The oak price rise in US, a problem for the French barrel market?

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One third of the 533,000 barrels produced in France are exported to the US.

“I hope that the oak prices surge in the United States won’t affect our business in the market” says Jean-Jacques Nadalié, which is familiar with the United States' barrel market. He was the first French to launch a cooperage in California in 1980. But, unlike his other French colleagues, which followed his example implementing similar projects in Napa Valley, he was less afraid of the consequences of white oak price hikes. ''Our sawmill in Pennsylvania allows us to control supplies'', reassures Jean-Jacques Nadalié.

This price surge is rather treacherous. Starting from the end of 2012, prices have noticeably soared (see table below).

"We will find solutions to the US oak price rise," says François Witasse.

However, in less than two years, prices for white oak on foot have appreciated by at least 30%. ''Demand for bourbon matured in oak barrels has exploded in the US, Asia and Europe. A distiller like Jacks Daniel consumes about a million barrels per year, alone more than the rest of the American winemakers together'', says Chris Hansen, director of Seguin Moreau US. 

Therefore, it will be necessary for the French cooperages operating in California to adjust to the market prices. ''As always, we will find solutions», holds François Witasse, the CEO of Demptos (Tonnelleries François Frères Group).

Fortunately, two elements work in the favor of the French. On the one hand, California benefits from a very good harvest for the third year in a row, both from the point of view of the volumes harvested, as well as the quality of grapes.

On the other hand, for those who sell barrels made of French oak in the US, namely a third of the 533,000 barrels produced in France in 2013, the euro exchange rate now decreasing to $1,20, is a big luck. Of course, if the price stays the same until March, when barrel orders are placed in the US.

Prices of white oak on the rise in the United States

Average prices on foot in US$ / MBF (million board feet) Doyle
   12/2010 12/2011 12/2012 12/2013 09/2014 Evolution 2012-2014
Appalachian region: 221 200 200 296 284 +42%
Missouri: 160 155 200 260 275 +37,5%

Source : Appalachian Hardwood Center, USFS

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