What price, quality?

This question has been on my mind a great deal recently. Last year we saw Burgundy wine prices skyrocket and the trend has continued for much of this year. This year we watched as the best wines of the highly touted 2022 Bordeaux, wines such as Petrus, Lafite, Vieux Chateau Certan and Figeac sold for upwards of 20% above the previous year’s releases. Quite frankly, we wondered whether we would be able to sell some of these wines. Much to our surprise, they were the first wines to sell out; there is a sense of luxury in being able to afford the world’s best wines, which are often made in small quantities that make them rarer.

At the other end of the scale, there is a scramble to seize a share of the low priced, best value wines, and leaving supermarkets aside (they manage to lower costs by shipping wine in bulk and bottling at their warehouses) it is hard to understand how a wine can sell for under six euros a bottle. If you take into account packaging costs (bottle, label, cork, capsule, case) which have seen a considerable rise in price this year and now take up about €2,50 of the price of the wine, add transport, excise duties and a small margin which take up about €1,50 of the cost, that leaves €2 a bottle for the wine grower to work their vineyard all year round and cover the costs of picking, making, ageing and bottling their wine. No wonder that the French government is forking out €200 million to destroy unsold wine.

There is a price category where I believe that wine becomes really interesting. It is in the range from €15 to €30 a bottle. This is where we find many of the most exciting wines in our selection. These are wines that may come from emerging regions of classic wine countries such as the Ulterior collection made by Elias Lopez in Castillo la Mancha, Spain; the Château Bela made in Slovakia by Egon Muller; the Macons and St. Verans made by the Paquet family in southern Burgundy, the Ancestral collection of forgotten old vines in the Penedes by the Torres family or the southern Sicily Syrahs of Peter Vinding-Diers. The list is long. These are wines with ambition made by winemakers willing to take risks, fight climate change and global warming, move towards organic farming and preserve the sense of place in their wines.

These aspirations do not come without a price and when I questioned Matthieu Paquet about the hefty price increase his family have taken for their impressive wines, I received such an informed answer, that I am going to try to precis it here:

We took over the estate with (brother) Camille in 2017, at that time the estate was still on a model from the 80s/90s. Mâconnais wines with good value for money. To keep prices low the solutions were as follows: Cheap land therefore low rent; high yields around 70hl/Ha; Mechanical harvesting; sales to big volume market.

This model worked very well for 25 years, but today it is no longer economically viable:

land has tripled, so the rents of Pouilly-Fuissé which were at €5,000/hectare at the end of the 90s are now at €16,500/hectare this year.After producing too much volume for 40 years our vineyard is tired, so we can only produce 50 Hl/Hectare. Commercially we must concentrate on smaller markets which need the winemaker to travel to sell his wines and this takes time and money. For a concrete example, we sold you the Saint-Véran 2016 (in 2017) at €5.70. Today I already have €2.60 in rent and €1.40 in dry goods, so 4 euros before even having paid my employees, my loans and let's not even talk about the margin.

When we took over, we knew we had to change the system, but which one? here are the two factors that made us take the direction that brings us to where we are today:

After 10 years traveling the world to sell our wines I noticed that the demand was so strong for Cotes de Beaune wines that large establishments (luxury hotels and Michelin-starred restaurants) no longer poured these wines by the glass.It was a question of availability: the Martinez Hotel in Cannes needs 600 bottles a year for its bar. Which quality winemaker from the Cote de Beaune can provide this volume?? And they did not choose Mâconnais wines as an alternative because the quality was not good enough. My brother and I became passionate about these great wines and had the ambition to make this estate one of the references of the Mâconnais by producing great wines. It will undoubtedly be the work of a lifetime...

Where to start? We made a 5-year plan: Transition to organic farming to have more life in our soils, that the soils are composted more easily thanks to the worms and bacteria returning as we gave up chemicals. Ceasing mechanical harvesting to no longer damage the vines and to sort the grapes. We now harvest in small 15kg crates, so that grapes arrive in the press without being compacted and damaged during transport, thus limiting the risks of oxidation and avoiding the addition of sulphur before the end of fermentation. During harvest my parents were 4 people for 1 week, now we are around 80 people for 2.5 weeks.

Most of the great wines we love are produced biodynamically. In 2019 we converted the entire estate to biodynamics with the help of Jean Michel Comme (whose pioneering work at Château Pontet Canet in Pauillac had improved the estate immensely.) The energy gain in wines is incomparable. To limit yields to have fewer bunches, we do not do green harvests. We have changed the volume per vine from 14/16 buds to 8/10 buds, so we do not stress the vines and enable them to reach optimal maturity which was lacking in the past; the wines were almost anorexic. Today once the healthy grapes arrived in the winery, we wanted to extend the aging on the wines in top vintages. For this we lacked space so we invested in a new cellar which allows us to mature our wines for up to a year more.

We are now at the end of this 5-year plan, all the big (expensive) changes are now in place, thanks to our cash flow but today the estate must be profitable. Today our prices include:

the increase in production costs; the fact that we lose approximately one entire harvest every 4 years due to frost or hail or even drought and the domain must ensure a gross margin of 25%. The largest production wine, Macon-Village has the same production cost as the others, but we decided to set it at our production cost. The shortfall of income is made up by increasing the price of the other, quality wines. This changes the entire strategy that was put in place in the 80s by our parents. It means that we produce a great Mâcon-Village at €7.50, to be served by the glass in catering, for weddings, parties, etc. and as everyday wines, with no volume limits. Then, we also have more precise wines, more expensive but in limited quantities, made to be on wine lists or in the cellars of wine lovers. We have positive feedback on many markets. Once customers have tasted the wines, it works.

This fascinating insight, so clearly explained by Mathieu Paquet, gives you a real idea of the dilemma facing many wine producers. To put this to the test, we blind tasted 2019 Famille Paquet’s Les Cras Saint-Véran selling for €25.70 alongside two 2019 Meursault Villages, one selling for €350 a bottle, the other for €70 a bottle. True, the expensive Meursault from a very well-known producer came out top but the Saint-Véran did as well as, if not better than the €70 bottle. I mention this only to convince you that if you open your options and explore lesser-known wines, you can find some real treasures.

All over the world, the best advance that has happened over the last couple of decades is the dramatic rise in quality. Wines are being made so much more professionally and taste so much better these days. It is really staggering, and we do not take enough time to celebrate this. Wine is also being made so much more healthily these days. With the rise in awareness of wine and health, there are far fewer chemicals – pesticides, synthetic fertilizers and weed killers being used. We are taking much better care of our vineyards and especially ensuring that our soils are alive and healthy. Yes, these efforts make wines more expensive, but this is the price of quality and to find great wines at a €15 to €30 is a gift.