Burgundy wine sales hit by rising euro

PARIS (Reuters) - Sales of Burgundy wines have started to decline over the past few weeks with vintners blaming the rise in the euro against the dollar and the pound.

Wine bottles are displayed at a trade show in Barcelona March 14, 2008. REUTERS/Albert Gea

But winemakers in one of France’s best-known wine regions are not feeling too anxious after two years of steep price rises on the back of demand that still far outstrips production.

“I believe that in the first quarter of this year we have had a decline of 4-5 percent in volume and a similar rise in prices,” Frederic Dupray, head of economic studies for the Burgundy wine association, told Reuters on Tuesday.

“We had been expecting a decline in volume this year after two years of growth and in any case stocks are very low in Burgundy, so we are not in tears,” he added.

Wine house Albert Bichot sounded a warning bell.

“After two years of strong growth in sales...Burgundy is experiencing the start of a slow down,” it said in a note to clients. “The strength of the euro, the rise in prices for the 2007 harvest and a more glum sentiment at our clients are the cause of this,” it said.

The single European currency used by France, Germany, Spain, Italy and several other EU countries has gained 16 percent against the U.S. dollar over the past 12 months.

Dupray said that sales to the United States were hit by the rise in the euro, while sales to the United Kingdom were hit by a decline in the pound as well as an economic situation in Britain, which he described as “not brilliant”.

“In Britain there is less demand for the high-end Burgundy wines and more for the middle range,” he said.

But demand from Russia and Asia is booming and many vintners from Burgundy and other French wine regions will be present at the Vinexpo trade fair in Hong Kong, from Tuesday until May 29.

“There is a lot of demand still but what we want in Burgundy is to get a hold on volumes and improve the price level,” Dupray said.

Albert Bichot ( trades in Chablis, Cote De Beaune, Cote de Nuits, general Burgundy wines as well as the Beaujolais, Maconnais, Cotes du Rhone and Languedoc wines farther away from the central Burgundy area, roughly between Dijon and Beaune in central France.

Created in 1831 by Bernard Bichot, the family firm is now headed by Alberic Bichot.

It owns, among others, Domaine Long-Depaquit in Chablis and the Domaine du Clos Frantine in Vosne Romanee, a village that yields some of the most expensive Burgundy wines.

Burgundy wines are single grape wines, mainly Pinot Noir for the reds and Chardonnay or Aligote for the whites, and not blends such as Bordeaux.

The tastes of wines can differ widely from one mini-climate to the next in the myriad of villages and vineyards that stretch across Burgundy.

Reporting by Marcel Michelson, editing by Paul Casciato