As France Shuts Down to Fight Coronavirus, Bordeaux Puts Wine Futures on Hold

Bordeaux's wineries have a new vintage to sell, but the world has greater concerns

As France Shuts Down to Fight Coronavirus, Bordeaux Puts Wine Futures on Hold
Château Lafite Rothschild and other classified growths will hold off on the futures campaign for the 2019 vintage. (Deepix)
Mar 20, 2020

With French President Emmanuel Macron having declared war on the spread of COVID-19 and the European Commission enacting a 30-day travel ban, the Bordeaux wine trade faces a challenge never before seen by this generation.

What seemed like a decision of monumental importance a week ago—whether or not to hold the en primeur tastings for the 2019 vintage — has been quickly eclipsed by curfews and lockdowns, army field hospitals and emergency funds to halt a national slide into bankruptcy. All tastings and events have been indefinitely postponed.

The French government has imposed a strict 15-day lockdown on the country, asking people to stay home except for essential activities. Anyone leaving the house must have a printed explanation of why they are out or face a stiff fine. As of today, there are 10,981 confirmed cases of COVID-19 in France and 371 confirmed deaths.

A vintage in limbo

Châteaus, négociants and courtiers have been in daily, sometimes hourly, discussions on how best to proceed in a rapidly deteriorating global crisis. "The trouble is, every day the situation changes and what we decide in the morning is no longer valid in the evening," said Lilian Barton Sartorius, négociant and owner of Châteaus Léoville Barton, Langoa Barton and Mauvesin Barton.

One option under discussion is to push back the tastings until late spring or early summer. "If the virus has decreased sufficiently, the usual tastings could take place the last week of May, which would allow five weeks for the campaign, providing the situation has settled worldwide," said négociant Jean-Pierre Rousseau, CEO of Diva.

"At DBR Lafite we are very much in the mood, if the situation allows it, to offer our ’19 wines en primeur in the spring or at the start of the summer," said Jean-Guillaume Prats, CEO of Domaines Barons de Rothschild (Lafite).

But that might not be realistic if the virus continues to spread. Another potential date is September, though there is concern that buyers will be focused on bottled wine, rather than futures, in order to generate immediate cash flow.

Another challenge: It's difficult to sell a wine as futures if no one has tasted it. Some châteaus consider the young wines too fragile for shipment, and with businesses in lockdown, there isn't the staff to prepare the samples, not to mention the huge question mark over national logistics.

Other châteaus show a willingness to adapt to extraordinary circumstances. "We will adapt in order to show the 2019 vintage to the trade once we have more clarity," said Prats. "Either by providing samples to some of our partner négociants when they will receive guests or by organizing tastings abroad ourselves."

While the French largely ignored previous calls for social distancing, Macron's call to war has focused minds. "Our priority is to support the doctors, the nurses and the people already sick, by a strict discipline, which leads us to limit as much as possible physical meetings," said Ronan Laborde, CEO of Château Clinet and president of the Union des Grands Cru (UGC). "We'll see how the situation evolves to plan the [en primeur] 2019 sales."

The 2020 vintage

Of more immediate impact, during the lockdown everyone must work from home, with very few exceptions. "Our estates in Bordeaux and in the Languedoc (Domaine d'Aussières) are closed," said Prats. "We have stopped all operations except the vineyard work and some minor work on the current vintage. We have reorganized our vineyard team so they do not interact among each other. Our priority is to keep the châteaus protected in order not to put the 2020 harvest at risk."

As for the rest of the company, "At DBR Lafite we have closed all our offices and all are working from home wherever possible," said Prats. "Ironically, our office in Shanghai and our estate of Long Dai in Penglai are now back in full operations after weeks of quarantine."

Lafite's actions mirror the situation throughout the region and the rest of France. "We expect a very limited activity in our wineries in the next weeks," said Laborde. "No visits, work at home for the administrative team, minimum work for the logistics team. Only the winery and the vineyard teams have 'normal' work to do."

An uncertain future

There is no question that a cloud of uncertainty was already hanging over the 2019 campaign before the pandemic. Bordeaux's three key export markets—the United States, China and the United Kingdom—all offer challenges: Riots in Hong Kong, Brexit, America's 25 percent tariffs, French strikes slowing shipments and now the coronavirus.

"There are so many more uncertainties versus a normal campaign," said Jean-Christophe Calvet, CEO of Aquitaine Wine Company. "No one can buy blindly."

"The 25 percent tariff for the U.S. imports definitely blocked most of the orders, especially since we are not even sure of what will happen in a few months from now," said Rousseau. "There is still a small turnover with China and we do hope that a more normal stream of business resumes in the coming weeks. They do have money. Europe is still buying, although at a much lower rhythm."

In order to attract buyers during an uncertain economic recovery, fluctuating exchange rates, unreliable delivery dates due to quarantine (not to mention French strikes once the lockdown is lifted), restaurants closing their doors, airlines grounded, cruise ships docked, stock-market losses and a trade war—the feeling is that it will take exceptional conditions to jumpstart a futures campaign.

"Pricing of classified [growths] are at a historic high. It would need a real deal to make it appealing," said Calvet. "Prices have to go down substantially to be interesting, then you have to deal with the 2017 and 2018 [wines in stock]. The final obstacle is the 25 percent [tariffs]."

But the mood is stubbornly optimistic, despite the crushing economic impact of COVID-19. This is largely due to confidence in the quality of the 2019 vintage and the characteristic chutzpah of Bordeaux merchants. Many evoke challenges from the past—wars, boycotts, the 2008 banking crisis—as proof that they can get through this. When markets collapse, they look for new ones. Today, that might be Internet retailers and delivery services.

"The quality of our distribution, the capacity of quick reaction of the trade and the professionalism of our négociants will guarantee that as soon as things settle down the right decisions will be made to ensure the best development for this wonderful vintage," said Sylvie Cazes, owner of Château Chauvin and co-owner of Lynch Bages. "Bordeaux has seen many crises in the past and has always reacted quickly and efficiently, with the help of our partners around the world, to ensure the best service to all wine lovers."

For now, they are focusing on the important things. "Globally, I am not worried," said négociant Yann Schÿler, CEO of Maison Schröder & Schÿler. "[The wine] will sell, sooner or later, but at this stage, no one can tell. Health first."

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