French wine: From whining to winning?
 August 06, 2004

There's just no pleasing France's mighty wine makers.
Last year, a grape-shrivelling heatwave led to panic about wine supplies drying up. Now, production is up 20%, and the industry is whingeing about a wine surplus - currently 6 billion litres and counting. Export sales are slumping, and even the French seem to be losing their thirst for the daily coup de rouge. There has been talk of a looming crisis, demonstrations by workers and a call by the French Government for a "global offensive" to boost sales.

Sales figures this year have not been encouraging. Exports fell 10% between January and May, continuing a trend which saw a double-digit decline in 2003. Several wine growing regions are introducing caps on production, while up to a thousand small producers in Bordeaux are reported to be on the verge of bankruptcy. This growing malaise has resulted in some radical suggestions to solve the industry's problems.

Many winemakers are pushing for a relaxation of some of the age-old traditions governing wine production in France. This, it is argued, would allow them room to innovate by embracing techniques used by "New World" wine producers - flavouring wine with wood chips, for example.

There is also widespread support for wine to be made exempt from tough advertising laws in France which prohibit alcohol promotion on television. French deputies representing wine growing regions recently lobbied French Prime Minister Jean-Pierre Raffarin to relax the laws, in place since 1991. Critics blame the laws for a dramatic decline in domestic consumption.

The most controversial proposals surround possible reforms to the classification system of wine which has underpinned the industry since the 1930s.Designating wine according to geographical origin, the system specifies which grapes can be used, where they can be grown as well as permitted alcohol and sugar levels. Designed to give legal protection to wine growing regions such as Bordeaux and Burgundy, the system has acted as a guarantee of quality, particularly for wines under the most prestigious appelation d'origine controlee (AOC) label.

No changes are proposed to the AOC classification.

However, plans to relax production requirements for vins de pays, mid-market wines accounting for around half the annual harvest, have devided the industry.

These changes would enable producers to use grapes from different parts of the country country and label bottles according to grape variety as opposed to its region of origin, a significant break with tradition. This is seen as crucial if French wine is to appeal to buyers in the United States, Australia and South Africa. Burgundy producers have criticised the proposals, which will only be adopted if the whole industry agrees to them. Francois Collache, UK managing director of French wine promoter Sopexa, says the industry does need to re-think how it markets its products. "There are fundamental issues which need to be addressed," he says. "It is not about the quality of the product, which I am confident about, but about marketing it and the creation and communication of brands. How do we organise and simplify our offer to make it more easily understandable to consumers?"

Andre Barlier, director of Onivins, the French winemakers' association, says the ideas being put forward are intended to make French wine more attractive to consumers but also moreeconomically competitive. "The paradox is that French wine has adapted itself to different types of consumers and drinking occasions," he says. "However, it seems handicapped by a reputation for complexity which has made certain customers reluctant to approach it, prefering more straightforward wines to begin with."

The French Government recently agreed to double its financial support for the industry - money used for promotion - to 15m euros (£9m; $18m). But this is still a fraction of the annual marketing budget of industry leviathans such as California's EJ Gallo.

"The level of margins in the industry is not very high," explains Mr Collache. "The French business has definitely underspent compared to the New World. There are a few companies doing large scale marketing campaigns but compared to countries like Australia, they are many years behind." Castel-Freres, France's largest winemaker and the world's third largest, is one company that has invested heavily in recent years, developing its own branded wines exclusively for export. It has also spread its bets, with deals such as the purchase of the British Oddbins wine-retailing chain. Castel's Franck Crouzet believes there is an urgent need for fresh thinking although he says greater regulation of production is also needed. "There should be fewer constraints, allowing French viticulture to adapt to the evolution of consumer taste," he says. "We have to develop a new culture around wine, playing on the benefits for good health and on consumers knowing how to appreciate a good wine." Despite the recent fall in exports, Andre Barlier says the industry's performance needs to be put into context, with sales having doubled in the past 15 years. "Wine exports generated 7.8bn euros last year, the equivalent of selling 160 Airbus A321 jets or 11 Queen Mary 2 liners. "Exports are currently in decline but the industry is working hard."