Greg Sherwood MW: Is there still a future for Bordeaux’s negociants?

As a collective product group, French wines are not selling well either at home or abroad. The French have been slowly falling out of love with wine for several decades. Per capita annual consumption has fallen from around 100 litres in the 1960s to 24.2 litres in 2023 according to available data. Falling sales would be a concern for any country’s wine industry, but are particularly worrying for France, which has been the world’s most respected source of fine wine since Pope Clement V moved the papal court to Avignon in the 1300s.

Specifically, it strikes at France’s economic heart as wine and spirits are one of the country’s top five largest export industry along with aviation, pharmaceuticals, cars, and machinery. This market decline has left no wine region untouched, least of all stalwarts like Bordeaux, with its wholesale prices for entry-level bulk wines collapsing as overall global wine consumption falters and China yet again proves that it is not the French winemakers’ Valhalla.

Despite its illustrious past as France’s fine wine leader, one can only look at the current market conditions and wonder as we approach the 170th anniversary year of the 1855 cru classé classification next year, if there really is a future for the negociants of Bordeaux who collectively seem to have done little to halt the decline in wine sales or effect a turnaround in Bordeaux’s waning global fortunes.

To an outsider, the dynamics of the Bordeaux marketplace with its three-tier system of Chateaux, Courtiers, and Negociants can seem a very strange way to do business, and the En-primeur market may well be rooted in a long history, but is it still relevant and effective today? There are still circa 400 registered negociants and around 130 courtiers operating in Bordeaux who are responsible for distributing wine to over 160 countries worldwide. They take care of shipping, taxes and regulations, enabling many Chateaux to focus solely on production.

Certainly, many of the smaller properties do not have the capacity to develop such a widespread and diverse customer base, leaving distribution to the negociants who normally deal with several merchants in international markets to ensure comprehensive distribution. Within this three-tier system, the courtiers act as middlemen brokers guaranteeing the transaction between producer and negociants and ensuring a good all-round business relationship concerning specifically information on matters of pricing and market conditions, for which they normally receive a 2% percent commission share of the deal. Nowadays, the courtiers’ most important role is bringing people together and assisting in the intricacies of establishing an opening price for first tranche Bordeaux En-primeur releases, made all the more important due to the emergent power of Parker, Suckling, Galloni and Neal Martin points.

Where the system of the Place de Bordeaux runs into difficulties is when an interested customer approaches the producing chateau with a request to buy wine only to find that the sale is entirely in the hands of a third party. The price and availability of wine is no longer in the producer’s hands. As we head into 2025 on the back of a terrible 2024 rain-soaked vintage in Bordeaux, many industry commentators may still outwardly support the current system whole-heartedly, but there are clear structural and practical problems emerging where demand and supply are simply out of balance.

This can be seen by the decrease in French wine exports to the UK, one of Bordeaux’s most important markets. In 2023, French wine exports to the UK dropped by 9.4%, with shipments from Bordeaux and Champagne forming an important component in particular, sliding to the lowest volume levels in 17 years according to Decanter magazine. In isolation, the exports from Bordeaux to the UK fell 12% in volume to 17.3 million cases, with the value falling 5.6% to £2.23bn.

The power of negociants to regulate supply in the market and hold stocks until demand increases is fast diminishing. Bordeaux alone produces over 9,000 different wines per year from over 6,000 chateaux names, each with a different label. However, most consumers want the simplicity of brand names. They look for an Errazuriz Merlot or a Nederburg Shiraz, or a brand that offers consistency of quality and adds to their purchase confidence. It is very difficult for an entry-level, three-hectare Bordeaux vineyard producing its own wine to either establish visibility or to get a company to market its label. With no economy of scale and relatively high wage and staffing benefits contributing to high production costs, it’s becoming increasingly difficult for many French producers to compete.

The system of negociants has in many ways protected growers and chateaux from too much market variation and instability but has also ensured that they are cocooned from the realities of the marketplace and changing consumer sentiment. This buffer has resulted in growers and Chateaux becoming very detached from the actual consumers drinking their products.

The brand equity of even the top cru classé brands is almost all based on the classification of 1855 with very little else being added since. The negociant system has also indirectly prevented the growth of a vibrant tourist wine route in Bordeaux, limiting both the future marketing potential for the region and its user friendliness, leaving many consumers with cliched impressions of arrogance and indifference.

With Bordeaux’s highly fragmented supply base, it is going to be difficult for negociants to evolve and find a more effective role in the modern global fine wine marketplace. But one way they can change is by either becoming even more specialized in the products they trade or by becoming more relevant to the UK merchants with whom they have traded for so many decades.

With Bordeaux En-primeur sales in the doldrums and another weather-affected vintage on the way, giving consumers little to no reason to buy in advance before finished wines are bottled and assessed critically, the negociants have started to morph into more international-styled wine merchant / distributors, leveraging their connections, their global clientele and general market reach to promote a whole new bouquet of fine wine brands from across the globe.

When producers like Almaviva from Chile and Masseto from Bolgheri severed traditional merchant routes to market in favour of offering their wines pre-release through the ‘Place de Bordeaux’, it certainly put a few noses out of joint. Roll forward a decade, and the list of producers offering their wines through negociants and the ‘Place’ has become a veritable who’s who of the international fine wine industry.

In the past weeks, London hosted one of the bigger negociant players in this ‘alternative new release’ business, CVBG, who presented a formidable line up of wines to taste in London, under the banner ‘Beyond Bordeaux’, for primarily fine wine brokers, traditional merchants, traders, independent merchants and even the odd premium on-trade customer who still has the cashflow to buy fine wine stocks on a pre-arrival basis and cellar them until they’re ready to be added to their wine lists.

From Italy, the list grows longer every year, with iconic producers like Petrolo-Galatrona, Bibi Graetz, Caiarossa and Solaia joining the likes of Masseto. From the Rhône, the list grows slowly and steadily, including offerings from Jacques Perrin (CNDP Beaucastel fame), and Domaine de la Chapelle from Paul Jaboulet Aine. The ‘Beyond Bordeaux’ roadshow has certainly not passed the great names of Chile by either, with the likes of Vina Chadwick, Sena, Don Maximiano, Almaviva and Clos Apalta, firmly throwing their support behind this new, alternative route to market for their brands.

From Argentina, Bodegas Caro – the Catena / Lafite partnership – has recently joined along with stalwarts like Catena, Cheval des Andes and Vina Cobos from Californian Paul Hobbs. As for Paul Hobb’s countrymen from the USA, the list grows longer and longer by the day, with notable participants including Vérité winery and Cardinale from the Jackson Family stable, Peter Michael Winery, Francis Ford Copola’s Inglenook, Quintessa, Dalle Valle and Pym Rae winery, once famously owned by the late actor Robin Williams, but now in the Tesseron stable alongside Pauillac icon, Chateau Pontet Canet.

Some new and exciting additions from down under include Craggy Range from New Zealand, but more importantly, powerhouse Aussie players like Jim Barry Armagh, Yalumba, Wynns Coonawarra, Cloudburst from Margaret River, and of course the famous Penfolds, with brands including Bin 707, St Henri, RWT and their iconic national treasure, Grange.

On the more South African front, Klein Constantia has been part of this ‘alternative Bordeaux’ negociant offering for several years now, apparently very successfully for their Vin de Constance brand in terms of turbo-charged global distribution. If all the stories in the Cape industry are true, then Kanonkop’s Black Label Pinotage will join South Africa’s lone participant with an upcoming new release trial offering.

Quite clearly, the purported 400 negociants operating in the market need to define far more clearly which products they represent – mass market brands, middle market brands, or premium cru classé clarets. Greater specialization will lead to greater sales and distribution success and perhaps 80% of the wine sold will eventually be traded by only 20% of the negociants instead of the current 40%. Consolidation is inevitable but will strengthen the industry structures and help long term sustainability.

While currently, some negotiants can make more margin from selling one single case of Chateau d’Yquem than from an entire container of entry-level AOC Bordeaux, there is still a very important branded market segment that is underrepresented and is underperforming, especially in the UK. After all, Bordeaux produces more wine that the whole of Chile.

The negociants need to lead the way in developing better infrastructure for branded wines and promote greater unity among the key segments like the growers. But could all these New World prestige winery offerings turn out to be the surprise silver bullet the Bordeaux negociants have been looking for to help save their waning industry and drive modernisation for the future? Only time will tell.

• Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years traveling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London, working his way up to the position of Senior Wine Buyer over 22 years. Sherwood currently consults to a number of top fine wine merchants in London while always keeping one eye firmly on the South African wine industry. He qualified as the 303rd Master of Wine in 2007.