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July 2018 WINES&VINES 47 BARRELS trifecta — the growing world-wine market, the consistent rise in demand for premium French oak, and the poor euro exchange rate — the average price of French oak barrels will double within the next five years. Phil Burton, owner of Barrel Builders in St. Helena, Calif., said due to the inconsistency in the euro exchange and rising costs of raw materials, he, too, has adjusted the prices of his French oak barrels. "Our top-end Esprit French oak 48-month air-dried barrel cost 1,020 euros ($1,132) in 2016. This year the price is 1,065 euros ($1,243)," he said in an email to Wines & Vines. "The exchange rate makes a big difference." Still, "French oak will always be the 'cat's meow' in Napa," said Burton, who's noticed that most clients making premium wine feel the pressure to invest in the more expensive, tighter-grained barrels. In his opinion, this isn't completely necessary. Burton said medium-grain barrels are a viable option, especially for those aging red wines for 20 or more months. "It's more eco- nomical, and they'll see similar results as those aged in tight-grain barrels," he said, stating that his current medium-grain barrel prices average 820 euros ($957). "It's time to rethink that tighter is better." American oak market stabilized In our February 2015 issue, Wines & Vines re- ported on increasing prices for American oak barrels, driven by surging consumer demand for Bourbon and other oak-aged spirits. In response, barrel producers such as TFF Group, which owns Tonnellerie Francois Freres, Tonnellerie Radoux and other major cooperages and barrel brands, expanded coo- perage production to serve the Bourbon mar- ket. According to the company's annual report, TFF has surpassed its business goals to serve the bourbon-specific market. "Bourbon has proven to be the major growth driver that I had announced," said CEO Jerome Francois in the report. "The year 2017/2018 is look- ing promising with a full order book that should allow us to double our activity." With major coopers like TFF responding to the spirit industry, along with other, spirit-focused coo- pers entering the market, the added pressure on American oak wine barrel suppliers has eased. "Most spirits guys are now trying to get barrels from those guys and aren't coming after us," said Seguin Moreau's Hansen. "We do have a few craft distilleries on the West Coast that do some purchasing from us because we're local and they want a top-notch barrel, but there's not as much demand as years past." While the competition for American oak has decreased, the price does continue to increase, though minimally. Hansen reports that the cost for raw materials has risen slowly over the past five years and that Seguin Moreau has re- sponded with a minor increase to its American oak barrels, priced at $520 this year. Burton cited an increase in Barrel Builders' American oak barrel prices, from $510 per barrel in 2016 to about $560 per barrel in 2018. Burton calls American oak "a relative bar- gain" compared to French, but aded that be- cause of the barrels' strong characteristics and "aggressive" effects on the aging wine, the market for American oak still remains specific to certain wine producers — such as those working with hearty Zinfandel or looking to craft an "oaky" Chardonnay. So it is that American oak maintains an "alternative oak" reputation. KEY POINTS Euro-dollar exchange raises prices and concerns. Suppliers are creating "high-end" American oak barrels. Coopers recommend alternative solutions.