"The Bordeaux wine market is eerily calm at the moment but market operators can't play the waiting game too long," explains a broker specialised in contractual relations between producers and merchants. This profession is often described as the beating heart of the Bordeaux wine business.
The market's pulse is definately on the slow side this season : transactions are rare between producers and merchants, most of whom have a year's stock ahead of them and are not in any hurry to re-order, despite a historically low yield in 2008. On the production side, growers refuse to lower their prices and quotations are not budging. To add to the difficulties, banks are hesitant about granting loans to finance stocks....As a result business is grinding to a halt, a situation which could well continue throughout the semester.
The wines will have to be sold at some stage to finance the coming season. There is hope for an increase in sales in the Spring....For the moment however, the market is so paralysed that Saint Gobain, the major regional glass bottle manufacturer, has already stopped production from one of it's ovens in the company's factory based in Charente....
The grand cru wines are also in a difficult position. The 2007 vintage prices were expensive and merchants still have a considerable number of unsold bottles in stock. Moreover, the practically non-existant futures campaign in the Spring did little to move stocks.
Pension funds, which had invested in the wine business for speculation purposes, have suffered the effects of the financial crisis and are consequently putting wines on the market at drastically cut prices...and in doing so are brutally re-adjusting the market.
Author:
César Compadre
doc@sudouest.com
S.O. 09/01/09
Translated by Maxine Colas.