French Vintners Get Small Financial Package from Government

A lot of French winemakers are in financial trouble. They have fallen behind the US, Chile and Australia in volumes exported, and those who know don’t think the quality makes up for that. Worse, Frenchmen themselves are drinking less – the current 50 liters a year per capita is less than half what it was in the 1960s. So, the government has stepped in with an aid package of €70 million. With around 220,000 winemakers, this won’t fix much.

The aid will help some older wine makers retire, and that will help with overcapacity a bit. The largest chunk of aid, around €40 million, will help indebted operations cleanup their debt structure, which is prudent. Another €15 million will be low interest loans to cooperatives, which may or may not amount to anything tangible. And there’s €3.5 million in advertising abroad to boost exports (money flushed down the urinoir, certainly in the US).

The French can make exceptional wines thanks to their climate and experience, but they are suffering from a case of inertia. Production exceeds demand in Europe by about 30%. Things are so bad that the French government may ask EU permission to distill 250 million liters into alcohol for industrial purposes, and 80% of this is Appellation Contrôlée – the good stuff. Consolidation is necessary to mop this up, and retooling the industry for the future is not going to come for €70 million.

The other wine-making countries of the world have found that marketing is greatly aided when the grape variety forms the cornerstone of product differentiation. When one orders a Merlot, the wine is going to be a hefty red. When one orders a Burgundy, one is asking for wine from a certain place, not of a certain grape – and white Burgundies are one of the world’s great surprises. In France, there is a heated debate about just how to use the grape variety on the label. The tradition is convoluted and obscure to an outsider, but that merely proves the point. Consumers outside of France are definitely going to be outsiders, and a confused consumer is not a happy tippler.

Branding, advertising and technological innovation are exactly what the French vintners have traditionally avoided. There comes a point at which resisting the market becomes self-defeating, and they passed that point some time ago. The government will need to help, given how intertwined it already is in the mess, but change is needed. It can either be painful or extremely painful, but pain-free isn’t an option any more.

© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.

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