BORDEAUX: An iconic region battles to sustain market share - Part 2

(WB) - A Weak Value Proposition

Despite the shrinking number of wine properties in Bordeaux, the region remains a world of small farmers. Their wines may carry the name of a château, but the edifice depicted on the label is typically more of a country house than a grand castle. As is true elsewhere, small viticulteurs can be resistant to change, or they simply lack the resources to modernize cellars or hire a famous consultant. This is not to say that modest properties have not been gradually updated with new presses and tanks, because in truth change has always characterized Bordeaux. If this were not true, the region would never have survived for centuries and attained iconic status. It is equally true that the image of Bordeaux is derived from the upper crust of its wines. The large, broad base is the part under serious threat.

Regional red Bordeaux and Bordeaux Supérieur (by law, lower maximum yields at higher maturity) constitute the foundation of the region: half of total output. This amounts to a very substantial volume averaging 27 million hectoliters (30 million 9-L cases) in recent vintages. There are many examples of well-crafted regional reds—and dry whites—made to a style which can stand up to New World competition at lower price points. Equally, critics contend there are too many which lack the fruit and flesh to appeal to contemporary wine drinkers. There is no mystery as to why Bordeaux is losing, or is unable to grow, volume on some key foreign markets. Meaningful increases in shipments must be based on wines retailing in the U.S. below $15, or certainly less than $20. Nielsen research shows that approximately 80 percent of wine volume falls at less than $11.99. Focusing a U.S. marketing campaign on products with consumer prices up to $55 a bottle, as the Bordeaux Wine Council (CIVB) has chosen to do, assures that growth can only come in small increments. This strategy seems to be dictated by the needs of producers, not the behavior of consumers. The Wine Market Council has shown that the most influential factor determining the purchasing decisions of American consumers is an exceptional price-value relationship. This is precisely the Achilles heel of Bordeaux.