New Digest October 2024

by Valeria Tenison

The Sauternes harvest has now drawn to a close in Bordeaux, with most picking going on well into the second half of October. Although harvesters needed patience, in the end most estates saw an excellent final wave of botrytis cinerea or noble rot. Harvest at Château Coutet, as an example, began September 19 and concluded on October 24 for a total of 21 days of picking over the course of six weeks. The 80 pickers completed six passages through the vineyard, and expect, in the words of owner Aline Baly, a ‘vivid and fresh backbone to this vintage, accentuating the Coutet’s Barsac signature style’.

Now that the wines are quietly fermenting in the vats, a new scandal has sparked outrage among local growers. Bordeaux AOC wines are being liquidated at auctions for as low as €7 per hectolitre. This price is seven times cheaper than some Spanish table wines, provoking frustration among Bordeaux producers who see it as devaluing their product and damaging the market. The sales are often rushed through court-appointed liquidations, with little regard for market value or quality, and without paying mandatory interprofessional dues or quality controls, raising concerns about transparency. Bernard Farges of the Bordeaux Wine Council (CIVB) and the Viti 33 collective are pressing for government intervention. They argue that the sales bypass standard industry regulations, allowing opportunistic buyers to profit at the expense of struggling producers. Growers suggest that regulated buyers purchase these volumes for distillation to stabilise the market and ensure fair treatment for Bordeaux wines.

At the other end of the price scale, an international wine counterfeiting network was dismantled this month in Italy. The criminals transformed Italian wines into fake French Grand Cru bottles and sold them for up to €15,000. The joint operation, led by French, Italian, and Swiss authorities with Europol and Eurojust support, resulted in six arrests and 14 raids in Turin and Milan, where counterfeit materials, including labels, wax, and recapping machines, were seized along with €100,000 in cash. The fake wines were sold globally through unsuspecting wine dealers. Investigations linked this network to previous counterfeiting cases, with authorities intensifying efforts to prevent similar frauds in the luxury wine market.

Château Pontet-Canet, a 5th Classified Growth winery from Pauillac, will start using lighter bottles for upcoming vintages, reducing each bottle’s glass weight from 815g to 490g. This shift, resulting from a four-year collaboration with glassmaker Verallia, cuts the winery’s CO₂ emissions by 38% per bottle, supporting its environmental commitments as an organic and biodynamic certified estate. The new, lighter bottles will debut with the 2022 vintage.

Simultaneously, Dourthe, a major Bordeaux wine producer, is launching its first returnable bottle (within France) with the Promesse cuvée. In collaboration with Bout’ à Bout’, which specialises in bottle reuse, Dourthe’s returnable bottle program is expected to reduce energy use and greenhouse gas emissions by 79% and cut water consumption by a third compared to producing new bottles. The bottle features an FSC recycled paper label, no capsule, and a national deposit symbol for easy identification and return at collection points. The wine will be available for sale in December 2024.

Sadly, the ambitious €15 million Cité du Vin wine tourism project in Sauternes, which aimed to attract 50,000 visitors annually, has been put on hold due to financial concerns. Despite widespread support from local wineries and potential public funders, local officials deemed the financial risk too high. The Sauternes-Barsac ODG (appellation governing body) has indicated that while the latest iteration won’t proceed, they are open to re-evaluating a scaled-down version.

The latest ranking of 500 wealthiest individuals in France published by Challenges magazine reveals significant fortunes built on both traditional and diversified ventures, many of them in Bordeaux wine. Bernard Arnault tops the list. Known globally for his luxury brand LVMH, Arnault has a significant wine portfolio, including two grand Bordeaux estates, Château Yquem in Sauternes and Château Cheval Blanc in Saint-Émilion. Pierre Castel, eleventh in wealth, is a self-made wine and beer tycoon with a $14 billion empire. His Château Beychevelle in Bordeaux is co-owned with Japan’s Suntory. François Perrodo, 15th nationally, oil magnate at the helm of Perenco, is also the owner of Château Labégorce, Château Marquis d’Alesme and Château La Tour de Mons in Margaux. Martin Bouygues of construction giant Bouygues, ranked 33rd, acquired Château Montrose in Saint-Estèphe in 2006. This iconic estate now features modernised cellars and technical innovations, with Bouygues personally overseeing operations. Bernard Magrez (121st), a billion-euro wine entrepreneur, owns Château Pape Clément in Bordeaux, among other global estates. Other prominent investors in the region wine industry include the Wertheimer family (3rd national fortune), owners of Chanel, as well as Château Canon and Château Rauzan-Segla, François Pinault (ranked 8th) with Kering Group and Château Latour, the Courtin-Clarins family (18th) behind the Clarins cosmetics group and the owners of Château Beauséjour in Saint-Emilion.

Despite these prominent investors, there are currently dozens of châteaux on sale in the region – with a large number (as many as 50) owned by Chinese investors. As the Chinese boom in buying Bordeaux vineyards has cooled significantly, many investors are now seeking to resell properties they bought during a decade-long buying spree. Economic and regulatory factors are driving this shift, notably China’s strict capital control policies, which restrict outward investment. Additionally, some buyers underestimated the costs and challenges of wine production, hoping for quick returns by selling Bordeaux wines at high prices in their home markets. However, the market’s challenges—such as high production costs, complex vineyard management, climate risks, and a declining interest in Bordeaux wines in China—have discouraged immediate profitability (you can read an excellent piece on this from Alexander Hall of Vineyard Intelligence, showing that the writing was already on the wall a few years ago). Despite these trends, a few Chinese investors, like Alibaba’s Jack Ma (Château Pérenne and Château Guerry) and Hong Kong businessman Peter Kwok (Vignobles K), remain dedicated, investing heavily in vineyard revitalisation. Some, such as Zhang Rong (Château des Chaplains), continue operating their properties with a long-term focus. Investors like Hugo Tian (Château Fauchey) are optimistic that future Chinese buyers will return with a more sustainable and realistic approach, especially as interest grows in organic and natural wines.

 

Sources: Sud Ouest, Vitisphere, Terre de Vins, Europol