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Bordeaux frosts to cause 20% price hike

Hervé Grandeau, chairman of the Federation of the Fine Wines of Bordeaux, has estimated that prices could rise by 10-20% in 2017 as a result of the April frosts.

As reported by The Times, this year Bordeaux’s production may fall to around 300 million litres of wine, compared to the annual average of 540 million litres.

An estimated 60% of vineyards have been affected, to a greater or lesser degree, amounting to around 65,000 hectares.

Experts have predicted that the cold snap has caused damage to the tune of between €1.5 – €2 billion.

But is this a fair picture and does it reflect what will happen in other regions that have suffered frost damage?

Gavin Quinney of Château Baudac situated in the Entre-Deux-Mers has published a report on Bordeaux’s frost damage for and Liv-ex, based on his own observations and figures released by Chambre d’Agriculture de la Gironde. He makes the following three conclusions.

The first is that the Right Bank faired much worse than the Left Bank, with the large region of Cotes de Bordeaux and sites around Pomerol and Saint Emilion suffering over 80% crop damage. In contrast, St-Estephe, Pauillac and St Julien on the Left Bank, according to Quinney, appear to have experienced minimal damage.

On the other hand, Moulis and Listrac in the Médoc were hit appallingly badly, as were the communes of Arsac, Soussans and Cantenac in Margaux and parts of Sauternes and Pessac/Graves.

Secondly, even in communes that suffered considerable losses, it was still very variable as to how badly vineyards were damaged. Using his own château as an example, Quinney stressed the importance of site situation and aspect.

He stated that, “all the vines on the plateau at the top of our hill, surrounding the house” are healthy, however, further down the hill, the vines facing east, south and west were struck by frost ‘as if frozen in a time warp.’

Continuing, he said that it is, ‘probably no surprise that a great many of the top châteaux of Bordeaux have exceptional terroirs for avoiding the ravages of frost.’ He estimates that 80% of the top 150 Bordeaux châteaux have escaped, ‘as far as their grand vin or principal château wine is concerned.’

Gavin Quinney’s map of the frost damage in Bordeaux. The worst affected parts in black are clearly spread across the Right Bank. He remarked that losses in some of these areas was 100%.

Is, therefore, Grandeau’s (chairman of the federation that represents the likes of Château Haut-Brion, Lafite Rothschild and Latour) 10-20% price hike estimate a fair reflection of the damage caused at the region’s top châteaux?

Finally, grape variety is an important factor to consider. At Château Baudac, when the frost struck, the earlier budding Merlot was ahead of both Cabernet Sauvignon and Sauvignon Blanc and therefore, came off the worst.

Quinney concludes that, “overall production will be down by at least 30% from last year.”

Will this justify a price hike?

It is important to remember that the 2014, 2015 and 2016 harvests in Bordeaux were above average volume. The 2016, in particular, was the largest harvest since 2006, producing 577.2 million litres, according to official figures. Will the success of previous years cover the losses of 2017?

Speaking to the drinks business earlier this month, the president of the Bordeaux Wine Council, Allan Sichel, said that although there would be price hikes it was important that the they were in proportion to losses.

He recalled the devastating frosts of 1991 (and to an extent the bad weather in 2007), which was followed by huge price increases, “we lost a lot of markets [after that], especially for white wines.

“What is critical is keeping supply in the markets, we don’t want to lose market share,” he went on. “I think everyone is aware of that in Bordeaux and aware of the need to keep our heads for the benefit of everyone. It’s important to keep a long-term perspective on this.”

It is to be hoped that producers still have stock from the 2014-16 stretch to see them through a lean 2017 – certainly a lot of the top châteaux have been holding back greater amounts of stock each en primeur campaign for some time now.

“Hopefully we will see a recovery in 2018,” he said, “but next year will be very difficult for some people.”

Indeed, for some smaller growers in the region this is the third time they have been hit in recent years and the burden is too much. “We’re already hearing of some selling up because they can’t carry on.”

Around Europe

English vineyards were also subjected to sub zero temperatures and a severe air frost, however, this followed four record harvests and the pledge that this year, the UK will plant a further one million vines.

Once again, some vineyards, for example Denbies (75% crop damage) and Nyetimber’s Hampshire vineyard (90% crop damage) experienced high losses, whereas others, such as Greyfriars Vineyard with an estimated loss of under 30%, came out relatively unscathed.

Carlos Delage, export area manager of Cune, said that Rioja was in a similar position. Despite suffering up to 50% frost damage to its vines, Delage states that producers remained optimistic about the effect of the cold snap.

Speaking to db at the London Wine Fair he said: “Luckily 2014, 2015 and 2016 were big harvests for us, so things hopefully won’t be that bad.”

CEO of Vega Sicilia, Pablo Alvarez, however, told dbHK that: “I feel like the prices for the grapes are going to increase. For us, we don’t need to buy in, but obviously the grapes [prices] are going to be more expensive”.

It remains to be seen to what extent the higher prices will be passed on to the consumer.

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