Rhone’s focus on premium

France’s second-largest wine region continues its development plans, including an appeal to Millennials. For publication in the week starting 22 April 2019.

A previous column noted how the wine world seems to be dividing into two main groups: cheap and cheerful versus a focus on premium. In the latter case we get the neologism “premium-isation” where fewer bottles are sold but those wines attract higher prices.

The Rhône region, the second largest in France after Bordeaux, represents an example of the latter category. Over the past decade exports surged 64 per cent to be worth 507 million Euros last year. Yet the number of bottles despatched to the 205 nations that buy Rhône grew only 9 per cent in the same period.

Last year the Rhône region sold 365 million bottles. A third were exported. Another third were sold domestically to supermarkets with the rest going to a range of outlets including restaurants, online sales, direct sales to individuals and discounters.

Philippe Pellaton is vice president of Inter-Rhône, the body that represents all of the region’s winemakers apart from the Chateauneuf-du-Pape appellation. Pellaton said Rhône wines were re-positioning themselves “in the mid to premium range segments” of the market.

“Value growth is clearly significantly higher than volume growth, the result of deliberate and very successful premium-isation.”

America remains the Rhône’s biggest overseas market. In the past decade exports increased 82 per cent, but their value doubled to be worth 107 million Euros last year. The United Kingdom is the second biggest destination in both volume and market, but uncertainties about Brexit and the resulting fall in the value of Sterling have shaken the market.

Belgium is the third largest export market, a fraction smaller than the UK. Consumers there were choosing slightly more expensive wines and drinking a little less of them, Pellaton said. Organic wines were becoming more popular, he noted. Interestingly, the proportion of organic vineyards in the Rhône has risen in recent years. Some AOCs have had almost a third of their estates certified organic or bio-dynamic.

Recent years saw the emergence of China as the fourth largest export market by volume, boosted by an increased level of awareness among consumers. Exports to Canada last year were worth more than those to China, but more bottles went to China, meaning the Chinese are buying cheaper wine than the Canadians.

Chapoutier.jpgMichel Chapoutier (shown right), president of Inter-Rhône, said the region had successfully positioned itself in a higher market segment domestically “while minimising declining volume sales” at home.

Wines sales across France have plummeted in recent generations, from 160 litres a year per person a half century ago to about 47 litres a head by 2016. Chapoutier, a Baby Boomer, said for his generation wine was “just a drink” but for younger generations wine “has become a culture”. It was vital, he said, to attract Millennials. These are the people born between 1985 and 2000. Within half a decade they will constitute the majority of working adults and bring massive spending power. An Accenture consulting report last year said that by next year Millennials will represent 30 per cent of retails sales in the United States, worth USD 1.4 trillion.

The key was to attract Millennials and focus on exports, Chapoutier said. “The future for us is exports,” he told a press conference in Avignon on April 18 at the 10th Discover Rhône festival. The event is held every two years.

Guy.jpgMillennials shop differently from Baby Boomers, noted Guy Sarton du Jonchay, co-president of Inter-Rhône’s economic committee (shown right). They want to consume less but better, and they crave “authentic products”. Their consumption habits tend to reflect their social and environmental views and they see themselves as “consumer activists,” which means they will reject products they believe behave unethically.

Rhône valley winemakers have adapted their approach to match Millennials’ expectations. In 2014 they implemented an “environmental landscape charter” to improve viticulture practices to protect the environment. At least two thirds of vineyards no longer use chemical weed-killers, with an aim to eliminate them totally apart from on steep slopes that machines cannot access.

Biodiversity is being promoted to help the environment. Winemakers are partnering with beekeeping associations to increase the number of bees. Some of the 17 crus (top end AOCs) have more woodlands than hectares devoted to vines to provide habitats for birds. Vineyards are installing “bat boxes” to attract bats. Chapoutier explained that bats ate insects at night, which made them a key player in the plan to use natural ways to kill insects.

Philippe Pellaton said Rhône wine businesses and their partners were helping to reduce environmental impacts and promoting best practices, and it was important that consumers became aware of these actions.

Guy Sarton du Jonchay said Inter-Rhône introduced global information systems technology in 2014. By March this year two thirds of all Rhône vineyards had been mapped using the technology, which provides visual descriptions of specific parts of vineyards. The aim was to map the entire region, he said.

The technology could identify land that would grow optimum grapes and determine which varieties were best suited for specific terroir. Scientists were also investigating new varieties, related to traditional Rhône grapes, with built-in disease resistance and the capacity to cope with climate change.

The Rhône has traditionally produced mostly red wine. But the past decade has seen a change to the Rhône’s profile. Sales of red have slipped from 88 to 79 per cent of the total but rosé sales have jumped from 11 to 19 per cent. White sales are low but increasing.

Philippe Pellaton said a rise in white wine production had many benefits and it was vital to tell consumers about the great whites in the Rhône. Future columns will describe the excellent textural whites from the Rhône.

Another column will consider the growth of sparkling wine in the Rhône. Vineyards around the town of Die are becoming known for the quality of their fizz. Exports were worth 5.8 million Euro last year, mostly to Belgium and Switzerland. While these exports only account for 15 per cent of sparkling sales, their reputation is growing because of the quality of the limestone-based terroir in the Rhône.

Disclosure: Organisers of the Discover Rhône festival supplied hotel accommodation for three nights for Stephen Quinn plus two fine dinners. Quinn paid his own travel.

Words: 1,034

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