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10.26.2010

Too Much (Bad?) Muscadet or Evil Taxes?

I read with some dismay this morning, a news article in Decanter Magazine about sixty growers in the Loire Valley's Muscadet appellation going bankrupt in the past few months, and the imminent danger of perhaps hundreds more following suit.

It's never nice to hear about folks in the wine industry suffering calamities such as this, but I have to wonder if there isn't a certain amount of inevitability about it.

Like every major economic incident these days, this one has its roots in globalization, and the complexities it adds to market operations.

Some folks might say that the Muscadet region has just made too much wine for a long time, and that government subsidies have encouraged growers to overproduce, leading to too much mediocre wine on the market and not enough demand.

On the other hand, producers will point to the fact that the main export market for these wines is the UK, and in the past five years, the British Pound has weakened against the Euro while at the same time import duties and VAT taxes have gone up, resulting in a net combined increase of nearly 60% in taxes on every bottle, according to Charles and Philippa Sydney, who recently wrote a report on this year's Loire harvest for The UK's Wine Detective Blog.

Add to all that the global economic crisis, and you've got what amounts to a slump in demand translating to a 50% drop in the price of Muscadet according to the web site Just-Drinks.Com. Such a collapse in prices so quickly means that the market has had no time to adjust the other prices like labor, equipment, etc, and so growers have been left holding the bag, with grapes that have cost them the same as last year to produce, but which are fetching half as much in price this year. It doesn't take a degree in accounting to understand why these farmers might find themselves somewhere up shit creek without a paddle, as the saying goes.

I've never understood why, in such situations, the French vignerons turn to vandalism and rioting, but much like past events in France where winegrowers have lost subsidies due to such new economic realities, they are busy destroying tanks of wine here and there. Such behavior is infantile.

I have a certain amount of ambivalence to news like this. As I said, it's tough to hear about so many families in dire straits because of changes in the market like this, but that's just what happens when things go haywire in the global economy, and I don't agree with those who say that the Government has some responsibility to intervene, or those who would shut their eyes tight, put their hands over their ears, and believe we can somehow wish our way back to an economy like we had 40 years ago.

But if you did want to do something, for yourself as well as the growers in the Loire, I'd suggest a dozen oysters and a couple bottles of Muscadet on your next sunny Fall afternoon.

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