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Monday 1 September 2014

One third of Bordeaux properties “for sale”

21st December, 2011 by Gabriel Savage

As many as one third of Bordeaux’s wine estates are for sale, according to Yvon Mau managing director Philippe Laqueche.

Highlighting the tough situation faced by the majority of producers in Bordeaux who fall below the classed growth tiers, Laqueche remarked: “people are retiring and the next generation don’t want to follow them.”

However, he suggested that this natural shrinkage could have a positive effect on the profitability of France’s largest AOC, suggesting that many of the vineyards being pulled up were on poorer terroirs. “My feeling is that we have too many hectares in Bordeaux for quality and demand,” Laqueche concluded, adding that vineyards close to urban areas were also in demand for real estate development. [See the comment section below for a further explanation from Laqueche.]

Alex Hall, director of Bordeaux property agent Vineyard Intelligence, added context to this statistic, saying: “There are 8,200 producers in Bordeaux – are one third of them on the market? I’m not sure. But in terms of people who, if they thought they could sell, would – yes, probably.”

For the most part, Hall suggested that vineyard owners approaching retirement but who wish to keep their family estate intact are choosing to take up EU or local subsidies in place of grape growing.

Especially for those without their own winemaking facilities, this presents an attractive alternative to the modest prices paid by co-operatives, who receive around 20% of Bordeaux’s grape harvest.

As for the recent flurry of purchases in the region by Chinese buyers in particular – 15 to-date – Hall expressed confidence that there remains “quite a lot more mileage” in this avenue.

He also argued that such acquisitions from foreign, capital-rich investors were a good thing for the region, saying: “New owners are bringing in new markets. These guys are buying what other people wouldn’t be keen on buying. It’s difficult to make money at a certain economy of scale because of distribution.”

However, pointing to the Chinese businessmen who are typically buying Bordeaux properties, many of whom have extensive contacts in their home country’s hospitality industry, Hall suggested that finding a market for their wines was: “the last thing they have to worry about.”

Following a steady increase from 100,000 hectares in 1981 to its peak of 125,000ha in 2007, CIVB figures show a steady decline in Bordeaux’s vineyard area, which had shrunk to 115,100ha by 2009, largely thanks to subsidies.

Emphasising that the challenges faced by Bordeaux are far from unique, Hall pointed to other countries such as New Zealand and Australia as he remarked: “Oversupply is everywhere; it’s something the wine industry needs to deal with.”

3 Responses to “One third of Bordeaux properties “for sale””

  1. Simply because of education, vineyard and winery engineering improvements over the past say 30 years ,wine can now made in a very professional way. The companies who don’t reinvest to keep up with significant wine industry related improvements eventually disappear or just manage to eke out a living because of low or no debt , but at the same time they are slowly going down the tube, just nobody has told them of their potential fate. Cash flow is vital for any business to survive and the wine industry is no different. Understanding your financials is vital , as we say in the wine industry, ‘How to make a small fortune out of the wine industry = start with a large fortune “.
    Since a family Demerger in 2008 ( we have 120 year old family wine company in 2012) my new team within the current climate have managed to swim against the tide by understanding the changes in the route to market and what our customers want, plus running a very efficent operation and concentrating always on improving wine quality,developing improved wine styles that differentiate our Brand , coupled with improved packaging etc.
    Wine is now a comodity , with the aim is to make acceptable margin within a very competitive wine world but at all times enjoy the challenge and what you do.

  2. Ravi Singh says:

    Bordeaux has always been enjoyed in a different range of quality, styles & price ranges.
    For the new wine drinkers Bordeaux was never unaffordable and as their quest for quality wine evolved. There was
    always a new level of offering to engage these consumers. Be it generics, offerings from lesser rated appellations
    within Bordeaux or progressing to Cru-Bourgeois, second wine and then on to the Cru Classe fine wine, there was truly
    something for everyone.

    Ripping up the agrarian landscape in this context in the name of quality makes very little sense. The success of the post1981 vintages may have led to increased plantations. In more recent times they may have felt the new world pinch in the market place however in I feel that this is a reversible trend when it comes to Bordeaux.

  3. Philippe Laqueche says:

    It is true that the younger generation in Bordeaux is more inclined to seek a career outside viticulture for a number of reasons, economic and social – so, as a result, many Bordeaux estates would consider selling if they were offered a fair price.  However, it is going too far to suggest that a third of Bordeaux’s vineyards are actually for sale, so the headline here is misleading.  Over the last 30 years, there has been considerable consolidation of Bordeaux’s vineyards and it is likely that this trend will continue because larger estates are more likely to be better managed and, probably, more profitable.

    The CIVB has a strategic plan to improve the quality and productivity of Bordeaux’s less prestigious vineyards through better training and improved technical competence.  So, although the area under vine in Bordeaux is likely to decline as some families move away from viticulture, volumes produced should remain stable and quality will certainly improve.

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