Bordeaux's wine trade has strong trading links with the UK rooted in a centuries-old relationship - but what happens now? Jane Anson gauges reaction to the Brexit vote and what it may mean.
Is there really anything else that we can write about this week?
I am more heartbroken and frustrated than I can remember being. As a British person living in Europe, this was a result that I neither expected nor wanted. But it’s now almost a week on, and reality is setting in. And even for those of you who voted Leave, it is perhaps useful to know how things look from this side of the Channel.
In many ways, Bordeaux is a strangely comforting place to be while absorbing the impact of this vote. It’s a city that has been closely linked to England, Ireland, Wales and Scotland for many centuries. There are ties at many levels, from names of chateaux such as Kirwan and Palmer that come from Scottish and English former owners, to the many hundreds of British citizens who work as wine merchants, in châteaux, as wine tourism professionals and in many other roles in the region’s wine industry.
The outcome of what comes next is crucial for France as a whole; 5.7% of all French food and drink exports go to the UK, bringing in €625 million euros per year. Regions such as Beaujolais, Burgundy and the Rhone have a huge presence in the UK market. But there is a psychological link in Bordeaux that dates right back to 1152, a date that suddenly means more to me than it ever has before. Surely a referendum isn’t going to change that?
When the news broke, the first reaction in Bordeaux was the same as it was around the world. Florence Cathiard of Chateau Smith Haut Lafitte said, ‘We all thought it would be a Bremain, what a shock it has been’. But as the dust clears (we can hardly say settles yet), that is giving way to a variety of different possibilities and options…
See which one you like the sound of most.
Business as normal
‘The UK market will always be very important to us’, David Ornon at Château Guiraud in Sauternes points out, ‘and we will maintain our Entente Cordiale’. The ever pragmatic Bernard Magrez is equally calm, saying that, ‘it will make no difference to us whatsoever. We have a number of tastings and events lined up and all will go ahead exactly as normal’. And on the merchant side, Yan Schyler at Schroeder & Schyler says, ‘To be honest, business will soon be back as usual’.
Christian Seely of AXA Millesimes’ Chateau Pichon Baron (and himself an Englishman), wrote in his blog this week, ‘inevitably there will be some short term turbulence, but personally I do not foresee major long term disruption. England and Bordeaux have been trading closely together for many centuries: the British market has a special place in the hearts of Bordeaux producers; and Bordeaux equally has a special place in the hearts of British wine drinkers. That special relationship, which existed for hundreds of years before the European Union, will endure. This feeling is reinforced by many conversations I have had both with fellow producers in Bordeaux, and with many fellow English lovers of the wines of the region’.
Business as normal, soon
The reality, for the time being at least, is that the biggest immediate impact is exchange rate volatility. It has already led to an abrupt halt of any lingering transactions for the 2015 en primeur campaign. ‘This year we had many English merchants buying Smith Haut Lafitte,’ says Cathiard. ‘The sales went fast and well, so for this vintage we are fine. But surely the UK market will not be buying as many bottled wines over the next year as the currency drops’.
An Opportunity for Bordeaux
David Ornon has been one of many chateaux directors and merchants to point out that, just as the City of London may well find its importance dropping over the next few years, so might the London wine merchants who for many years have been almost a second Place de Bordeaux. ‘It may be that Bordeaux starts trading more directly with Hong Kong and other places, not always passing through London,’ he says.
For now, London is seeing a brisk trade. Since Friday morning, Asia and the US has been buying stocks that saw 10% of their value wiped off overnight – and it seems a number of Bordeaux merchants and chateaux are also buying back stock from the London market, which has always been one of the interesting places globally for buying older wines. Several big London merchants closed their sites for a few hours on Friday, and reopened allowing only transactions in sterling, as exchange rates were too difficult to track with the euro or dollar.
‘Certainly the ease with which we are used to trading internationally will face a few months’ suspension’, points out Hubert Lagrue, courtier and owner of Gardère-Haramboure brokerage house.
A World Outside
Frankly, Bordeaux has always been an outward-looking city that has long travelled the world to sell its wines. The whole point of the Place de Bordeaux is that it is flexible, and it will continue to be so – and already it is well placed for shifting its focus further afield.
The figures for Bordeaux exports over the past 12 months show that the UK is fourth in value terms. The other four in the top five are Hong Kong, USA, China and Japan. ‘Not being in the EU has not prevented Bordeaux from exporting to these countries,’ says Seely in a show of optimism for the UK. This is also true for premium wines over €15 – with the top five here being Hong Kong, USA, China, UK and Switzerland. ‘We will find a new balance,’ says Cathiard. ‘But perhaps will be more reliant on the United States and other markets’.
And it’s worth pointing out that global markets will not wait for the Conservative party to come up with a plan – something that both the UK and Europe might do well to remember in future negotiations. My conversation with Lagrue took place while a major Chinese ecommerce platform was presenting its pitch for selling Bordeaux wine direct from producers here to Chinese consumers. ‘When it comes to Brexit,’ Lagrue points out, ‘we all need to be aware of our relative power in a changing world’.
A positive impact on New World Wines
Of course, if a compromise is not reached, trade tariffs imposed and wine duty increased, Seely points out that the only ones to benefit would be New World producers who would seize the chance of increasing market share in the UK. ‘I think and hope that far sighted and rational politicians in Europe w ill do all they can to avoid such an outcome, which would obviously be negative for Bordeaux and indeed for all European wine producers’.
A positive impact on Europe
A stretch for some to take this perhaps, but all hats off to Lagrue when he says, ‘This will be a period of change and uncertainty. But maybe one day we can say thank you to England for saying no to Brussels but yes to Europe’.
Brexit won’t happen
A personal favourite of mine. Magrez says that he doesn’t believe it will happen in the end. ‘There are so many considerable economic inconveniences on both sides. Now we are seeing those pre-Brexit campaign figures, such as the £350 million per week to the EU, were totally false. I believe, and it is just my opinion, that we will find a compromise. There will be new negotiations, but in practical terms, in today’s world the economy takes precedence over emotions. Look at Hollande’s promises during the last election campaign; when he became president they were all forgotten. There are ideals and then there is the reality of commerce’.
What happens next…
In the end, Bordeaux is a city of business, and most people here are reacting accordingly. It was very telling that I rang Magrez the day after the vote, and he waited until Tuesday to call me back, saying ‘I am sorry for not calling earlier, but I wanted a few days to let things settle’. A cheering example of how we should all be reacting right now.
He points out, ‘I am not pessimistic. There was the emotional shock at first of course, but now things are being put on hold until September and it is in everyone’s interest to take a pause. England is a great democracy but it is also hard-headed and pragmatic’.
Let’s hope there are more Magrez-types in Brussels and Westminster over the next few months. And if not, as one wine consultant said to me this week, ‘British wine lovers are always welcome as political exiles in the Médoc’.