Burgundy expects lower wine prices in softer market

Tue Jun 16, 2009 8:46am EDT
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By Michel Rose

PARIS (Reuters Life!) - Burgundy wines, hit by a fall in U.S. and British demand suffered a 30 percent drop in first-quarter exports and a "more difficult" year ahead is expected to lead to price cuts for the region's finest vintages.

Increased volumes in 2009 compared to the relatively poor harvest of 2008 which helped producers maintain prices, combined with an enduring economic crisis will force prices down, the BIVB sector organization said.

"The harvests in 2009 should be good, we will start picking grapes early, around September 10. If the crisis continues, then it will be difficult. A drop in prices of grand crus wines is to be expected," BIVB President Pierre-Henry Gagey said.

Stable sales in France in the first three months of this year mean global sales of Burgundy wines dropped only 11 percent in the first quarter of 2009, but the domestic market is now also feeling the pinch of the crisis.

"In the last few months, I have the impression that it hasn't improved, maybe it will at the end of this year. All in all, we will maybe finish this year on a 15 to 20 percent drop (in sales)," Gagey added.

"Our clients will expect price cuts," Gagey added. "But we were more reasonable than wines from Bordeaux, where the price increase was crazy."


He added that the rise of the euro versus the U.S. dollar and the pound sterling increased the pressure on producers to reduce their margins in those markets, to hang on to big retailers such as Tesco or Sainsbury's in Britain.   Continued...

<p>A bottle of Romanee-Conti 1945, a Burgundy wine, is shown in Geneva May 8, 2007. REUTERS/Denis Balibouse</p>