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54 WINES&VINES December 2016 OAK BARRELS euro will go in the future is blowing smoke," he said in an email. Burton said his best guess is that the ex- change rate will slowly favor the euro through the end of 2016 and then improve in early 2017. "So for French oak, I'd guess a 5% in- crease for next season and maybe 4% or so for other European oak," he said. "I have several cooperages in Eastern Europe that would love to penetrate the U.S. markets. I met with one rep from Armenia recently, and he's all set to send sample barrels and start with an initial price well below what we are paying now." Burton said the "incredible" demand for bourbon will probably translate to an increase of around $30 per barrel for new American oak. He also said as European oak gets more expensive, American producers try and main- tain the same difference between the cost of those barrels and theirs. French barrel prices tend to stay on the in- crease because the supply of the best cooperage timber is tightly controlled by the government. A few members of the Tonneliers de France, however, want more of a say in how prices are set for that wood. In June 2016, the group announced several cooperages that operate their own stave mills formed the Syndicat des Mérandiers de France. The group is seeking more influence with the national forest agency and uniform procurement strategies. Global barrel sales strong The Tonneliers group also reported that in 2015 its members sold 592,300 barrels, or 8% more than the previous year in volume and 10% more in value. Total sales came to 391 million euros ($435 million), and 64% or 381,000 barrels worth 264 million euro ($295 million) were exported. France is the largest market for new French barrels, followed by the United States, Spain, Australia and Italy. These five countries repre- sent 80% of the world barrel market. The group noted the favorable exchange rate for the dollar did result in more orders for new barrels from American wineries. Ken Seymour, managing director of H&A Barrel Management in St. Helena, Calif., said he expects pricing for 2017 won't be set by the major coopers until after the Unified Wine & Grape Symposium in late January, when H&A representatives can get a sense of the level of demand from the U.S. market, which has be- come the world's largest for new barrels, ac- cording to Seymour. H&A provides barrel-leasing services, barrel inventory management and resells used bar- rels. Despite the volume of barrels that H&A's clients purchase, the company doesn't get a break on pricing. "We want to stay neutral," Seymour said. "We really don't want to control pricing. Our job is to pay the coopers and make sure the invoices keep moving." He said the company, which is based in France but serves all of the principal wine regions in the world, now has more than 1,100 clients and handles more than 500,000 barrels. Total net sales reached $176 million in 2015, he said. Regarding the secondary market, "The used barrel market is an extremely volatile market, and it can dramatically change very quickly," Seymour said. Two years ago, when the supply of American oak was constrained, it put a premium on used barrels and even seven- to 10-year-old barrels were fetching prices two to three times normal. "That dried up very quickly," he said, as the supply loosened up. "They (spirits producers) stopped looking at the wine market for their used barrel needs." As for the big picture, despite the im- proved quality of alternatives and the number of oak options, Seymour said H&A sees noth- ing but strong growth for the barrel market. "Our customers are dependent on barrels for building complexity of wine, and they're sell- ing it at a wine price point to allow them to buy expensive barrels," he said. "We don't see that changing." "Cooperage is Our Craft" Ad - 4.5" x 7.5" Proof 3