2013: the straw that broke the camel’s back?18th November, 2013 by Gabriel Savage
The devastating hailstorms which hit Entre Deux Mers and other Bordeaux regions this summer may prove a breaking point for the many producers who are struggling to stay in business.
“I think around 40 or 50 producers will disappear this year,” warned Stephane Defraine, who in addition to owning Château de Fontenille is also president of the Entre Deux Mers growers association, as he assessed the damage to his own appellation.
Estimating that around 25% of vineyards across Bordeaux were affected by the August storm, Defraine reported that around 20% of Entre Deux Mer’s 44,000ha vineyards were hit, with about 4,700ha experiencing damage of more than 80%.
What’s more, he added, where the damage was most severe, “there may be 30-40% less crop next year.”
While the Entre Deux Mers often forms the front line for these hailstorms, which tend to arrive from the south-west, Defraine noted that, so far as recent history is concerned – hail also struck in 2003, 2009 and 2012 – “this year was the worst.”
Highlighting those growers most at risk, he told the drinks business: “The people who work with the négoces will go because if you work that way then you don’t have your future in your own hands.”
For the most part, Defraine indicated that these unprofitable vineyards were likely to be sold to larger producers better able to survive the commercial challenges which face this relatively low profile area.
Indeed, despite the severity of this year’s hailstorm, Defraine acknowledged that the weather was not solely to blame for the region’s problems, but rather exacerbated an already precarious balance of profitability. As reported last week by db, this pressure is also being felt by Bordeaux’s sweet wine producers, including those in prestigious regions such as Sauternes or Barsac.
“What worries people here is the price of their wine,” remarked Defraine. “The hail is a problem today because our business is fragile. If this had happened 15 years ago it would not have been such a problem.”
Tracking the growing difficulties of more recent years, he said: “For the last 10 or 12 years when people in Bordeaux sell in bulk they sell below the cost of production.” Even at his own estate, which sells 90% of its production as bottled wine and “is not the cheapest”, Defraine described the commercial situation as “difficult”.
Although Entre Deux Mers estates do not command the same prices or attention as the classed growth châteaux of the Left Bank, Defraine stressed the significance of his region, which accounts for nearly half of Bordeaux’s 100,000ha total vineyard plantings. “In terms of size of production the Médoc is peanuts,” he observed; “the heart of the Bordeaux economy is here.”
Indeed, Defraine argued that the growing disparity between these two sides of Bordeaux had heightened the problems for the region’s many less prestigious appellations. “The perverse effect of the grand cru classé prices is that the négoces can make more money by selling a case of their wine and everybody wants it,” he explained.
By contrast, Defraine suggested that this same situation had made merchants less interested in selling the lower end of Bordeaux’s offering. “No one asks for these wines and there is less profit,” he summed up.
In addition to this problem, Defraine argued that Bordeaux’s traditional négociant system, which takes care of sales for the châteaux, was the source of a wider problem. “Producers never meet the final consumer,” he explained. “We don’t make the right choices because we are never in the market.”
In particular, Defraine argued that Bordeaux growers today were in general placing too much emphasis on red grapes. Looking back 40 years to when the region’s balance between red and white varieties was more even, he suggested: “The problem with Bordeaux today is not the white, it’s the reds. They have been planted too much and not in the right place to make good wines.”
Using his own estate as an example, Defraine noted: The best profit at Fontenille is white and rosé; red is less profitable.“ This will prove particularly the case in 2013, when his red grape yield fell from its 50 hectolitres per hectare average to just 15hl/ha.
With quality concerns to accompany this hit on quantity, he confirmed: “This year we will not make a red under the Fontenille name”, explaining that the crop would instead be sold under a different brand.
A further factor exacerbating the problems created by nature is the difficulty for many growers of finding a suitable insurance deal, an issue which has also been felt by a number of Burgundian producers this year after their own serious hailstorms.
“Not enough people have it,” remarked Defraine of insurance cover in his own region. The problem, he explained, is that, while a low level of insurance cover is relatively affordable, “if hail hits 15-20% of your crop there is no effect on your production because the vine will compensate.”
According to Defraine, the real damage to yields comes once this percentage rises to 25% or more. However, he added: “It is very expensive if you are well insured.”
Despite picking out certain communes such as La Salve where competing insurance firms had offered sufficiently enticing deals for the majority of producers to have been covered, Defraine noted that elsewhere the proportion was no more than 25%.
Relating this to the precarious financial situation in which many producers now find themselves, he argued: “The insurance companies are partly to blame for this problem. The prefer to sell fewer contracts at higher prices.”
As part of his efforts as president of the growers’ association to address this issue, Defraine explained that he was considering the suggestion of compulsory insurance, which would result in lower premiums for everyone. However, he acknowledged the challenge of winning the support required to make this idea work.
In a similar vein, Defraine concluded that it would be difficult to achieve the consensus required to make the wider changes he believes are required to help his region return to profitability.
“Collectively I don’t think we can really do anything except if we change the rules but nobody wants to do that,” he told db. “My analysis is that quality is not democratic,” he continued. “If we are more strict on the rules then 20-25% of people will disappear.” Nevertheless, Defraine insisted, “for me, the only answer is to increase quality.”