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May 30, 2022 View:

Bordeaux wine growers' association plans production cuts

The Bordeaux Winegrowers Association is studying a production reduction plan to address the overcapacity of AOP-rated wines in 2020. The total reduction in production is reported to be up to 20%.

Image courtesy of: Wine Business Watch

Yield reduction measures are yield control per hectare

A proposal adopted by the organization on June 22 shows that Bordeaux AOP red wine production will be reduced to 5,000 liters per hectare in 2020, compared to 54,00 liters per hectare in 2019. In addition, the yield per hectare of Super Bordeaux, rosé and white wines has also been reduced.

If the winery wants to maintain total production, the only workaround is to commit to downgrading 10% of Bordeaux AOP capacity to VDF (everyday table wine).

Bordeaux exported 290 million bottles of wine in 2017, accounting for 44% of its total sales. The Chinese market, on the other hand, is Bordeaux"s top producer, having set a record of 84 million bottles exported annually.

In a sense, Bordeaux wine has become a symbol of French wine in the Chinese market, and Bordeaux AOP is a kind of standard product in the market, as long as the merchants dealing with French wine almost all have products prepared with AOP grade, no matter it is small appellation or big region level.

Image courtesy of: Wine Business Watch

The key to stabilizing prices is market demand

Liu Fengwei, president of Bordeaux Floria Wines China, believes that: this active production reduction is to cope with the weak market and should be able to be implemented. Now Bordeaux wineries are cutting costs, one is people and the other is materials. The wine will not be bottled even if it is not sold and stored in large tanks. But with the arrival of the harvest season, the large tanks will be full, so the reduction in production can reduce the pressure of the winery.

Li Yajun, the representative of Bordeaux Pao Yue Shijia in China, believes that: because the price of Bordeaux wine harvest has not been going up for two years in 2018 and 2019, coupled with the impact of the epidemic this year, which makes the downward pressure on the price, the association has a positive significance in initiating production restrictions to protect the price.

For this initiative to reduce production can preserve the AOP prices that have been falling since this year, Liu Fengwei believes that the effect on stabilizing prices is limited. You can stabilize the price competitors are not necessarily OK, but now the price of Bordeaux wine is already the lowest in history, and there is no more room to fall. Liu Fengwei said.

Active production reduction can help improve AOP quality and reduce winery inventory, but more importantly, the demand side. Li Yajun believes that. In his opinion, if the Chinese economy can come out of the epidemic"s impact early and the channels recover as soon as possible, the price of Bordeaux wine can be stabilized and there is a possibility of market share recovery.