The Winds Of Change
Count me as one of the surely millions of people who gained at least ten pounds during the pandemic, mostly from eating and drinking well beyond my normal threshold. Not only was I consuming more volume, I was treating myself to decadent, high-caloric meals almost daily, washing them down with an entire bottle of Bordeaux before heading over to the whiskey shelf—a pattern that went on for nearly two years.
Now that reality has kicked back in and we can no longer live like the world is about to end, the wine industry has a serious problem; particularly Bordeaux. An article in the Guardian this week confirmed just about everything I’ve been telling my clients over the last two months: consumption habits are changing fast.
To be more specific: a recent French survey found that consumption of red wine in France had plunged by 32% over the last ten years, mainly in the 18-35 age group. The main causes were: “changing tastes, people eating less red meat, fewer families dining together, and an increase in households with single parents who did not drink alone.”
The situation has become so dire in Bordeaux that winemakers are now asking the French government to compensate them for ripping out at least 10% of their vineyards. Not only do they want to decrease production, they want to destroy current inventory to immediately crush supply and push pricing back up (and they want compensation for that, too).
Even if the French government capitulates to those demands, it won’t save the Bordeaux industry. The declining interest in French claret isn’t a blip on the radar, or the result of a few tough vintages, unfortunately. It’s part of a sea change in the way we drink and eat, an evolution that’s been in play for more than a decade, and the inevitable end of the cycle that dooms all pop culture trends. Especially the most extravagant ones.
Bordeaux has been riding the gravy train for the last twenty years. If you need proof, look at the price increases over that period. When Château Mouton-Rothschild, one of five coveted first growth producers, launched its pinnacle 2000 vintage, preorders started at around $300 a bottle. Five years later, the fantastic 2005 vintage arrived and preorders started at well over $800. The heralded 2010 vintage launched at more than $900 a bottle. The tripling of prices by Bordeaux’s best producers reflected an increased demand from premium consumers, with many of those costs holding well into 2016.
Even smaller properties experienced the same bump. A bottle of insider favorite Domaine de Chevalier Rouge could be purchased for $36 back in 2000. However, the 2016 vintage sold for around $120—a 333% increase in less than twenty years. So when Bordeaux vineyard owners say “sales and prices have collapsed because of overproduction and altered drinking habits,” they’re really talking about a bubble that has finally burst. With increased prices came increased production, and a misbelief that the good times would last forever.
Both Scottish and American whiskey distillers should see the writing on the wall here, but when you’re in the midst of a boom it can be hard to let go. The obvious difference with the Bourbon industry is that most producers haven’t tripled their wholesale prices during the recent gold rush, allowing retailers and secondary flippers to do that for them in the face of increased demand. Fortunately for these distillers, their profits and expansion aren’t tied to the maintenance of unrealistic price tiers. The Scotch single malt industry, on the other hand, is due for a rude awakening.
One bright spot in the article, however, was Burgundy. Prices have not only held, but the low yield of the 2021 vintage has only driven the frenzy further with global collectors. Burgundy’s production volume is only a third of Bordeaux’s though, and there’s no room for expansion in the region’s top vineyards. Knowing there are only so many bottles to go around, the FOMO-based demand still outweighs supply. That’s why I’m more than curious to see what happens after Buffalo Trace doubles its production over the next few years. Once everyone can get a bottle, will Bourbon drinkers still want it?
-David Driscoll