The French wine industry can not seem to catch a break. First came the global Covid shutdown, which initially tamped down demand. Now unseasonably cold weather is threatening to ruin an entire season of wine.
Last year was tough for French winemakers, as global demand fell as a consequence of the Covid lockdown. This was particularly difficult for premium wines and champagnes, as most celebratory events were cancelled. Champagne production was cut 25% to avoid a sharp drop in unit prices caused by oversupply. Happily, U.S. consumption eventually took up the slack (and then some) to bring a smile to producers’ faces around the world. As vaccines were developed, produced in huge volumes, and delivered into people’s arms, it looked like the French wine business was going to quickly return to its former levels.
Then came the spring. Just as the grapevines were beginning bud break and enjoying early warm weather, a late Arctic frost swept across most of France. This extremely late cold snap was cataclysmic for the budding vines across the majority of the winegrowing regions in France, including Champagne, Bordeaux, Burgundy, Provence, and the Rhone and Loire Valleys. Growers struggled to protect their vines, setting small fire pots and candles among the vines and operating fans to circulate the air through the vineyards. Sadly, these efforts were insufficient. It is estimated that the frost could reduce overall wine grape yields by 25% to 50%. This could result in a revenue loss of €2B! Last year there was plenty of fruit and not enough demand. This year there may not be enough fruit to meet resurging demand. A tough time to be in the wine business!
Of course, this is not the end of the French wine industry. The French government has financial support programs for just such a situation. Tax abatements and direct subsidies can help the vineyard and winery owners through this difficult time, but such a drop in volume will send a shock through the world-wide wine industry. If we remember our college economics classes correctly, supply and demand work together to derive market prices. If supply goes down, it is reasonable to expect French wine prices to rise.
Now may be the perfect time to stock up on French wine!
About the Author: John grills a mean steak and is always in the market for another wine fridge. Believes that if a winery has more than 10 employees, it's probably too big. Buys wine faster than he drinks it, but who cares?
