There are many factors that influence the price of both your investment wines and that glass you may be enjoying whilst you read this blog. One of the factors in 2021 is the availability and price of French oak – could this be a longer-term consideration for the value of your fine wine?
Pretty much all investment wine production involves maturing wine in French oak barrels and, despite France being one of the most tree-populated countries in Europe, supply has become an issue. Since the start of 2021 the price of this precious raw material has increased 50%.
As part of its climate change strategy, the French Government has pushed for the use of natural ‘home-grown’ materials and additional extraordinary demand, such as the building requirements for the 2024 Paris Olympics, has impacted supply. Expected future restrictions on tree-felling, to minimise the climate impacts of this, are also expected to hit oak supply for cooperage (the creation of wine casks or barrels).
The result is, the price of French oak barrels has soared and this has already impacted the export market. Australian press has reported that wine producers are having to pay above A$2,000 per cask (£1,100). This, combined with the global supply chain challenges and additional soaring logistics costs, are driving rising wine prices.
Australian Grape and Wine chief executive Tony Battaglene said: “French oak is difficult to get and even more difficult to get on a boat, and the price of freight is really starting to cause problems. And when margins are tight it makes a big difference and there is a big concern – I don’t know what we can do about it.”
This isn’t likely to be just a short term or temporary problem. The climate change agenda will impact on the future supply of valuable, climate-sensitive raw materials like oak. One thing is for sure – the price of one of the key components of creating investment-grade and fine drinking wines is rising and we will have to swallow it!
See our top ten factors that influence the value of your fine wine and speak to a member of our team about current market prices by calling 0203 384 2262.