Recently I gained a new perspective on the local wine economy here in Bordeaux, France, where we’ve been for several weeks now. I’m sure there are other versions of this story out there, but one French winemaker explained it to me like this.
In Bordeaux wine can be made from a Chateau that grows its own grapes and makes its own wine. But it is also common for farmers to sell some or all of their grapes to another winemaker.
In the 1960s there became a rising interest in Bordeaux wine. Wine prices rose and so the farmers followed suit and raised the prices of their grapes. At this time, large wine co-operatives came in and started buying up much of the grape supply to make mass quantities of Bordeaux wine. Farmers enjoyed this and got to ride the wave of selling their grapes for a high price for the next 40 or so years.
Next, around the turn of the millennium, the Chinese entered the picture. They started buying up all the top Bordeaux wines and prices rose again. This left all the other non-top Bordeaux wines in a commodity-like position. The co-ops then started treating the grapes from non-famous Bordeaux wineries just like any other commodity and started driving down the price for those second tier grapes.
Now that the prices are so low it has become tough for small farmers to survive. They can choose to make their own wine but marketing and selling is a struggle since there are literally thousands of them in the area.
One by one, farmers are dropping out and selling off their property. And guess what? It is the Chinese who are now buying up much of the land.
A tale as old as time: one man’s loss is another’s opportunity.