Source: Joseph De Avila, Wall Street Journal

Higher Prices, New Options Damp Demand for Beaujolais

Beaujolais Day is here, but wine merchants aren't celebrating like they used to.

As dictated by French law, today -- the third Thursday of November -- is the first day of the year when Beaujolais Nouveau can be sold. The red wine, made from Gamay grapes, is the first wine of the new season, and is released to much marketing fanfare each year.

Though critics long have dismissed Beaujolais Nouveau as unsophisticated, the wine surged in popularity in the 1980s and '90s. More recently, subtle price increases in the relatively inexpensive wine, along with competition from other cheap wines, have chipped away at sales.

Distributors and wine shops expect sales to drop slightly, maintaining the downward trend that began earlier this decade. Last year, 2.55 million bottles of the wine were shipped to the U.S., according to Inter Beaujolais, a Beaujolais trade union in France. That's down from 3.9 million bottles sold in 2001.

"Demand has certainly been waning," says Chris Ryan, chief executive for Dreyfus, Ashby & Co., a New York-based wine distributor that sells Joseph Drouhin's Beaujolais Nouveau. Sales began to slow about four years ago, he says, but have since leveled off. The drop in sales coincided with a weaker dollar and higher transportation costs.

"We squeezed margins as much as we could to keep it under $10, but that is no longer close to possible," Mr. Ryan says. The average price this season will be $12.99 to $14.99. That's up about a dollar from last year, he says. Sales for the 2007 season were down 12% from 2001, he says.

As the price of Beaujolais Nouveau has crept upward, some drinkers are opting for the many other inexpensive wines now available, says Serge Lozach, managing director for Sopexa USA, a marketing agency for French wines.

Efforts to keep the price down have focused on shipping costs. Beaujolais Nouveau traditionally is flown to most parts of the world in order to get it to shelves by the third Thursday of the month. It's not only expensive to fly wine across the world; the amount of carbon emissions involved is much higher than if it were shipped by boat or by truck, says Tyler Colman, the author of "Wine Politics: How Governments, Environmentalists, Mobsters, and Critics Influence the Wines We Drink."

W.J. Deutsch & Sons Ltd., importers of Georges Duboeuf's Beaujolais Nouveau, is shipping most of the wine by boat this year, says Barbara Scalera, a spokeswoman for W.J. Deutsch. The move saves costs and energy, but it has its downsides: Due to a finite amount of space, the importer could ship only 150,000 cases this year, down from the 180,000 cases typical in recent years.

Among efforts to reduce shipping weight, and also the wine's carbon footprint: This year several labels are bottling their Beaujolais Nouveau in recyclable plastic. Labouré-Roi, distributed by Palm Bay International, and Mommessin and Bouchard Aîné & Fils, both distributed by Boisset Family Estates, will come in a plastic bottle for the first time this year. And Georges Duboeuf produced a private label blend of Beaujolais Nouveau for Whole Foods Market Inc. that will come in a plastic bottle.

Write to Joseph De Avila at joseph.deavila@wsj.com

Source: Joseph De Avila, Wall Street Journal

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