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CO VER S T OR Y How winemakers can stave off bearish times By Kerry Kirkham No Bull Barrel Market magine that you're a wine- maker, and the boss hands you an annual budget demanding a 10% reduction in costs without a decrease in production or a compromise in quality. How would you choose what to cut? Wine industry professionals across the board are faced with similar requests to do more with less, and many barrel suppliers find themselves grappling with how to help winemakers achieve their goals on a budget. I For the overall 2010 barrel market in North America, sales were down as much as 35%-40%, depending on the supplier. However, pricing has remained virtually the same for two straight years, and many barrel suppliers are saying that the worst appears to be over. Jérôme Aubin, owner of Oakland, Calif.-based Artisan Barrels, echoed the comments from many suppliers. "Our agency has been pretty much flat from the big slump in 2009, which was down from 2008. At least the hemorrhage has stopped," he said. 26 Wines & Vines FeBRUARY 201 1 a french oak barrel undergoes bousinage, the toasting of the barrel, which breaks down the monosaccharoses on the surface of the wood, imparting specific organoleptic qualities. While the economy remained down and many wineries' sales did, too, decreased yields from the 2010 harvest helped winemakers keep their barrel expenditures down. Aubin noted a 10%-15% drop in barrel sales for Bordeaux varietals such as Cabernet and Merlot. Barrel sales for Char- donnay and Pinot Noir were less affected. As for 2011 barrel market conditions, Jim Boswell, owner of The Boswell Co. in San Rafael, Calif., cautioned, "Our expec- tation is for another very tough year. This is the most difficult barrel-selling environ- ment in my 35-year history. The good old days are gone. Winemakers need to be careful about how they choose barrels in this unstable era." According to cooperage industry data, average barrel prices for American oak ($360), French oak ($853) and European oak ($625) were flat in 2009 and 2010, and they are expected to stay flat well into 2011. Highlights • With the economy still soft, winemakers looking to purchase barrels have options for cost savings that won't compromise quality. • Puncheons, hybrid barrels and Hungarian oak can all help achieve budget reductions. • Few price changes are expected for 2011, but "buy forward" contracts can moderate euro fluctuations. All this begs the question: With the economy still soft and barrel prices holding firm, can winemakers do more with less without compromising quality? Ultimately, a trusted cooperage or barrel broker can guide clients through various cost-saving options. Here are a few to consider: follow the euro Suppliers reported that the price of barrels in euros has been practically unchanged for the past two years. The rise and fall of the euro is what has driven barrel price fluctuations, unfortunately not in the favor of American buyers. SEGUIN MOREAU