It’s not always easy living in a world in which free-market capitalism and globalisation appear to be sweeping all in their path. British dairy farmers complain that UK supermarkets are supplying their customers with cheap European milk; US steelworkers bemoan the theft of their jobs by low-cost Chinese factories; and producers of Beaujolais Nouveau protest the low prices they’re being paid by negociants. This year, the going price for Beaujolais Nouveau is apparently €1.80 per litre ($2.00) compared to €2.18 in 2014. One of the protesters, André Collonge, was quoted as saying that the reduced price for 2015 made it impossible for him and his neighbours to make a profit. “We demand a revaluation in order to sustain our business and our family,” he said.
Monsieur Collonge should consider himself lucky. If he had been a Bordeaux bulk supplier in 2014, he’d have had to accept €1.37 per litre for Bordeaux Supérieur, or just €1.22 for basic Bordeaux Rouge.
Compared to their compatriots in the Languedoc, however, both Beaujolais and Bordeaux producers are positively spoiled. Vignerons trying to sell Corbières or Minervois count themselves lucky to get a euro for a litre of their wine.
The point about all of these producers is that whatever the cultural and viticultural trappings to which they may aspire, as bulk-sellers they are in the commodity business. And as Adam Smith pointed out some 300 years ago, the trouble with commodities is that they are exquisitely sensitive to the laws of supply and demand, over which the traders may have little control. There is no point in trying to raise the price of oil if your customers are turning to alternative and cheaper forms of energy.
Of course, wine is not like oil. Nobody needs to buy it at all, unless they are an alcoholic, or organising some kind of social function at which it is an absolute prerequisite. Just as Arabica coffee growers owe much to the efforts of chains like Starbucks, if it had not been for the marketing dynamism of Georges Duboeuf in the 1970s, relatively few people would ever have bought a bottle of Beaujolais Nouveau outside the confines of Paris and Lyon. And if it were not for Jean-Charles Boisset’s more recent efforts, far fewer people would be drinking it in Japan. But there is a limit to what companies like Duboeuf’s and Boisset’s can achieve. In 1985, Londoners and New Yorkers were excited by the idea of Nouveau; today they are more tempted by Malbec and Merlot. Between 2002 and 2013, the market halved from 72m bottles to around 36m.
French producers like M Collonge ignore commercial realities like this and expect to receive higher prices when the harvest is short, irrespective of quality. To an extent, they often get away with it. Despite the fact that the small 2013 vintage was, by general agreement, the worst Bordeaux had seen in decades, the average bulk price for its weedy wine was higher than for the riper, tastier 2012. But everything is relative: a extra few cents a litre are not enough to make bulk production a sustainable commercial prospect in regions like this.
At a recent Vinocamp conference in London I found myself in a discussion with a group of French producers. “You have to appreciate,” one said, “that the average producer works in a family domaine with only two or three people. They have no time for marketing.” Unfortunately for anyone who favours accuracy over folklore, this appealing picture of a nation of mom ’n pop businesses all busily tending their vines bears little relationship to reality. France’s 619 cooperatives produce half of all its wine, and well over a third (39%) of everything with an appellation. When you consider how many vignerons sell their grapes or wine to sizeable negociants such as Guigal and Duboeuf, and the substantial number of estates producing and distributing tens of thousands of cases from their own vines, it is a minority that conforms to the cozy ‘family domaine’ image. Little more than one bottle in seven of Beaujolais or Beaujolais Nouveau, for example, is independently produced and bottled; the rest is all handled in bulk.
Unfortunately, no deus ex machina is going to magically make things right for the victims of global competition. Indeed, the recent signing of the Trans-Pacific Partnership which reduced barriers between 40% of the world’s economies, from the Americas to Australia and Japan, is only likely to exacerbate the problem. Embattled dairy farmers on both sides of the Atlantic are turning to cheesemaking to improve their lot. If Beaujolais Nouveau production is no longer profitable for the growers there, maybe they too will have to seek alternative sources of income.
