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| September 2nd 2008 |
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| Inside the cooperage |
by James Lawther MW
While barrels are an old idea, the global cooperage business is relatively new, finds James Lawther MW. As demand for high quality wine rises, both traditional French and younger East European producers have rushed to supply the market.
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It’s hard to believe today, but the modern cooperage business was only born in the 1980s. The renaissance of Bordeaux with the 1982 vintage, the growth of the Californian wine industry, a clearer understanding of the virtues of élevage, the desire for a richer, rounder wine style and the influence on winemaking of people like writer Robert Parker and oenologist Michel Rolland all contributed to the development and expansion of the industry. As an example of the turn of events, in the early 1980s Demptos was the largest cooperage in Bordeaux, producing only 30 barrels a day, mainly for the local market. Today, a company like Sylvain in Libourne, the eighth largest tonnellerie in France, produces 130 barrels a day, 70% of which are for export. Demptos is closer to 150 in Bordeaux alone and more than double that figure if overseas subsidiaries are taken into account.
An international industry
The industry has indeed become global, with companies acquiring a multinational profile as they reach for growth and market share. The publicly quoted OENEO group, which purports to be “world leader for the manufacture of barrels for wines and spirits”, has production and sales facilities in France, the United States, Spain, South Africa and Australia through its subsidiaries Seguin Moreau, Radoux and Schahinger. The Groupe Tonnellerie François Frères, which also includes Demptos, has a similar profile.
Another giant, World Cooperage, a leader in barrels for bourbon and other spirits, has a clear American focus, but also maintains production and sales operations in Europe (Tonnellerie du Monde) and South America (Grupo Tonelero Andino). Brands marketed include World Cooperage, T.W. Boswell and Quintessence, with a mix of French and American oak barrels on offer. The internationalisation of the industry includes the supply and trade in oak. The primary sources of Quercus petraea and Quercus robur are the forests of France, including Allier, Nièvre, Burgundy, Vosges, along with Eastern Europe, including Hungary, Romania and Poland. Quercus alba is the white oak of North America, sourced from Minnesota, the Appalachians and Missouri. A large percentage of the manufacturing is done in the country of origin, but there’s also a steady trade in the export of wood. It’s therefore not unusual to find French oak barrels made in Spain or American oak barrels produced in Chile, both of them, say, finding a market in Argentina.
French oak
French oak barrels made in France (primarily 225 and 228 litre) are still considered top-of-the-range and continue to be in strong demand. This helps place French coopers in a sound position as industry leaders. “It’s a market that continues to develop as there’s a worldwide tendency towards the production of high end, premium cuvées with a consequent call for French oak barrels for maturation,” explains Fabrice Gautier, CEO of Tonnellerie |
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Saury. “Transport costs and exchange rates have had some consequence on orders, but the number of clients continues to grow.”
Figures supplied by the Fédération Française de la Tonnellerie show a total of 580,175 barrels, of all sizes and oak types, were produced in France in 2007 to a value of €331m ($492m). This is up 6% in volume and 9% in value on 2006. French oak barrels of a volume less than 240 litres represent 80% of the total production, or 464,000 barrels, and value, at €260m, with 70% destined for export.
Following a peak in 2000 when some 600,000 barrels were produced for the Millennium, and a slight downturn in 2002 and 2003, a steady rate of growth for French coopers in France of 5% to 10% seems to be the order of the day. What will govern further development and progress is the availability and price of quality French oak. The leading French cooperages primarily source their French oak from state owned forests managed by the Office National des Forêts (ONF). Cultivation and management is better than at private domaines. Increasingly, in an effort to show complete transparency, the oak is also purchased uncut at auctions run by the ONF, and then transformed into staves at stave yards in the region or at the cooperage. The volume of oak available from state forests remains relatively stable. Figures from the ONF show 473,227 m3 of oak in 2006, with a diameter of more than 50 cm, at the size, age and quality desired by cooperages. That rose to 493,621 m3 in 2007 and a provisional total of 489,949m3 for 2008. In the past a greater percentage of this would have gone to furniture manufacturers, but with the demise of this industry in France, the cooperages have been able to take up the slack.
Factoring in price
Today, however, there’s less room to manoeuvre and, with demand drawing level with supply, price has become the lever to control reserves. In 2008 alone there’s been a 30% rise in the cost of uncut oak, taking the price per m3 to €600. (1m3 of cut staves can make ten barrels.) Oak barrels leaving France now turn around €600 per 225 litre unit. Tax and transport can then add up to €1,000 on arrival in a country like Chile. Ten years ago the same 225 litre French oak barrel would have cost €370. With cost now a considerable factor, French oak barrels are clearly destined for premium wines. Industry analysts estimate that less than 3% of world production ever sees French oak. In European and New World markets the barrels are often imported directly by wineries via a network of agents, importers or brokers in situ. Mel Knox, for instance, is a well known broker in California who represents François Frères and Taransaud in the USA. Other cooperages like Seguin Moreau in the Napa Valley or Nadalié in Chile have chosen to set up production facilities in proximity to local markets in order to enhance the offer, as well as diversifying into American and European |
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oak barrels.
New wave oak
American oak has a wave of followers. The flavour is more powerful than European oak, but it adapts well to certain grape varieties. It’s obviously important in California, with no less a producer than Ridge Vineyards vaunting its values over the years. Elsewhere, American oak has been used in Spain for Rioja, in Australia for maturing Shiraz and in South Africa for Pinotage. A key point is that American oak barrels are considerably cheaper than French and other European oak barrels.
American oak is generally sawn rather than split, so there’s less wastage. An American oak barrel today sells for around €330 to €370, 40% to 45% less than its French equivalent. This means that, apart from its adaptability to various grape varieties, it can be a valuable asset to wineries that want to reduce costs on specific brands and lines. World Cooperage is the largest producer of American oak barrels, but French cooperages were quick to set up subsidiaries to meet demand. Demptos was the earliest, opening their US cooperage in 1982, while Radoux and Seguin Moreau both set up their Californian operations in 1994. Taransaud took another option acquiring Canton Cooperage in 1998 and forming the group Chêne & Cie. The revival of interest in Eastern European oak has again been lead by price as well as the qualitative factor and its similarity to French oak. Prices for 225 litre barrels are around €400-500, with the oak being sourced in Hungary, Romania, Slovenia and even southern Russia. Although demand appears to be growing, it’s difficult to obtain specific figures; 8,977 barrels with a volume less than 240 litres were produced in France from Eastern European oak in 2007, but production figures for barrels made elsewhere from similar oak are harder to come by.
Producing barrels where the wood is located offers a more interesting differential in price compared to French oak. Hence the François Frères group has been active in Hungary for a number of years in a tie up with Trust Hungary. In 2008, Taransaud announced a 50/50 partnership with the Kadar Hungary cooperage “aimed at consolidating the identity and authenticity of the barrels produced”. With Taransaud, Canton and now Kadar, Chêne & Cie agents have a range of barrels at various price points each with a specific identity.
The other oak market
Another important consideration is the parallel market for barrel alternatives like oak chips, powder, cubes and tank staves. It may seem like another world from oak barrels but these products are in direct competition, the price and their ability to prepare wines for the market rapidly a considerable lure to producers of fast drinking, entry level wines. Specialist producers and distributors like Custom Cooperage (Innerstave) in Sonoma, California operate in this field, but the international cooperages and groups have also wanted a bite of the apple. Seguin Moreau launched Oenostave, the François Frères group market alternatives through the Arobois brand, Radoux through Pronectar while Nadalié have Oak Add-ins in the USA. The world of small, family run cooperages still exists – Darnajou in Bordeaux and Gamba in Italy are two fine examples – but, increasingly, the business has become a multinational affair. As the wine industry has become global, so too have the cooperages.
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