The Chambre d’Agriculture de la Gironde recently published a revised edition of a study entitled: “Référential Economique du Vigneron” (previously published in 2002, 2009 and 2012), looking at the production costs for AOC Bordeaux wines.

The 2016 study adopts a slightly different approach to the earlier editions, looking not only at the difference between a producer selling in bulk and one selling in bottle but also at the differences between producers with different sized vineyards, different planting densities and, notably, different viticultural practices. Whereas the 2012 study compared just two hypothetical AOC Bordeaux producers, each with 25 hectares planted at a density of 3,333 vines per hectare, one selling in bulk and the other mostly in bottle, the 2016 study compares four types of producer: two practising organic viticulture and two practising sustainable viticulture. In each case one producer has 25 hectares planted at a density of 3,333 vines per hectare and one producer has 15 hectares planted at a density of 5,000 vines per hectare. This new approach reflects the increasing awareness of the environmental impact of wine production and the increase in the number of producers adopting either sustainable or organic viticulture practices.

The first part of the study compares vineyard equipment costs. The practice of mechanical weeding, rather than spraying weed killer, and the use of a powder sprayer in addition to a liquid sprayer leads to  higher equipment costs for organic producers, with the total cost of equipment being €159,300, versus €128,500 for producers practising sustainable viticulture.

The second part of the study analyses the production costs for each type of producer; looking at viticulture costs, total vineyard costs (including items such as insurance, administrative expenses and the cost of leasing land) and winemaking costs. The study analyses all of the costs in detail, which are summarized in the table below:

On this analysis production costs per hectare are approximately 15% higher for an organic producer than for an equivalent producer practising sustainable viticulture.

The next part of the study looks at the impact of yield on production costs, under three scenarios: where the grapes are sold to a cooperative, where the wine is sold in bulk and where the wine is sold in bottle. The following table shows the impact of yield on production costs in the case where the wine is sold in bottle:

Finally, in keeping with the emphasis on looking at the impact on costs of using more environmentally friendly production techniques, the study looks at the implications of a sustainable viticulture producer using mechanical weed removal in place of weed killer and eliminating any CMR (carcinogenic, mutagenic or reprotoxic) substances. The resulting increase in viticulture costs is €286 per hectare for the lower density vineyard and €447 per hectare for the higher density vineyard.

When looking at this study it is important to bear in mind the hypotheses used: production of red AOC Bordeaux wine; all buildings and equipment meeting current regulatory norms; vines in good condition, aged between 15 and 25 years, with few missing vines and moderate vigor; properties with either 25 hectares planted at 3,333 vines per hectare or 15 hectares planted at 5,000 vines per hectare. However, what this study clearly illustrates is :

The marginal viability of many AOC Bordeaux producers, particularly those selling in bulk – The average bulk price for AOC Bordeaux was €1,215 per tonneau in 2015, compared to production costs of at least €1,424 per tonneau in the study.

The impact on production costs of variations in yield – Costs are approximately €1 per bottle higher  at a yield of 30 hl/ha vs a yield of 55 hl/ha (maximum authorized yield for AOC Bordeaux is 58 hl/ha).

The higher costs associated with organic wine production – Organic wine costs approximately €0.50 more per bottle based on representative average yields of 40 hl/ha for organic viticulture and 50 hl/ha for sustainable viticulture.

Production costs are rising – In the 2012 study, for which I also published the findings (see here), the equivalent production cost per tonneau was €1,186 vs €1,424 in 2016, while the production cost per bottle was €2.88 vs €3.01 in 2016 (at a yield of 50 hl/ha).