The Wine Loft Email News Blast Week of October 6th

French vintners fear worst sales since post 9/11


French wine merchants fear the growing world financial crisis could cause their worst end-of-year sales squeeze since the aftermath of the attacks of September 11, 2001.


Bordeaux-based wine merchant, Jeffrey Davies, said that while the crisis triggered by the terror attacks on New York and Washington had hit US wine sales, the economic meltdown had global implications. "The big spenders that were ordering the top wines in top restaurants have been taken out," Davies said. After the attacks, sales of Bordeaux wine to the United States fell by 29 percent in volume during the final quarter of 2001 -- the key Thanksgiving, Christmas and New Year period, which accounts for half of annual sales. Sales within the European Union also dropped by 10 percent.

Davies now anticipates "a major impact" on export figures for the last three months of 2008, given the ongoing financial uncertainty, the US elections, and the fact that wine is far from an essential household requirement. Fabrice Bernard of Millesima, which with 55,000 clients in Europe is one of Bordeaux's biggest online and mail order wine merchants, said turnover in September this year was five percent lower than in September 2001. "This is the first time since we went into business in 1983 that we have witnessed such a slowing of orders," said Bernard. Bernard described German and British sales as frozen, while other European clients have significantly reduced purchases. "Even in the City of London we are starting to see certain wine shops tightening their belts after recent job losses," said Jean-Christophe Mau, another Bordeaux merchant and owner of Chateau Brown.

Mau, who saw a 20 percent drop in sales during the six months following 9/11, says he is waiting to see what the coming weeks will bring. His fear is that this time round, the crisis will be longer and deeper. But the upside of 2008, he said, is that all the eggs are no longer all in one basket. "Asia is a very profitable," he noted. Citing Asia as a solution to slowing demand from traditional markets has become a standard response in Bordeaux, but whether the region can make up for losses in America and Britain -- the two top importers by value -- is doubtful.

In 2007, a third of Bordeaux's total wine sales were exports, worth a total of 1.39 billion euros (1.9 billion dollars) to the industry. Of those exports, Britain and America account for more than 431 million euros, while the combined Asian value for countries including Japan, Hong Kong, China, South Korea, Singapore and Taiwan come to only 286 million. The expected drop in exports will add to a slight drop in sales volumes for the first six months of 2008, due partly to the slow uptake of the 2006 and 2007 vintages, and partly to the euro's strength. The delivery of the much-vaunted 2005 "vintage of the century," boosting sales by 42.5 percent in value, saved Bordeaux in value terms in the first half of this year. But sales of the 2008 vintage, currently being harvested, are unlikely to do the same.

Early reports suggest this year's harvest is good quality, but problems include fewer grapes due to cooler, wet weather and higher costs after a long-running fight against mildew.