France set to pull out vines
As I touched on two weeks ago, the French government recently requested €120 million in financial aid from the European Commission in order to grub up 30,000 hectares (over 74,000 acres) of French vineyards, or around 4% of the country’s total planted acreage. That request was approved on 3 October. Growers anywhere in France are entitled to €4,000 per hectare for permanently removing vineyard acreage. Vitisphere reports that subsidies cap out at €280,000 per producer. Applications open in mid October, close the last day of December, and vines are required to be removed by 15 May of next year.
I absolutely think this is necessary. However, I do wonder what will replace vineyards as a source of income for growers. Agriculture is, generally speaking, not the most lucrative business and growers will need a replacement income – of the €4,000 per hectare subsidy more than half will be eaten up by removal costs (head of the Bordeaux wine trade body CIVB, Allan Sichel, estimated a €2,000 per hectare cost for removal when talking to a regional newspaper in 2022). Land suitable for vineyards is more marginal than arable and many of the plants that would do well in those spaces are expensive to plant. And that is assuming the land is replanted rather than used for animals, forestry, energy farming or a myriad of other options. But in any scenario – new crop or entirely new sector – current growers would still need to make a massive investment in education, tools and technology. And I haven’t seen anything published by the European Commission, Ministry of Agriculture, or news publications on what industry may be a good fit for the land and labour that is about to be available . If you have, please drop that info in the comments or in our forum.
France’s shrinking harvest
A month ago, I ran through the September production estimates issued by France’s Ministry of Agriculture … on 1 October those estimates were updated. The new data show an even smaller harvest than previously projected. Overall national production is now forecast to be down 22% year on year and 15% compared with a five-year average. According to Vitisphere, this puts the vintage in line with 2021 yields and barely above the historically low yields of the 2017 vintage.
Napa’s name protected
On 10 October Napa Valley Vintners (NVV) announced that Napa Valley had become the first wine region in the world to secure name-protection rights in Mexico. As the press release explains, this is hugely important as Mexico has become one of the top five export markets for NVV members. Californian wine exports to Mexico saw 29% growth in volume and 25% growth in value in 2022 alone.
Wine from Napa Valley now has name protection in 22 countries, and in the entire European Union.
Duckhorn Portfolio sold
On 8 October, The Duckhorn Portfolio – known for brands such as Decoy, Sonoma-Cutrer, Kosta Browne and Duckhorn Vineyards – sold to Butterfly Equity for $1.95 billion. This means that Duckhorn will no longer be a publicly traded company – all shareholders will be paid out at $11.10 per share.
The wine industry has seen a lot of sales of late but this one surprised me. The Duckhorn Portfolio acquired Sonoma-Cutrer from Brown-Forman only in November of last year. At that time, they seemed financially healthy. They had closed the 2023 fiscal year (which ends 30 September – so prior to the acquisition) with sales up 8.2% over 2022. And when they acquired Sonoma-Cutrer the deal was structured so that, even though it was a $400 million sale, in reality it was a 21.5% ownership share for Brown-Forman and two seats on the board of directors plus $50 million. Which means they got to keep their cash … Clearly, I have not checked in lately. During the 2024 fiscal year Duckhorn’s stock prices halved and, excluding Sonoma-Cutrer from calculations, the rest of the portfolio saw sales decrease by 13.9%. Even with Sonoma-Cutrer in the mix, gross profits fell by 7.2%. Which tells me that even premium-dominant portfolios are suffering. My question is, what does Butterfly Equity know that we don’t know?
Come Over October
Back in July there was a press conference – led by author Karen MacNeil and public relations executives Gino Colangelo and Kimberly Charles – presenting ‘Come Over October’, a new movement to counterbalance ‘Sober October’. The idea was to create a movement that recognises wine as a product that facilitates community gathering and socialising. This month, there are quite a few wineries, wine bars and restaurants hosting Come Over October events. You can find many of them on localwineevents.com. Jackson Family Wines went so far as to waive tasting fees at many of their properties for the whole month.
Personally, I’ve been hosted by my friends twice and am due to host them next week. And I have to say, trading off cooking dinner is pretty nice. Hosting is a lot of work, but, depending on how many people you can involve, you may not have hosting duties more than once!
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