trunks with wine. Better prices are still to come.

  2. Ha, Jack–if you’re right, it will be just in time for summer vacation then!

  3. Tyler, although nothing goes straight up or straight down, it will not take long for this dying Currency and Socialist Political failure to fall flat. My number is by year’s end.

  4. Hey Tyler,

    Since I am living in Switzerland for a few years, let me share a few statistics:

    * It is estimated (and a Swiss ‘estimate’ is usually spot on) that 97-99% pf Swiss wine is consumed in Switzerland. Much of what is exported just goes to Swiss embassies around the world.

    * By the way, they make some pretty amazing wines here. One sampler:

    * Here is the interesting stat. Swiss wine only accounts for 40% of the wine consumed in Switzerland. An awful lot of French, Italian and Spanish wine comes in here (and German, Austrian, Portuguese, American etc.) So the bulk of what is consumed here just got a lot less expensive.

    Anyway, take care.

    -Eric LeVine,

  5. Müller-Thurgau is looking a lot more prestigious, although I thought you put it in the fondue.

  6. Congratulations, belatedly, to Suzi LeVine for her ambassadorship.

  7. @EricLeVine, that actually means it just got harder for Swiss producers to sell their wines, no?

  8. Jennifer, yes that means that Swiss export prices got more expensive (and that import prices into Switzerland will be cheaper). I am no expert in the economics of the Swiss wine market, but given that nearly all of it is sold here already I don’t really see that changing.

  9. @EricLevine, I imagine, that imports got cheaper, therefore, there is now more wine in general available for consumption in Switzerland.

    From what I understand, barriers for wine imports were removed in 2002 … Which is when Swiss winemakers started competing for market share in their own country.

    Before that, of course Switzerland bought their own wines. They never had a choice. Now, with lower barriers on imports and cheaper wine, (aka choice) Swiss winemakers have to compete.

    Not something they’ve had to do in their history. Something they are just learning to do. Few do well.

    Only the fittest will survive.


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