News Digest May 2024

by Valeria Tenison

This is the time of year when the spotlight of the global wine trade is looking at Bordeaux. The 2023 Bordeaux Primeurs Week showcased the new vintage to 5,000 professional visitors, and the following En Primeur campaign has featured aggressive marketing and significant price reductions compared to the sharp increases seen in 2022. Notable estates like Château Léoville Las Cases and Château Lafite Rothschild have released their wines at prices 32-40% lower than the previous year, responding to market demands for affordability. Despite the reductions, sales have been tepid, with fewer buyers and smaller orders than in previous years. Asian demand has notably declined, contributing to a cautious atmosphere among traders.

The report on recent Bordeaux exports published by FranceAgriMer confirmed the complex market conditions. As per recent customs data, French wine exports have seen a significant 9% decline in both volume and value compared to the cumulative figures from August to February 2022-2023. This downturn is attributed to inflationary pressures and tough comparisons with previous years post-COVID recovery. Major export markets like the United States (-6%), United Kingdom (-3%), Germany (-6%), Netherlands (-23%), Japan (-19%), China (-26%), and South Korea (-35%) have all reduced their orders in volume terms. Asian markets have notably decreased their purchases. Previously a robust re-export hub for French wines, the Netherlands has also shown a decline. Looking more specifically at Bordeaux, exports from January 2023 to January 2024 are down 12% in volume to 1.55million hectolitres, but are holding up better in value, with a drop of 6% to €2.22 billion.

At the end of the Primeurs week, during the early hours of Friday, April 26, 2024, a fire broke out at Château Margaux, specifically in a 750m² agricultural storage area. Approximately 70 firefighters responded swiftly, dousing with water to protect nearby living quarters. By 10am, they had brought the blaze under control. Unfortunately, the incident injured four firefighters, as reported in a statement by Château Margaux. The fire was confirmed as accidental by local authorities, who evacuated residents from adjacent buildings as a precaution. Fortunately, no damages were reported to the main château or wine cellars. The estate is assessing the extent of damage to the agricultural building and planning necessary measures for reconstruction.

Bordeaux faces challenges beyond economic shifts. Similar to 2023, downy mildew poses a significant threat to Bordeaux vineyards, with early and highly virulent outbreaks reported. The disease is widespread in the Libourne area and Graves, though less prevalent in Médoc. The first symptoms appeared unusually early in April, driven by a mild and wet winter, with rainfall significantly above average. Initial contaminations are linked to early April rains. Winegrowers are urged to intensify their treatment regimens, increase doses, and adapt spraying techniques to focus on fruit-bearing zones to combat the epidemic. Some viticulturists have sprayed six times by this time of the year. Despite this, flowering is underway, with the earliest-budding Merlot around halfway through as of the end of May, one week behind the dates for 2023.

Despite the economic and climatic crisis, there hasn’t been a massive move away from organic practices. However, conversions to organic farming have decreased significantly. According to the Vignerons bio de Nouvelle-Aquitaine (VBNA) report, around 70 farms ceased organic production in 2023, although the region remains a significant player in organic wine, with over 2,000 estates farming in this way. Sales in supermarkets, however, have dropped by 11% in volume, with Bordeaux particularly affected.

On May 6, French President Emmanuel Macron hosted Chinese President Xi Jinping, showcasing French gastronomy and fine wines during a state dinner at the Elysée Palace. The dinner featured high-end dishes from renowned chefs, including Mauro Colagreco and Pierre Gagnaire, focusing on French culinary excellence. Château Lafite Rothschild 2007 was selected to accompany the prestigious dinner, along with Moët et Chandon Rosé and Hennessy XO.

However, not all international interactions were celebratory. On May 16, a French court ordered the confiscation of nine Bordeaux châteaux owned by Chinese tycoon Qu Naijie following his conviction for laundering over $30 million in Chinese government funds. Qu, founder of Haichang Group, received a three-year suspended prison sentence and a €1 million fine. The seized properties and other assets total approximately €35.5 million. Chinese authorities implicated Qu’s company for embezzling RMB 268 million to purchase the châteaux between 2010 and 2013. Known in Bordeaux as “Mr. Dalian,” Qu bought over 20 Bordeaux estates during a period of significant Chinese investment in the area. The confiscated châteaux, bought under his wife’s name through shell companies in the British Virgin Islands, include Château L’Enclos, Château Baby, Château Chenu-Lafitte, Château Branda, Château Grand Branet, Château Laurette, Château Thébot, and Château Millaud Montlabert. Despite his legal troubles, Qu remains Chairman, Executive Director, and CEO of Haichang Ocean Park Holding, valued at over HK$925 million.

Meanwhile, tensions simmered when the leading French wine merchant, Castel, pursued legal action against 120 winegrowers and three agricultural organisations that demonstrated at its headquarters on February 28. Castel demands €100,528 in damages for alleged harm caused during the protest. Despite calls from some winegrowers and traders to drop the lawsuit and engage in dialogue over fair remuneration, Castel remains firm, refusing to negotiate. At the same time, threats of further demonstrations and blockages persist.

On a lighter note, the Stonehouse Restaurant at San Ysidro Ranch in Santa Barbara has acquired the most extensive collection of Château d’Yquem wines in the world, including 138 vintages from 1887 to 2008 and select bottles as far back as 1811, the “comet “ vintage. The wines were sourced directly from France to ensure authenticity. Château d’Yquem, traditionally known for its ageing potential, is now being promoted by its owner, LVMH, as a wine that can be enjoyed from its release. The winery aims to demystify Yquem through collaborations with high-profile hospitality venues, known as “lighthouses,” which offer unique experiences to showcase the wine. The Stonehouse Restaurant is one such venue and also boasts a significant collection of Château Pétrus wines.

Back in Bordeaux, the Olympic flame journey through Gironde, highlighting the region’s rich wine heritage, started on May 23 and featured a notable segment at Château Cheval Blanc, owned by LVMH, a key Olympic partner. The flame’s journey spanned 800 meters, starting from Château Cheval Blanc’s paths, passing through its winery, and concluding at the historic château. Unlike others, this segment was private and not open to the public, although local schoolchildren were present. Other events included a 38-minute passage through Saint-Émilion including Château la Gaffelière, a scenic 30-minute boat trip on the Garonne from the Cité du Vin to Lormont, and nearly two hours in Pape Clément and Château Bellegrave vineyards.

Resources: Actu.fr, SudOuest, Vitisphere, The Drink Business, Vino-Joy.com, Téma – Agriculture & Terroirs, RVF