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The Bordeaux Diet

Wine industry leaders are trying to save the area's small growers with a bold marketing plan and big cuts. Is it too little, too late?

Suzanne Mustacich
Posted: August 4, 2010

Bordeaux's industry leaders are coming to grips with some hard facts—France's most famous wine region has a surplus of bad wine that is undermining its image. While prices for the top classified growths continue to skyrocket, most recently during the 2009 futures campaign, the vast majority of small producers are having trouble selling their low-priced reds and whites. Without a solution, an industry that employs 50,000 people could be in trouble.

Last week, leaders of Bordeaux's Wine Council (CIVB) revealed an ambitious new strategy for dealing with the problem. They optimistically call their plan "Bordeaux Tomorrow: The Reconquest." By 2018, they hope to increase the industry's annual revenues by 28 percent to 4.6 billion euros.

But the success of the plan hinges not only on smarter marketing to make Bordeaux more "fun," but also eliminating 110 million liters of cheap plonk produced each year—that's 12 million cases.

Presenting the plan, CIVB leaders grimly explained the problem. As a region, Bordeaux has lost shelf space and disappeared from the wine lists in both domestic and export markets, and failed to capitalize on wine tourism. On exports alone, they calculate that Bordeaux from 2003 to 2007 failed to sell 48 million bottles of wine worth 293 million euros. That was before the recession began.

In their battle to win back wine drinkers, the CIVB plans an international marketing campaign focusing on lower-cost, quality wines with consumer-friendly labels. The plan divides the wines into four image categories—Art, Exploration, Fun and Basic, (in order of descending price). The CIVB's goal is to increase the volumes of the first three categories, but eliminate the 110 million liters of “Basic” Bordeaux, which retails domestically for less than 2 euros per bottle, or about $2.60. "The 'Basic' wine does not correspond to the image of Bordeaux," says Georges Haushalter, a négociant and the newly elected president of the CIVB.

Not everyone producing “Basic” Bordeaux is being asked to find a new career path. With help from experts, one-third can improve the quality of their wines enough to move up into the “Fun” category (which retails for about $3 to $8 a bottle). Another third can try their hand at producing rosé and varietal branded wines. But the plan argues that a third of the vines must be ripped up, decreasing Bordeaux's vineyards by 7 percent and its winegrowers by 26 percent.

Bordeaux has tried this game before. The most recent attempt to rip up 10,000 hectares (24,000 acres) flopped a few years ago. But Bernard Farges, president of the Bordeaux and Bordeaux Supérieur wine syndicate, believes that times are sufficiently hard now that many who resisted the offer of 15,000 euros for every hectare pulled up have changed their minds. "They are at the end of their rope," says Farges. At least he hopes so, admitting, "They will sell the family jewels, everything, but hold onto their vines."

So how will CIVB leaders weed out the recalcitrant growers? The CIVB, which is made up of growers and négociants, has access to the details of every drop of wine sold. They know who is selling at rock-bottom prices. And since 2008, wine estates are subject to government inspections to make sure that the vineyards, cellars and wine meet quality standards. With nearly 9,000 growers, the inspectors can't be everywhere at once, but the CIVB will "intensify quality control inspections of operators selling at abnormally low prices" by pointing the inspectors in their direction.

If a wine estate fails inspection, it cannot produce wine under the Bordeaux label. They will be shut out of the market. Getting money to rip up vines and plant another crop might look more attractive.

But the CIVB may be trying to have it both ways. In the same report, the leadership also insists Bordeaux is not suffering from a wine glut—just a cheap wine glut—and they anticipate increasing overall production by 12 percent in the next eight years. By matching the new wine categories with specific markets, the CIVB says they can turn around Bordeaux's fortunes.

The key? Bordeaux needs to be more fun. Going nose-to-nose with New World marketing teams, they insist the new "Fun" wines can be trendy and attract drinkers under 35. Local wine cooperatives are being pressured to reorganize, with some co-ops focusing on producing and packaging "Fun" wine while others stick to their traditional role of supplying négociants. And the CIVB sees strong potential for increasing sales of the "Exploration" wines, which retail for around $20, particularly in the U.S., Asia and traditional European markets. Both of these initiatives require increasing yields.

There's plenty to be skeptical about, and the CIVB faces several long-term problems if it doesn't succeed: Bordeaux is facing attrition by age. Forty percent of its winegrowers are over 55. They want to retire but young people don't want to take over their vineyards. Farges believes that will change if the Reconquest is successful. "Economics will decide everything," said Farges. "Young people will come to the trade if they have confidence in our future."

If they don't, Bordeaux may reduce production in a simple, but perhaps even more painful way—the end of small vineyard ownership as a way of life.

Fred Swan
California —  August 4, 2010 9:16pm ET
I wonder where they plan to sell the extra wine that will be produced. It seems to me that oversupply is an issue for the global wine market, not just low-end Bordeaux. And there is no shortage of "fun" wines with attractive marketing either. I wish them luck.

Kenneth A Galloway
Paris, France —  August 5, 2010 5:53am ET
Very interesting article and right on in terms of many of my personal marketing interests at the winery/vineyards where I work... I think we have a niche in all three categories, "art", "exploration", and "fun"... but in Savennieres, we suffer from a different issue, which is the sad reality that not many people are aware of the beauty and quality of our chenin blanc... in either case I hope Bordeaux gets their act together, for the sake of all French producers !

Kenny Galloway
Domaine du Closel
Stephen Stewart
new mexico  —  August 5, 2010 11:03am ET
Fun wines sound like fruit bomb wines to me.That seems to be the modern wine these days.
Denis Boucher
Montreal, Quebec, Canada —  August 10, 2010 8:58pm ET
How about good value for the money? That seems to have been forgotten a long time ago in the Bordeaux area. In a sense, the problem is not just with inexpensive and uninteresting wines but also with overpriced first growths and wanna be. It can be "fun" to taste a great Latour or Cos or Ducru. It is not as much fun to have to remortgage your house to pay for it! When you know that all first growths produce more than 350,000 bottles a year, the rarity factor is absolute non-sense. Consumers are quite intelligent. When they feel that they are not getting enough for their money, they turn to sources that show greater respect and offer better value. A 1995 first growth was selling for about 75 dollars when it came out. There is no acceptable explanation but greed that can explain how 2005 sold for $1,000. Unfortunately, even plunks thought they could apply the first growth approach. The marketing plan was needed then. It may be too late now. It's hard to win back customers when you have cheated them.

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