Success - Burgundy style

Posted on | December 15, 2006

Wine writers are sent a lot of press releases which all too often, to our shame, we take at face value. They are fodder for our publications and a demonstration of intentional influence on the market by PR and marketing companies on behalf of their clients. A recent press release came across my computer screen celebrating the success of Burgundy wines as a harbinger to a trade tasting for wines from the region and which was issued by Sopexa on behalf of Burgundian winegrowers. I decided to take a closer look and I have appended some comments to key statements made in the release which might be open to a different interpretation. I have reproduced the release in full at the bottom of the page so you can ensure that remarks are not taken out of context.

The tasting will focus on 2 vintages: the current elegant 2004 vintage…

This would seem to conjure a whole new euphemism for what was really a very difficult vintage for most producers. In fact, many producers’ crops were completely wiped out by a hailstorm in August and wine commentators have warned consumers about the likely variation in producers’ output in terms of quality - always a feature in Burgundy anyway. So, is that how one would describe the 2004 vintage - as ‘elegant’. I am reminded of the terrible storm following the harvest in Hardy’s Far from the Madding Crowd. I don’t recall Hardy using the word ‘elegant’ in his description of it. There will, no doubt, be some producers who will have produced terrific wines, even elegant ones, but as an epithet for the entire vintage this is stretching it.

The athmosphere (sic) of the event will reflect the spectacular form enjoyed this year by Burgundy wines. The UK alone has imported over 28 million bottles (+ 6%) from August 05 to July 06 and remains Burgundy’s first export market in volume terms (Source BIVB / French Customs).

According to the BIVB’s own website and statistics on the UK market, Burgundy was already exporting just over 28 million bottles in 2003. It is not quite clear therefore why this 2005/6 growth figure should be of such celebration except to say they may be back on track. Clearly, there has been something of a decline in exports during the intervening period and they are only just beginning to pull back. In fact their 2004 report stated: “Given UK sales of 26 million bottles (down 11%) with a value of 134 million euros (down 5%), Britain remains Burgundy’s number one customer, accounting for a third of all exports.” So, yes, overall, Burgundy is making a comeback. But a comeback is, well, just a comeback.

It (UK) accounts for nearly half of Burgundy European sales and 30% of world sales.

This might be rather worrying. As new markets have opened up around the world, apparently the world’s taste for Burgundian wines has declined. Back in 2002/3 the UK accounted for only 31% of their exports by volume and 26% by value (source: BIVB). Added to their woes must be the weakness of the US dollar.

Chablis also enjoys a very enviable position, with UK consumption equating to 40% of total exports.

I think this means that the UK market absorbs 40% of all exports from Chablis. This is also indicative of where most of the UK imports are coming from within Burgundy. Chablis is by far the largest category of wine exported to the UK from Burgundy - some 41% of all Burgundian white wines and 33% of both red and white wine (2003) (source: BIVB).

Sales are buoyant both on the domestic market (+7%) and on export markets. Totalling 93 million bottles, Burgundy’s exports from August 05 to July 06 increased by 14% year on year, (Source BIVB / French Customs). Anne Parent, Vice-President of the BIVB Communication Committee explains: “The excellent 2005 vintage was keenly awaited by all foreign buyers and sales of the regional ACs started the ball rolling in fine style. The Burgundy nègociants were ahead of the game and rapidly acquired half the harvest. The strong upturn in Chablis exports, up 24% and accounting for 28% of total Burgundy exports, has also played a significant part.”

It is always helpful to be provided with figures especially when provided to clarify a point. I would like to have seen the source for these, but the French customs information is not easily discovered . However, it is clear from this that the driver for the so-called UK export increase is from Chablis. Was the advertising and promotional campaign (see below) which has been so expensive and effective so weighted towards Chablis and Macon? What do producers from other areas think?

Well, they’ve already headed me off on that one. Here it is: a ringing endorsement of the BIVB marketing initiative implemented and controlled by their marketing company Sopexa as provided by a producer from the Côte de Nuits - who presumably just bubbled over with excitement when he said:

“The BIVB investment in a collective initiative, namely the advertising campaign launched in 2005, which has continued throughout 2006 is paying off.”

Well, let’s put this into context. I don’t know when the campaign kicked off in 2005 but according to Nielsen Burgundy Wines spent approximately £148,000 between February 2005 and January 2006 on advertising. This compares to Beringer Blass Wine Estates who spent nearly £2m and Constellation who spent over £1m. But this is perhaps likely to be insignificant compared to the undisclosed back-door payments to supermarkets and large chains for instore promotions - particularly training, wine fixtures (the displays), promotional leaflets, and BOGOFs (buy one get one free) not to mention market research. [ Interestingly, these types of payments were originally controlled in France under the Loi Galland but there has been some added confusion and complexity to this story which I am no longer abreast of. However, part of the object being to stop supermarkets from selling products at below cost and drive the smaller retailers out of business. We have no way of knowing the size of these payments ]. However, I am not clear why said producer from the Côte de Nuits seems to think the campaign is paying off when most of the growth has come from white Chablis and Macon unless he’s been taken in with the general statistics.

The producer continues:

“The campaign positions Burgundy as the home of Pinot Noir and Chardonnay. The UK is a mature market and consumers are now keen to explore the world of wine and embrace the concept of terroir.”

Clearly the producer believes the rhetoric of his marketing. The assumption here is that the consumer, who we all know loves Chardonnay, is also apparently more and more developing a taste for Pinot Noir - although there doesn’t appear to be much evidence that Pinot Noir sales have blossomed to the same extent. And, he/she will be more inclined to buy a Burgundy wine believing that they are the rightful keepers of these varietals. I am not convinced. Nor am I convinced by his notion that consumers (let’s remember that most wine sold in the UK as an impulse purchase and consumed the same day) are ready to grapple with ‘terroir’. Since most wine professionals can’t agree on what it means it is difficult to see how the consumer is going to ‘embrace the concept of terroir’ either unless it is one of those mystical terms whose very abstruseness is sufficient to convince a consumer that if a wine ain’t got terroir (French terroir that is) then it ain’t worth drinking. A recent thesis by some French academics examining vineyards in the Haut Mèdoc cast doubt on the whole ‘terroir’ concept. However, there is a consistency in the marketing of French wines when recently they suggested that everyone who ate French food wanted to be French. The only problem I can see is that the word ‘terroir’ isn’t very edible - and it certainly isn’t comprehensible.

Anyway if we are in any doubt any of the above then the publishers of the Press Release provide further irrefutable evidence for the changing fortunes of their region: the recent auction of Hospices de Beaune:

“While most export markets have enjoyed a double digit growth both in terms of volume and value over the year, the trend has been confirmed by the good results of the Hospices de Beaune auction on Sunday 19 November. Contrary to expectations, prices exceded those of the exceptional 2005 vintage. Whites in particular achieved a staggering 63% increase, while overall the average barrel price was up by 15%.”

The Hospices de Beaune auction would, I venture, hardly be representative of the market as a whole even if it can be held up as a symbol of pride for Burgundians. Overall, supply was down to 680 barrels, compared to 789 last year (-13.8%). Allowing for the effects of supply and demand one might well expect an increase of the order of 15% assuming some small level of inflation. The prices of the white wines is clearly an anomaly. Would you want your export strategy to be based on an anomaly?

The communiquè is directed at the trade who may take a generally cynical view of the contents of the statements. But it is also a public justification to Burgundians on the effectiveness of their marketing. I question this.

But of course… it is only a press release.

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