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May


Winemakers twirling their moustaches as Bordeaux burns

Sun, 16th Jul 2006

BORDEAUX WINEMAKERS have never had it so good. After a 'legendary' 2000 and an 'exceptional' 2003, last year they won the equivalent of a rollover jackpot. With perfect weather and growing conditions and radically improved techniques, many top chateaux made what they claim to be their best wines ever. And they are charging prices to match - double or sometimes treble their already exalted norm. Thus, a case of top-flight 2005 Bordeaux will set you back at least pounds 4,000 and sometimes much more. Chateau Haut-Brion is asking pounds 4,500, Chateau Cheval Blanc pounds 5,250, Chateau Ausone a staggering pounds 7,500 - that is, pounds 600 or more a bottle for wine that is still in cask and which no punter would dare to taste for another 10 years.

On the other hand, Bordeaux winemakers have never had it so bad. At the bottom end, many growers are in serious trouble, according to the Bordeaux wine trade body, whose president resigned in May in despair at the chronic failure to reduce the oversupply of basic wine that is at the heart of the problem. Many growers are refusing to sell at current price levels. While they want more cash to tide them over, the EU is determined to drain the wine lake - the result of worldwide overplanting - and stop a regime of subsidies and 'crisis distillation' that costs European taxpayers euros 1.3bn a year.

The Bordeaux nobles seem little concerned at the plight of their inferiors. Why should they be? The famous chateaux are among the original global brands, with histories dating back to the 18th century and international connections way beyond that (Bordeaux vineyards have some claim to be the first British subsidised industry; the city took the English side in the Hundred Years War). Production is tiny, and great Bordeaux is at the top of the wish list of the new rich in every emerging market, with China and Russia currently to the fore.

Yet if the blue bloods aren't worried, they should be. Brands are as fragile as they are powerful. And the first cracks in the myth have begun to appear. Bor deaux's own guru, the US critic Robert Parker, whose systematic rankings have done much to reassure consumers and collectors and consolidate the Bordeaux cult, has laid into the 'aristocrats of the Medoc' over the pricing of their 2005s.

By setting their prices with an eye to getting one up on their neighbours rather than the interests of loyal consumers, 'they may well be killing the golden goose', Parker charges. US buyers are staying away in droves, criticising 'insane' prices. The Bordelais are also taking hits from friendly fire. The resigning president of the Bordeaux trade association complained that 'unless the fundamentals change, the crisis will not go away. We are wasting the opportunity that a great vintage like the 2005 has given us.'

Winemakers in the Languedoc, who have already resorted to violent protest, have accused the Bordelais of 'twirling their moustaches' while others bear the brunt of the crisis. Perhaps most damaging has been a high-profile comparative winetasting of mature vintages of famous US and French growths. The replay of a celebrated 1976 tasting comparing younger vintages, it was widely expected to favour the French. In fact, US growers swept the board.

Such has been the hype that Bordeaux chateau owners will certainly sell their 2005s. But as they congratulate themselves on the cash rolling in, they might look at the trajectories of two other luxury industries that compete for the dollars of the new rich - flashy watches and exotic cars. Both demonstrate the folly of imagining that the top end of an industry can survive on its own.

Company after company on the run from low-cost foreign competition believes it can survive by retreating upmarket. (This is the whole story of UK manufacturing since the war.) But where are they now, Rolls-Royce, Bentley, Aston Martin or any other luxury marque? All owned by much bigger mass-market companies. The most successful top-end brand is Toyota's home-grown Lexus, the embodiment of everything the world's most effective manufacturer has learnt in half a century of making cars.

An even better analogy may be Swiss watches. In the 1980s, the Swiss were crumbling under the assault of Japanese digital manufacturers. What saved them was the invention of the Swatch, a pert, hi-tech, low-cost design whose success prevented the Japanese from cleaning up at the low end and devoting the profits to eating into the top, a la Toyota. It also ensured the survival of the Swiss watchmaking infrastructure and specialist skills which are the basis of Swiss cachet.

In winemaking the competition is not Japanese. But the Chinese and Indians are planting acres of the best grape varieties and - before you laugh - a respected wine expert predicted recently that in 20 years they would be doing to western winegrowers what their industrial counterparts are to electronics manufacturers and software firms. Never mind today's prices: it's time for Bordeaux's top winemakers to recognise that their fate is inextricably bound up with that of their lowlier brethren. There's no economic liberty, you might say, without equality and fraternity too.

The Observer,16 July 2006


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