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September 17, 2005

French wines in crisis, while American exports soar

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Plummeting exports of French wine have forced drastic action on the part of the dirigiste mandarins in Paris. The San Francisco Chronicle reports that

Makers of Bordeaux wines have been told to reduce their output this year by an unprecedented amount because of overproduction and falling prices, according to the body that controls French winemaking.

In response to a growing surplus of French wine in a tough global market, France's Institut National des Appellations d'Origine instructed growers in most French wine—producing regions to reduce output for the 2005 grape harvest —— but none by as much as Bordeaux. Bordeaux makers were told to reduce output by about 12 percent, the institute said in a statement.

In the first quarter of 2005, exports of Bordeaux wines fell by 11.4 percent in volume and 17.9 percent in value.

The Bordeaux wine industry has long haughtily insisted that its products are incomparable, and would always find a ready market, no matter what prices are charged. The same Bordeaux wine industry has also been shaken by recurrent scandals involving fraudulently passing off inferior wine as  premier cru,the officially—designated "best" estates.

Incidentally, we California wine producers exported 28% more wine last year than the year before. And we have increased our exports over the last ten years at an average annual growth rate of 23%. It is harvest time in our vineyards right now. California never has a bad vintage (unlike France), though some years are better than others. So far, 2005 is looking pretty good. Time will tell.

Thomas Lifson   9 16 05