Last days set for bad Bordeaux

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The days of bad Bordeaux are numbered after a decision from the region's wine supremos to drastically cut production of lower-end bottles of the wine.

Unveiling a strategy here this week, Bordeaux's wine trade council (CIVB) decided to increase overall production by 12 percent while reducing the current 1.1 million hectolitre production of so-called "Basic Bordeaux".

These cheap and cheerful labels retail for less than two euros (2.50 dollars) per bottle in France, but producers and merchants fear they dilute the region's image as the home of prestigious wines.

The all-powerful CIVB, run by winegrowers and merchants, will use government quality control measures to remove poor-quality producers. Government organisations will aid the transition for those exiting the wine business.

As part of the new campaign, the number of countries targeted for marketing has been reduced from 60 to 30.

Seven markets will receive priority: China, the United States, Britain, Japan, Germany, Belgium and France. Nine other markets, including Hong Kong, South Korea, Russia and Canada come just behind.

At a conference held following the CIVB general assembly, trade leaders declared there was no room for "Basic" in Bordeaux's future.

Their strategy, dubbed "The Reconquest", aims to increase current revenues of 3.5 billion euros by one billion euros within five to eight years.

It offers business plans for struggling wine merchants, overhauls the focus of wine cooperatives, and divides Bordeaux's current wine production into four price categories -- Art, Exploration, Fun, and the much-maligned Basic.

"The 'Basic' wine does not correspond to the image of Bordeaux", said Georges Haushalter, general manager of Compagnie Medocaine des Grands Crus and the newly-elected president of the CIVB.

Under the plan, one-third of the current 1.1 million hectolitres of "Basic" will be improved and sold in a higher category, one-third will become another product like rose or claret and one-third of the vines will be ripped up.

The number of winegrowers will drop by 26 percent and vineyard surface will shrink by seven percent.

Haushalter and other trade leaders, quoting a study by international consultants, said the Bordeaux brand is "damaged", a number of traders and winegrowers are in peril and the financial crisis has slowed the investments needed to improve quality and remain competitive.

Furthermore, the trade, which employs 50,000 people, failed to realise its potential even before the financial markets crashed.

Wine merchants fear that in growth markets between 2003 and 2007, Bordeaux missed the opportunity to sell 48 million bottles of wine and earn 293 million euros in revenue.

And quality is not the only issue.

The volatile price fluctuations in Bordeaux's bulk wine market "weigh heavily on Bordeaux," said Bernard Farges, president of the Bordeaux and Bordeaux Superior wine syndicate.

"The low percentage in volume that is in difficulty is destabilising the rest of the sector," Haushalter said.

Last winter, one tonneau (900 litres, 198 imperial gallons, 238 US gallons or 100 cases) of red Bordeaux bulk wine sold for 980 euros. In July it sold for 850 euros.

And in between, it dropped to 650 euros, the same price, ex cellar, as a bottle of Chateau Lafite 2010 on futures.

"No one is making money on this segment of wine," said Farges. "It is not viable, it is not sustainable."

A sustainable future means a migration towards high quality wine, according to Farges.

The Reconquest calls for increasing the production of "Fun" wines by 11 percent, "Exploration" wines by 57 percent and "Art" wines by 34 percent, which will increase revenues in those categories by 12, 60 and 34 percent. The region will do this by increasing yields to levels in line with New World wine production.

Overall revenues would increase by 30 percent.

Bordeaux's leaders are also developing a simplified labelling system, apart from the often confusing appellation and classification labels, that will allow the consumer to easily identify the quality category of Bordeaux wine.

© 2010 AFP

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