Paging the Champagne Warrior...

WINE TALK
1

Brad, will RM’s be cutting their yields this year or is this deal to “stabilize prices” just amongst negoce and their growers?

And, if the US can indict the officers of the De Beers diamond cartel, are the big Champ houses next? If not, why not?

2

Roberto,

Unless something changed in the last few days, my understanding is that this applies to everyone. The big houses are bursting with bottles in their cellars and dealing with poor export markets. They have been making their case since before spring that prices need to at least stay the same and yields needed to be cut drastically for at least a year. This would go for everyone even the smaller guys who can easily sell all their wines every year. A bit unfair, yes, but that is the way it goes.

I understand why this is being done and in many ways agree as the growers who are dead set against this are not the growers we all know and love (who could probably sell out easily just in France and don’t really need the export markets though they are glad to have them). My guess in early spring is that prices would remain stable from 2008 and the yield would drop to around 10,000 kg/ha. The yield may go even lower which I think could be a mistake in the long run.

I wish Champagne would stop being so bipolar as just a year ago they wanted to raise, raise, raise the yield and would pay whatever a grower asked. Now it is a complete 180 degree turn. This is when it is good to be a grower-producer as you don’t have to deal with the price wars as much, but the yield cut will hurt. Let’s hope things turn back around for next year. On the brightside, at least they are being flexible.

3

Brad,
Do you expect it might be a bit like OPEC when a group of major players all agree to cut back X percent, but in reality, don’t cut back quite as much? [scratch.gif]

4

Alex,

They really are cutting back. A lot of times when the yield is set the problem is that demand outstrips supply so there are a number of folks who will buy excess (and illegal) yield. The issue right now is that demand isn’t there (for today… who knows about tomorrow) so there is no buyer for excess grapes. The wines that are selling out and still oustripping supply tend to smaller volume grower or single vineyard cuvees and these wines are based on quality over everything else. This means that the yields are most likely going to be followed because the demand to go above them isn’t there even though the grapes are.

5

Just thought I would add a little more to this which should give a little more perspective into why decisions were made.

  • grape prices remained stable vs. 2008. This came into play when the yield was decided. If the yield was going to be over 9700 kg/ha, the negociants asked for a price decrease.

  • Negociants were limited to 8000 kg/ha with an additional 1700 kg/ha to remain in reserve until next year (and not having to pay until next year if desired) while recoltants were allowed up to 9700 kg/ha was strictly done because a large number of negociants would not be able to pay for grapes above 8000 kg/ha. Initially I thought it was a cash preservation move, but it actually was a move to help those out who had no cash to pay.

  • Separate from the annual yield, there is a blocage or individual reserve of 8000 kg/ha (or a little more than 1/2 a harvest to help out in case of emergency) that each producer can maintain. This is above and beyond any annual yield up to at least 14,000 kg/ha unless you have filled up your blocage. That said, the blocage limit can be raised if a year’s yield is decided to be 14,000 kg/ha. Thus, in 2009, you can still harvest/buy up to 14,000 kg/ha as long as everything over 9700 kg/ha goes into the blocage/reserve. This year, do not expect many negociants to be adding to their blocage because they cannot afford it. Some will, but they will be the exception. Growers probably will especially if the grapes come out very well (so far the vintage is promising). Again, the blocage guidelines are completely different from the annual yield setting and could turn out to help some growers this year. However, remember that even though you can trade your blocage wine in and out each year, you aren’t going to be using this for vintage cuvees, it essentially is reserve wine (though I’m sure you could find a way to use it for a vintage cuvee too - it just isn’t the way it was meant to be used). Also, you need to remember that most producers have a good amount in their blocage already.

  • All in all, most in Champagne found the results satisfactory. Yes, some are still grumbling about it, but all things considered, all sides met at a point that worked. Now if things are the same next years, it may get a bit more intense.