The wine industry has developed quite fast from a regional market to a global market and emerging new wine regions have intensified the competition. Overall world-wide wine consumption is increasing although this varies from country to country. Countries with a very high traditional consumption, such as France, have reduced their overall domestic consumption level over the last few years. The positive economic development of emerging countries (e.g. China, Eastern Europe), the general growth in wealth and the positive health aspects associated to moderate wine drinking are all positive factors for the wine industry. Several traditional wine regions have suffered greatly in the past few years. This is especially true for the Bordeaux region and even more so for the non Grand Cru wines and wines from the lesser known appellations.
WECM has analyzed several crisis factors for the Bordeaux region: |
|
|
Lower French domestic consumption. Chateaux without a significant export network have suffered the most. |
|
|
USD/EUR exchange rate. The weak dollar has shifted sales of prestigious chateaux from the US to Europe. This shift in sales has weakened the market position of the lesser known chateaux. |
|
|
No export network and dominant use of wine wholesalers. Wine wholesalers have shifted sales from the lesser known estates to the prominent labels. Those estates who sold almost their total production via one or only a few wholesalers have suffered the most. |
|
|
Rules & regulations: too many rules created to safeguard the quality have also lead to reduced creativity and innovations. |
|
|
No quality strategy: too many estates in the Bordeaux region have in the last few years failed to improve the quality of their wines. |
|
|
Weak international marketing efforts. |
Many wine estates who have not actively responded to these crisis factors are now in financial difficulties and a rising number are for sale.
WECM estimates that the bottom of the general crisis in the Bordeaux area will be reached in 2005 and that now is the right time to invest in wine real estate. WECM will be able to build a profitable business from the purchased wine properties because it is focusing on the three most important areas in need of improvement: |
|
|
Quality of the wine; vineyard management and wine making |
|
|
Enhanced modern international marketing |
|
|
International export network |
