The rise of rosé from Provence
July 21, 2020
Traditionally considered as a cheap and cheerful beverage, rosé has undergone a complete image transformation over the past decade. The US market has largely stimulated this makeover leading to a boom in quality and production volume. As a result, last year the French region of Provence drew some major investors from the luxury products sector, keen on adding premium rosé wines to their portfolio.
Global consumption of rosé currently stands at around 25.6 million hectoliters, up from 18.3 million hl in 2002. The color represents 11.2% of the still wine market and is driving overall growth. The two leading consumer countries of rosé are France, which accounts for over a third of global consumption and the United States with around 20% of total sales. Note that consumption of rosé on the American market is below 2 liters a year per capita, (14th rank worldwide), which suggests that it still has strong potential for growth.
The leading supplier of rosé is the French region of Provence, which produced 170 million bottles of wine in 2019, 90% of which contained rosé. The proportion of wine dedicated to making rosé from this location has remained fairly stable from one year to the next as vintners have been focusing on this category over the past couple of decades. Provence has three major appellation areas: Cotes de Provence, Coteaux d’Aix-en-Provence and Coteaux Varois-en-Provence. Combined, the volume of rosé produced by these AOPs has grown from 1,073,768 hl in 2009 to 1,155,283 hl in 2019. Last year, French supermarket chains acquired 252,396 hl of this region’s rosé appellation wines. At the same time, the United States imported 191,069 hl representing a turnover of more than 142 million euros.
Evoking the Mediterranean art of living, rosé of Provence offers consumers the possibility of enjoying a hint of this way of life, wherever they are. In addition; demand for this category has grown worldwide in favor of dry light colored rosé, which is exactly what this region supplies. As a result, in less than two decades, exports have become the main outlet for Provence’s rosés. Its winemakers are thinking long-term, as it is estimated that the global market for this color can potentially grow to 30 million hectoliters.
Aware however that demand can fluctuate for various reasons, the winegrowing region of Provence is seeking solutions to maintain a balance between its sales at home and its sales abroad. This objective is complicated as the price of the region’s rosés has witnessed a significant surge. In effect, the value of bulk volumes has increased, partly due to small sized harvests in recent years. Back in 2009/10, a hectoliter of rosé appellation wine fetched on average 134 euros. Today the same volume is worth more than twice this amount. Consequently, French supermarket chains have turned to alternative less pricy appellations. Indeed, there are currently very few AOPs from Provence available in packaging other than glass bottles or sold under distributors’ brands. In view of extending their portfolios, a number of the prestigious estates in Provence have established subsidiaries to make brands out of fruit, must or wines supplied by local operators. This is a feasible solution but needless to say competition is currently rife among merchants to secure raw material for winemaking. In addition, the new Trump administration tariffs introduced at the end of last year on some premium European agricultural products as part of a long-running trade battle between Airbus and Boeing have created further tension for Provence’s rosé wine producers. The region’s exporters have adapted to the situation in close collaboration with their importers. In some cases, the tax increase has been offset by lower margins and some volumes have been shipped to the United States in bulk and packaged over there. The latter strategy is making use of a loophole in the legislation as the tariffs apply only to wine in bottles of 2 liters or less. “In April 2020, 22% of the rosé exported to the United States from Provence was shipped in bulk, compared to 1% at the same time last year,” explained Cécile Garcia, Export Communication Manager for the Provence Wines Trade Board.
As demand for this color is expected to remain buoyant, France’s National Institute for Origins and Quality (INAO) has authorized the wine industry of Provence to produce more rosé. Measures include increasing the AOPs’ yield from 55 to 60 hl per hectare and planting an extra 300 hectares of vines per year throughout the region. Around 750 hectares should be covered by 2021, representing an increase in surface area of 2.75%. Planting new vineyards is a challenge for vintners who have had to secure a presence in between fast growing urban areas and highly protected forests. At the same time, the winemakers of Provence are taking steps to switch over to sustainable agriculture. Among other practices, this strategy involves the reduction of inputs, increased biodiversity, and careful water management. “The objective is for 60% of the winegrowing area to have organic or high value environmental certification by 2024 and for the entire vineyard to be certified by 2030,” explained Garcia.
The rising demand for rosés from Provence has led to the development of premium and even super premium brands, thereby propelling the category into the luxury goods segment. The successful launch of upmarket rosés, has in turn, incited major groups to invest in Provence in the footsteps of celebrities (Brad Pitt, Angelina Joly, Georges Lucas…) and entrepreneurs (Vincent Bolloré, Tom Bove…). As a result, last year was marked by some high-profile transactions.
In May 2019 Louis Vuitton Moet Hennessy (LVMH), one of the world's biggest fashion and drinks groups, enhanced its wine portfolio through the acquisition of Cotes-de-Provence cru classé Chateau du Galoupet – an estate dating back to the 17th Century. For the first time the French entity, which owns Champagnes Veuve Clicquot and Dom Pérignon, Hennessy Cognac, as well as the famous Bordeaux estates Chateau-Cheval-Blanc and Chateau-d’Yquem, decided to buy a winery specializing in rosés from Provence. Representing a surface area of 160 hectares, including 72 under vine, this property elaborates around 450,000 bottles of rosé a year. According to press sources, it was purchased from the UK-based Shivdasani family for the sum of 30 million euros.
Another indication of the growing popularity of rosé from Provence occurred six months later, when luxury French fashion group Chanel officially arrived at Porquerolles – an island just 20 minutes by boat off the French Riviera. Negotiations leading up to the acquisition of the wine estate located in this protected national park lasted two years. The purchase follows Chanel’s investments in various Bordeaux estates: Chateau Berliquet, a Saint-Emilion Grand Cru Classé and nearby Chateau Canon, as well as Chateau Rauzan-Ségla in Margaux. The latest acquisition was founded by Francois-Joseph Fournier in 1911, after he used income earned from mining ventures in Mexico to purchase Porquerolles. Later on, the French government bought the majority of the island to preserve the environment, but Fournier’s descendants were authorized to continue winemaking at Domaine de l’Ile. The family has kept a 10% stake in the estate and sold the rest to Chanel for an undisclosed amount.Certified organic since 2015, its 34-hectare vineyard essentially produces rosé, the price of which ranges from 12 to 33 dollars per bottle. Chanel, which is controlled by the Wertheimer family, has set itself the aim of elaborating gastronomic rosés and upmarket white wines at Domaine de l’Ile.
The year ended on a high note, once again with LVMH in the spotlight. This time round, the group became the majority shareholder of Chateau d’Esclans, the biggest seller of Provence rosé in the United States. The company’s CEO Sacha Lichine, who has kept a 45% slice of the pie, has stayed on board as Managing Director. Alix AM PTE Ltd, which had acquired 50% of the company in 2008, sold all of its shares to Moet Hennessy, whereas Sacha Lichine parted with 5%. After the purchase of Chateau du Galoupet, this new investment, representing 140 million euros, has confirmed Moet Hennessy’s intention of adding upmarket rosés to its portfolio of luxury wine and spirits brands.
Sacha Lichine acquired Chateau d’Esclans in 2006 after parting with Chateau Prieuré Lichine in the Margaux appellation, 30 km north-west of Bordeaux. His objective from the very start, was that of producing top quality wines, including a very high-end rosé brand. As a result, over the past 14 years, he has developed a full range of wines: Whispering Angel – the top-selling French rosé in the United States, Rock, Chateau d’Esclans, Les Clans and Garrus - for a long time the most expensive rosé in the world boasting a retail price of around 100 dollars a bottle. Substantial investments have been undertaken to constantly improve upon the quality of the estate’s rosé only wine selection elaborated out of Grenache and Vermentino. Today it stretches across 267 hectares, 74 of which are planted with AOP Cotes de Provence vines. The vineyard will be extended in the near future to include an additional 60 hectares of vines. According to Sacha Lichine, Bordeaux-style vine-growing practices and Burgundy-style wine-making techniques are the key to obtaining a super premium rosé wine. “We push the fruit to the limit in terms of ripeness, only use free run juice and mature the wines in 500-liter oak barrels,” he stressed. When it comes to selling, Champagne marketing savvy has served as an inspiration with powerful brand building and a range of premium rosés retailed at different prices. As a result, the estate’s sales hit the 5-million bottle mark in the United States two years ago. “The popularity of Sauvignon Blanc among female consumers opened the way for pale dry rosé wines on the American market allowing it to become all-year-round drink,” explained Lichine. Today, his company’s selection is available worldwide, notably in resort areas, but also China where it accounts for 30% of total rosé wine sales.
If investments in Provence over the past decade have led to a boom in the price of winemaking properties and rosé wines, transactions have reached a certain maturity, partly due to the Covid-19 pandemic, according to Michel Veyrier, the founder of Vignobles Investissement, a brokerage specializing in vineyards. “Under these circumstances, the market is going to stay open and allow for the arrival of new qualitative projects dedicated to rosé, but also wine tourism and luxury accommodation,” he pointed out. “The recent price stabilization is going to allow rosé appellation wines to remain affordable, thereby maintaining strong market demand ahead of other growing regions. Provence is therefore a sure-fire value for investors.”
by Diana Macle
Diana Macle is a wine journalist based in Southwest France