France has once again revised its wine production forecast for the year, citing the rainiest September in 25 years as a significant factor. The country anticipates that 2024 will see one of the smallest vintages in recent history, particularly impacting esteemed wine regions such as Burgundy, Champagne, and Bordeaux. However, the potential effects on Burgundy wine prices remain uncertain.
Agreste, the statistics and forecasting department of the French agriculture ministry, has estimated this year’s wine production at 37.5 million hectoliters. This figure marks a decrease from last month’s forecast of 39.3 million hectoliters, already reflecting adverse weather conditions. The latest estimate indicates an 18% decline in production compared to earlier levels, with a notable 22% drop from last year’s crop and 15% below the five-year average. This production level is comparable to the disappointing 2021 vintage, which suffered extensive frost damage.
In its monthly report, Agreste attributed this decline to unfavorable weather that has affected all wine-growing regions. The report noted that all types of wine have been impacted, particularly those from Burgundy, Bordeaux, and Champagne. Champagne production is projected to fall by 33% compared to last year and 14% below the five-year average. Production in Burgundy and Bordeaux is also expected to decrease by 35%.
Agreste explained that the poor conditions during flowering—characterized by cool and humid weather—led to phenomena such as millerandage and coulure. These conditions resulted in smaller grapes and the premature dropping of young grapes and flowers. The losses were further exacerbated by frost, mildew, and hail.
Typically, a decrease in production can tighten supply and demand, potentially leading to price increases. However, this year’s circumstances may not result in significant price hikes, possibly providing relief to some wineries and wine growers.
Li Yanjun, CEO of Merveille Business in Shanghai, stated, “In the past two years, French wine production has been high; however, market demand has not been as robust, especially in key markets like France and China.” He noted that Bordeaux, representing a substantial portion of the French wine industry with significant inventories, might not see price increases this year. Instead, the reduction in production could help alleviate the oversupply situation, which would be a positive development for the industry.
This analysis is consistent with producers’ willingness to reduce harvests. In July, Champagne producers proposed a 12% cut in grape harvests in response to a 15% decline in wine sales during the first half of 2024. Bordeaux winegrowers have also suggested removing some vines to manage excess capacity, with France planning to uproot 30,000 of the nation’s 800,000 hectares of vineyards in the Nouvelle-Aquitaine region and Bordeaux.
Nevertheless, price fluctuations may differ for Burgundy, the region most severely impacted in 2024. Li mentioned that in major Chinese cities like Beijing, Shanghai, Guangzhou, and Shenzhen, many consumers exclusively favor Burgundy wines. Given Burgundy’s already limited production, the decreased output could drive price increases for some entry-level and mid-range products.
While Burgundy wine prices have also experienced declines, consumer sentiment toward the region remains strong. Recently, significant figures like Alibaba’s chairman, Tsai Chung-Hsin, and LVMH have invested in vineyards in Burgundy, reflecting ongoing confidence in the area.
Conversely, Wu Xianghua, CEO of Fine West—one of China’s top wine importers—expressed skepticism. “From a market perspective, we haven’t observed significant sales growth in Burgundy’s mid-range and entry-level wines. While the popularity of white wines has indeed increased, the acceptance of Burgundy’s white wines, given their higher prices, appears to be lower compared to those from Germany and New Zealand,” Wu said.
He added, “With the current intense competition in the Chinese market and a global decline in wine consumption, I believe there is no justification for price increases in any wine category.”
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