Wine cooperative numbers will continue to fall - Bataille

Wine cooperative numbers will continue to fall - Bataille

Our February just the Answer (thank goodness for Leap Years) sees Chris Mercer going back to the future by interviewing the president of Les Vignobles Foncalieu in southern France's Languedoc Roussillon region. After meeting Michel Bataille by chance during a wave of winemaker street protests in 2005, Mercer caught up with him again at the Vinisud show this month to see how France's largest wine region, and the country in general, is adapting to a more competitive wine world.    

just-drinks: In 2005 and 2006, thousands of winemakers were in the streets, protesting at poor financial conditions amid falling consumption in France and growing demand for New World wine in key export markets. How have things improved?

MB: When you saw those protests it was the Languedoc in great difficulty commercially. Today, things have moved on. Production volumes have fallen and the balance between production and sales is good. I think, however, that demand may outstrip supply next year.  

Today is not like the era that you saw - and there were more or less ten years of protests - but today it is the same industry. We do things differently but it is [still] a fight for the Languedoc, to improve the region and protect jobs. 

When we protested before it was to obtain measures from the French Government or European Union to allow winemaking here to have a future. Now, at Foncalieu, my day-to-day job and that of my team is to help to build a new Languedoc, one that is more commercially-oriented and open to the world - but without losing the accent [laughs]. The region improves, but we see also fewer vineyards, partly because of grubbing up and partly because we are confronted also with an ageing population of winemakers.

just-drinks: To what extent is there a new wave of wine companies taking the region forward?

MB: There are three mains types of companies today. There are traditional merchant-style businesses, like AdVini in Languedoc, which have grown bigger by acquisitions. Skalli and Castel are also examples. Next, there is the model of Gerard Bertrand, Paul Mas and Miquel, who work as if independent producers and who have achieved commercial success by forging strong links with merchants to buy their wines. In general, they are dynamic businesses and very focused on quality.

Then, saving the best for last, there are cooperatives, such as Val d'Orbieu and us, who have improved by adopting better management practices in sales and marketing, as well as in the vineyard. It is a cooperative model like those who existed before, but with the winemakers in control and businesses that are not easily acquirable by financial or investment houses. That is an extremely important point.

just-drinks: Will we continue to see a decline in the number of cooperatives and independent wineries in Languedoc Roussillon?

MB: Probably, the number of cooperatives will continue to fall. There were 350 coops when I started in 1981, now there are 100. Probably in ten years, there will be 50. Some small cooperatives will survive and stay small thanks to niche markets. Others will become cooperative groups like us. For the rest, it will be a bit like what has happened to the dairy farmers and there will be the same trend towards industrial production.

j-d: What do you think of wine being treated as a commodity in this way?

Milk has two aspects: you have milk for making yoghurt and milk for making cheese. I think that we will have the same situation. We will have big cooperatives who will furnish companies with mass market wines, very important wines but very uniform wines, nonetheless. Then you have people like us, or Gerard Bertrand, who are almost like "industrial artisan" producers. Industrial, because one must be very organised, with a methodical approach, but also with the will and know-how to preserve terroir and the heart of winemaking. 

Michel Bataille, president of Les Vignobles Foncalieu

j-d: What is Foncalieu's specific strategy within these trends? Do you expect to make acquisitions within this trend for consolidation?

MB: Today, Foncalieu is going more towards bottled wine. We do one third in bottles and two thirds in bulk. It is important for our profit margins to increase bottled sales, so that's the first thing. Secondly, I do not want to sacrifice quality for the sake of acquisitions. We've invested EUR20m in the last ten years across all our cooperative grower and winemaking partners. Over the next ten years, we'll probably have to invest as much, if not more. We must also look at developing best practice around climate change, which is a real concern. We're working with South Africa and Argentina on this, because they are further ahead than us on this.    

We also want to develop the quality image of Foncalieu. We are working on developing sales in Asia and reinvigorating ourselves in the UK, where we do six million bottles today but we were doing 12m bottles a few years ago. We've hired a Texan to help us develop in the US and, in November 2010, we opened an office in Shanghai, China.

j-d: So, acquisitions are mostly off the agenda, then?

MB: I have been approached by two big cooperatives who are having a bit of difficulty and wish to join Foncalieu, but I have refused because they don't fit with our strategy and their quality is not good enough. On the other hand, there are cooperatives with no commercial plan who approach us. I'm meeting with one next week. If a cooperative can meet our quality standards and its wines complement our own styles, we could say yes. The same goes for individual wineries, who also knock on our door.

The other problem is that, with a cooperative system, I have to be sure that our whole board is in agreement with any move.

j-d: As a cooperative, do you have to take everything that the grape growers produce?

MB: Yes. Some growers will only sell a portion of their production to cooperatives, but we prefer to work with those who give us everything. We buy all the grapes, but we have four quality levels. Every year, Foncalieu classes the grapes and pays different prices accordingly.

j-d: I imagine that can be quite difficult in a tight-knit wine region, can't it?

MB: It is always very difficult. If you have a respected winemaker and they have often made it into category one [the top category], sometimes the grapes or the vineyard deteriorate and then you can fall three levels. It is difficult, too, because our staff who have to intervene often know a lot of the people. For me, not so much these days, but sometimes I know the parents [of the growers], so yes it can be very difficult. Yet, if the quality is not right we have to say 'no' [to a higher grade].   

j-d: Has Languedoc sought to borrow ideas from the New World, for example with the use of more well-known grape varieties? 

MB: Today, you see the same grape varieties in all countries of the world, except perhaps in China. With the big five - Chardonnay, Sauvignon, Syrah/Shiraz, Merlot and Cabernet - the big six with Pinot - the world is there and competition is strong. Languedoc is trying to be there, too.

At Foncalieu, we are also developing more original grape varieties, like Marsanne or Marselan, but that remains small because consumers don't know about them. And because they don't about them, there is not a big demand from merchants. In the on-trade it's a bit easier because you have sommeliers, but in the off-trade it's very difficult. 

j-d: Do you see any signs that consumers are willing to look for indigenous grape varieties to try something different? 

It is a demand that remains modest. Last year, we sold 55,000 bottles of own-label Marsanne through Asda Wal-Mart in the UK. But, it's because Asda launched television advertising to explain the wine. Even with that, though, sales were still much lower than for Chardonnay.