Wines of Bourgogne: Worries weigh, but hope floats

How has the recent unrest, political and social, affected the Burgundy (now officially called Bourgogne) export market? Hard on the heels of myriad climate change problems, comes Trump taxes, the Hong Kong upheaval and Brexit, causing producers in this premium wine region in France to re-create new export strategies for their expensive wine. Bordeaux-based correspondent for BTW, Brinda Bourhis explains

As I was heading to Bourgogne to meet with Ruma for our Hospices de Beaune experience at the end of November, I was reading online various articles about how Bordeaux wines were coping with the current economic events: Brexit, Trump taxes and social protests in Hong Kong. The news was not promising, with turnover figures in the red for Bordeaux wines.

Export sales are down by 9%, the main countries affected by this drop in volumes being UK (-3%), China (-27%), Hong Kong (-22%). However, the USA has seen an increase of 4%. (source CIVB, figures end September 2019)

We need to take into consideration when looking at such figures, that Bourgogne produces much less wine than Bordeaux (1.41 million hectolitres vs 5.1 million hectolitres for Bordeaux).

 I was curious to find out how France’s other fine wine region – Bourgogne, was facing the turmoil in such key markets.

During our visit to Bourgogne, I received inputs on this from leading figures in the Bourgogne wine industry.

Louis-Fabrice Latour – Vice President, BIVB

At a press conference prior to the Hospices wine auction, Vice President of the Bourgogne Wine Council (BIVB) set out the global picture of export sales for the first 8 months of 2019. 

Despite a rather gloomy global climate, Bourgogne wines are actually doing quite well, with an increase of 6% in volume for their export markets (+ 9.3% in value). The graph below shows the positive indicators for the major markets.

“We are lucky here in Bourgogne compared to other vineyards in France such as Bordeaux who are seeing a drop in their exports,” said Latour.

Regarding the USA, Bourgogne’s first export market, the Boeing/Airbus disputes around EU subsidies have been going on for a long time. President Trump suddenly decided to retaliate in October by adding 25% taxes on imported wines to the US, those with under 14 percent alcohol. “A third of French wines are affected by these taxes, including Bourgogne” explained Latour. He added that the actual drop in sales to the USA will only be apparent in early 2020. His instinctive feeling was that American distributors were not very supportive of the Bourgogne producers, often postponing orders to next year in the hope that the taxes will be removed. Until and if this happens, Latour foresees the possible increase in bulk wine sales to the US; these are not subjected to Trump’s taxes.

• 

Guillaume d’Angerville – Domaine Marquis d’Angerville, Volnay

This domaine in Volnay that has been in the same family for 200 years, is headed by Guillaume d’Angerville who knows quite a bit about the world economy having spent several years in banking and finance before returning to the family wine business. As with many estates in Bourgogne, Marquis d’Angerville’s three top markets are the USA, the UK, and Japan, in that order. He did not seem too concerned about the UK and Brexit issues. “I don’t think we will have less demand but maybe shipping will become complex, requiring more paperwork and border controls.” He is also seeking to develop the Asian market, placing his fine Volnay wines in Korea, Singapore, and India.

Christian Ciamos – Maison Albert Bichot

When it comes to sales strategy, Christian Ciamos has it carefully thought out for the 85 countries that consist of their export market. “We do not have a single market that has more than 10% of our turnover. We balance our sales by applying an allocation system” explained Ciamos.

With regard to the USA, Bichot has 8 full-time staff covering the country, and they are currently trying to convince their importers to help them in the Trump tax issue. This is vital as a short term strategy as Ciamos does not see the taxes being wiped out at least until the next elections in November 2020.

As for Hong Kong, Bichot has been hit with a 20-25% sales drop due to the social protests. “We now ship direct to Shenzhen rather than Hong Kong, which means we have the additional Chinese taxes, but at least we can get our wines in the country,” he said.

Daniele Bonnardot – Domaine Bonnardot

Daniele Bonnardot took over her parents’ domaine a few years ago, producing wines in Hautes-Cotes de Nuits. During her parents’ time, there was no wine being exported at all, so Bonnardot is building each market from scratch. Luckily, her former career in IT which took her to live in both the US and the UK, enables her to have some sort of understanding of the markets.

“I received my first order from the USA in November, but with the tax issue, I was expecting my client to cancel. He has maintained the order but has decided to buy less, saying he’ll place another order sometime in 2020,” explained Bonnardot. For her UK sales, it is business as usual for the moment. “Our importer in England was talking of stocking up before 31^st October when Brexit was supposed to go through. Finally, he decided to the contrary and is placing orders as needed,” she added.

The domaine now exports 10% of their wines, with the hope of increasing quantities, but the uncertainties that are lingering in the world economy makes it hard to have a steady, long term perspective.

Wines of Bourgogne (Burgundy) are available in India through leading importers:

Albert Bichot wines at leading all-India retailers: Aspri Spirits, Mumbai
http://asprispirits.com/

Marquis d’Angerville wines: Rajiv Kher Selections LLP, Delhi

About Brinda Bourhis

After five years working for a major Bordeaux wine merchant, British-born Brinda Bourhis has solid knowledge and experience of the wines of one of the finest regions in the world: Bordeaux.
She owns Winevox, a company that provides quality wine education including the WSET course, wine marketing and translations for the French wine industry.
Winevox also runs an on-going ambassador programme in the US for the Crus Bourgeois du Medoc, organising masterclasses at top universities such as Stanford, Columbia, Yale, and staff-training for wine retail stores as well as tastings for private wine clubs and associations.