Posted: Jul 24, 2017
Bulk wine accounts for around 80% of the global wine market, but its inner workings remain a mystery to many. In a two-part special report, just-drinks lifts the lid on the channel to discover what makes it tick and why it is more important than ever. In part one, news & insights editor Andy Morton goes inside one of France's top bulk suppliers and tracks bulk wine's journey from tasting room to bottling plants around the world.
It is the week before the Vinexpo trade fair, and in a tasting room in the Rhone valley, a bulk wine producer is laying bare the secrets of the industry. Around us are the usual weapons of wine sampling - a spittoon, empty glasses and, of course, a plateful of water biscuits. It is a scene due to be reproduced a thousand times over to our north in Bordeaux in just a few days time.
Here, however, there are some crucial differences.
In the bulk wine industry, two factors outdo all others - volume and cost
In the tasting notes, alongside the usual columns for origin, varietal and vintage, is a column marked "Price". A quick check reveals that this is not price-per-bottle, or even per-case. The numbers in this column are price-per-hundred-litres. While the tuned tongues and noses at Vinexpo may speak mainly of bouquets, aromas, tannins and notes of forest floor, here in the bulk wine industry, two factors outdo all others - volume and cost.
Despite accounting for 80% of the global wine industry, nobody appears keen to talk about bulk, perhaps because the concept strips wine to its commoditised bones, on the same level as toothpaste or toilet roll. In an industry that likes to view itself as one built on heritage, tradition and prestige, especially here in France, it may be difficult to accept that winemaking, at its core, is just like any other business.
But, the profile of bulk wine is changing. In a two-day visit to bulk wine producer Raphel Michel, I saw how some in the channel are pushing themselves forward as the equal, in terms of quality, of their bottled wine counterparts. And, as global logistics are turned upside down by new infrastructure developments in emerging markets such as China, speed of delivery and price today are better than they ever have been.
Meanwhile, because of increasing price pressures in major markets such as North America and the UK, bulk wine is playing an even more important role in the mainstream of the industry. Add to that a fresher focus among consumers on sustainability and eco-footprint, and you have a bulk wine market tipped towards the ascendency.
The link between big and small
As is apt for a qualified helicopter pilot, Guillaume Ryckawaert, the CEO of Raphael Michel, has seen a lot of ups and downs in the industry over the 15 years that he has been in the business. His own company's fortunes, however, have mostly been on the up. He bought Raphael Michel, a 118-year-old negotiant and producer, in 2002 after an epiphany on a visit to Australia. There, he saw bulk wine producers focussed on delivering to their clients bespoke quality of the sort the staid negotiants in France had thus far refused to do.
"I thought to myself, we have something to do in that business," Ryckawaert says over lunch at Raphael Michel's headquarters in Orange, a town 30km north of Avignon in France's Provence region.
Since then, Raphael Michel's business has grown by between 20% and 30% per year, on average. A continuous stream of lorries from the company's four loading stations delivers 1m hectolitres a year to bottling plants and major wine distributors around the globe.
As the only wine producer in France to focus solely on bulk wine, Raphael Michel works with a collection of 3,000 growers and cooperatives to source wine for its six warehouses across France. The company has long-term contracts with 15 cooperatives, and even controls vineyards of its own - six in France as well as an estate 120km south of Santiago in Chile.
The lines of supply have been set up to serve some of the world's biggest wine buyers. Raphael Michel says it has two types of customer - major distributors and bottling facility owners. The company doesn't disclose its client list due to confidentiality agreements, but supermarkets are a major player in the bulk wine market. French retailer Carrefour alone operates six bottling sites.
"We are the link between a lot of people and a few customers, but our customers are very big and the growers are very small," Ryckawaert says. "These are two worlds, very different. It can be very complicated sometimes to make it work but that's the job."
Securing the contract
For years, what was in most demand from bulk wine clients was two-fold - a low price and a reliable supply. Today, as customers demand more and supermarket own-brands increasingly take top honours in wine awards, the quality of the liquid has grown in importance. According to Ryckawaert, quality concerns now account for 50% of the conversation when securing contracts with clients.
"The level of quality asked for by each single customer is very high"
It wasn't always this way. When he joined Raphael Michel, Ryckawaert admits, he was ashamed of the wine it shipped out. "Today, to sell that would be impossible," he says. "The level of quality asked for by each single customer is very high."
This is where the tasting room comes into play. Clients fly in to the the south of France (samples can also be flown out to wherever needed) and, once among the spittoons and water biscuits, can choose from a long menu of wines.
That choice can then be further whittled down, depending on the client's needs. Perhaps the wine isn't sweet enough or the client wants a slightly different colour - Raphael Michel will go back to the blending process and try again. In the past few years, the group has worked to cater to whatever is in demand on shelves around the world. Its choice of wines extends to those matured in oak barrels, or egg-shaped concrete containers. Some of the vineyards on Raphael Michel's estate are organic-certified to cater to recent demand for chemical-free vines. Equipment also has to be replaced frequently for fear of falling behind rivals that buy the latest vinification or storage technology as soon as it hits the market.
"It is a lot to analyse, to ensure the quality," explains Raphael Michel's New World wine manager, Flavia Molines. "But, at the end, we have the contract, and that is what is important."
The bulk wine journey
Once the order has been placed, the logistics team steps into action. Management says a typical order is anything from 50 hectolitres to 30,000 hectolitres of wine, which once ordered is loaded into some of the up-to-30 trucks a day that leave its warehousing facilities. The trucks look like another other road tanker from the outside, but inside carry a protective lining that protects the liquid from the rigours of transportation. Raphael Michel staff affectionately refer to it as a "24,000-litre bag-in-box". A typical journey can be two hours to Lyon or a ten-day trip to the UK that comprises - in order - truck, train, boat, train and finally truck.
Once the wine is at the bottlers, Raphael Michel's responsibility is over. The liquid is now the sole concern of the client, to be blended into a well-known value brand, a supermarket own-label or even sold on to a third-party to continue its way through the Byzantian sprawl of the global wine network.
By Andy Morton
July 20, 2017
Source: Just Drinks
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