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Rhône coops chase cru margins to balance tough market

Published:  22 August, 2018

Rhône Valley cooperatives are on a mission to premiumise their offering, as market pressures mean they can “no longer compete with the New World at £3 a bottle”.

These words from Cellier des Dauphins’ Theophile Guigue – marketing officer at the Rhône’s largest coop – echoes strategies of other large-scale producers in the region.

Laudun Chusclan Vignerons for example, is now focused on pushing further into cru territories, while also working to help upgrade villages like Laudun where they already working closely with producers.

This is particularly true when it comes to export markets like the UK, the region’s top export market by volume, said Philippe Pellaton, president of Laudun Chusclan Vignerons.

“We make wine in the Côte du Rhône AOC, named villages and also some in Lirac AOC. The cru part of the business is the part we want to develop, which is why we’re considering changing our name to be able to be more flexible. The opportunity is there in the UK and the US, but the UK is the more mature market,” he said.

This focus on cru is part of the coop’s wider strategy for growth over the past ten years.

Swelling its ranks to 200 members, it now produces 8m bottles a year, up from 2m bottles in 2008 – much of it going to Marks & Spencer with a mixture of branded and own label wines.

Production meanwhile has also evolved from 75% bulk and 25% bottle ten years ago to an even split today.

Part of this is because bottle has become more profitable, said Pellaton: “Price of bottle ten years ago was very low. Across the business, members were paid 90 per hl in 2008. Now, it’s 165 per hl, which we sell in market for 220. Cost of production gone up, but we’re seeing a higher margin.”

Coops aren’t alone in their mission to premiumise.

Market pressures like a weaker exchange rate with the UK and a decade of underwhelming harvests has driven producers across the south – where the majority of the Côte du Rhône appellation wines are made – to make vast investments in improving quality, while also pushing to be recognised by the authorities.

Today, many of the coops are recognised for producing some seriously good wines. La Cave de Tains, which lies at the foot of the Hermitage hillside in the northern Rhône, is considered one of the best in France, while Cave St Verny to the west of the Rhône also produces top wine.

The bastion that is Châteauneuf du Pape even has its own coop, Le Cellier des Princes.

The cooperative system was established during the 1960s – a difficult time economically and in vineyards in France.

Since then it has continued to grow and now represents 60% of total cellar dispatches in 2016/2017 (just over 60% of Rhône Valley wine was sent in bulk, while 33% was packaged, and 6% were fresh grapes during that year.)

The coop model continues to evolve however.

Inter Rhône press export manager Anne Gorget argues that producers are misguidedly deserting cooperatives, particularly in the south, where the perception is that coops’ international image remains sour.

“This isn’t necessarily the case. Coops are working better and better,” she said.

Chasing a quality reputation is one reason producers are striking out on their own.

The other is that coops share out profit between producers, who know they will receive a set price for their products.

This is in contrast to the negoicant system, where producers aren’t paid until the wine is sold in market.

Such reliability, it has been suggested, means producers are now in the position financially to go solo.

“Money is going back to producers, and they are feeling more empowered to go it alone,” a source told Harpers. “Coops are increasingly renting machines for bottling,” fostering further independence.

Thomas Guibi, MD of Vignobles et Compagnie, concurs.

“More producers are leaving coops as they get a better price on their own. It’s the same in the Languedoc and all over France,” he said.

At the same time many welcome safety in numbers – particularly in the current climate.

Christian Voeux, winemaker at Domaine de l’Amauve in Séguret and head of Séguret appellation produces 40,000 bottles a year, believes it is still almost impossible to compete as a small, independent operation.

It is still “very difficult to work on your own”, he acknowledged. “Some winemakers just don’t have the know how or the investment”.