©2006, The Birmingham Post
This summer's campaign for Bordeaux 2005 "en primeur" has produced a veritable feeding-frenzy. Declared by winemakers and pundits to be the greatest year in living memory, it is certainly considered to be among the top handful of vintages since the end of the last war. Even more unusually, this exceptional quality transcends the entire range from top to bottom, red to white, dry to sweet and Left bank to Right Bank.
The feverish level of interest has been reflected by an astonishing price hike. Against the previous vintage in 2004, there has been an average increase of 60% and nearly one-third of all estates have doubled their prices.
At the very pinnacle, the biggest offenders are the "A" listers, Châteaux Margaux and Latour, who have posted prices of £4,000 a case, a massive rise of 338% and 289% respectively. In plain English, that works out to roughly £333 per bottle, without the addition of duty or VAT and, by the way, the wine is still in cask.
Appetites, though, have been whetted by such influential wine critics like Robert Parker, who has awarded a number of perfect 100-point scores on his website. The price increase, therefore, has done little do diminish the enthusiasm of investors and collectors alike, as wine merchants specialising in this field post "sold out" notices against their limited allocations.
So much for the fine wine market, because the paradox amidst this hullabaloo is that there is a worldwide surplus of wine, with an annual production estimated at 11% over and above consumer needs. In Europe alone, where Spain, France and Italy produce around 60% of global wine output, nearly 1 billion bottles of Italian and French wine will be converted into alcohol, disinfectant or fuel, and according to some reports, nearly one-quarter of all Spanish wine will be use for industrial purposes. The EU annually subsidises this surplus to the tune of £1.65 billion.
The once notorious European wine lake appears to have returned with a vengeance and crisis distillation, an emergency measure has now become the routine fate of one in six bottles of wine produced in Europe. The European Commission recently signed off £87 million in aid to France and Italy, and each year, the EU spends £335 million on unwanted wine, in terms of storage and distillation. This is a ridiculous waste of taxpayers' money and clearly the situation is not sustainable.
The background to the problem is two-fold. Although the UK is currently bucking the trend, there has been a continuing decline in wine sales in the domestic market of the traditional winemaking nations, where the fashion is to drink less, but better, and to turn to other alcoholic beverages, such as beer or spirits.
On top of this, French and other European producers are losing ground to New World winemakers, who respond more readily to public taste and, through simple labelling, make their wines more consumer-friendly. For too long, the traditional winemakers have shown a contemptuous disregard for their customers and rely on subsidies to help them out of a crisis.
In response, the EU's agriculture chief, Marianne Fischer-Boel, has outlined some sweeping measures, and has called on Europeans to learn from their New World counterparts. Root-and-branch reform is required, particularly as the EU attempts to remove some 400,000 hectares of vines from production by the use of grubbing up incentives.
The proposals will allow EU winemakers to blend wines from any variety they wish to use but, more significantly, allow grapes from more than one region, using a simpler, more user-friendly friendly label such as "French Chardonnay 2005". Moreover, the Commission considers that labelling rules, by focussing on a Chateau or Domaine from a particular appellation, are unhelpful. Instead, it wants to introduce a streamlined approach by defining just two categories of wine, namely wine with geographical indication and wine without.
None of the New World competitors face these restraints, and are gaining market share, because consumers like to know what they are drinking. These producers can also take advantage of economies of scale, through their sheer size, but are also permitted to use woodchips instead of barrels to impart "oaky" characteristics. The Commission now wants to embrace this approach but, surprisingly, wants to ban chapitilisation, the addition of sugar to beef up alcohol content. This could pose problems to more northern producers, in particular Champagne, where a form of chapitalisation is part of the sparkling wine process.
Taken at face value, these proposals appear to be an affront to the bastions of French winemaking, but then they are not aimed at tackling a global surplus of fine wine, merely at plonk. No doubt, too, that these recommendations will be watered down by self-interested politicians, but they should be implemented with a sense of urgency. A recent report released by the French Centre for Rural Economic Studies indicated that, by the end of 2006, around 89% of winemakers in the Languedoc will face financial difficulties.
The economic climate is much harsher "down under". There, the federal government has steadfastly refused industry pleas to assist stricken producers where grapes have been left to rot on the vine. In some cases, the price of Australian grapes have now plummeted to record lows.
For the time being, the major benefactor of this global glut is the supermarket wine buyer. Australian wine can be found at less than £3 a bottle and, as producers become ever more desperate to turn wine into cash, there will be some incredible one-off deals, particularly for bulk wine from such regions as Bordeaux and the Loire. In the short-term, the consumer will benefit, but the situation cannot continue in an industry that demands continuity and a long-term approach.