Does France Produce Too Much Wine?
Does France produce too much wine?
English translation (by DeepL) of a Reussir Vigne piece By Catherine Gerbod- Published on 3 December 2022
Faced with the accumulation of difficulties, the French wine sector needs urgent measures but also a longer term vision.?
The trend towards falling wine consumption continues in France. It can be measured, for example, through household purchases of still wine, on average of 44 75 cl bottles in 2020, 11 bottles less than in 2010 (Kantar/FranceAgriMer data).?
However, on a global level, wine consumption is heading in the right direction. This observation prompts Jean-Marie Cardebat, professor of economics at the University of Bordeaux and president of the European Association of Wine Economists (EuAWE), to consider that reducing our production is "a strategic error; it means rolling out the red carpet to our competitors".
A point of view shared by the consultant, Fabrice Chaudier, founder of Vins & Ventes. For him, as wine is not an essential product, the law of supply and demand does not apply, apart from a few percent of wines that can be considered luxury products.
Imagining strategies for conquest
For these market observers, a strategy of (re)conquest must be built. They cite the examples of Cognac and Champagne, where the markets are closely linked to production by controlling volumes and structuring around large players with strong marketing resources. "In both cases, there is a desire on the part of the interprofession to win back market shares or to produce according to objectives set by all the players", Fabrice Chaudier explains. He regrets that in vineyards like Bordeaux, intermediation has cut off production from the market. He considers it urgent to collectively help the winegrowers to sell. "The CMO for wine has 90 % of subsidies on the upstream and very little on the downstream. It is easier to obtain 100,000 euros for a wine press than to finance a sales representative," says the consultant. He regrets that in the management organisations of the appellations, they are mobilised above all on the specifications rather than on "what can change the marketing and the valorisation".
For Michel Chapoutier, president of the Union des maisons et marques de vin (UMVin), "it would be more positive to help young winegrowers to set up, sell and export than to destroy".
Double the effort on exports
He deplores the chronic lack of resources dedicated to sales. "France has a marketing problem rather than an overproduction problem," he insists. "In the 1990s and 2000s, we were reluctant to invest in developing exports. This is a political flaw," he asserts. He regrets the lack of weight given to those who market in the organisation of the sector, which leads to the question of selling after having produced. "We thought too much that the Holy Grail was the PDO and the PGI, but what is the market demand?
Jo?l Boueilh, president of the Vignerons Coopérateurs, also looks beyond our borders. "We are too focused on the French market. On the export market, there is room for our wines, but there is a way of thinking about the wine trade that needs to be found," he observes.
A lack of structure and strong brands
French resistance to brands is a problem, according to Robert Joseph, a British journalist and author, including editor of Meininger's Wine Business International. He believes that value is added to grapes by creating products that have a recognised quality, and that this is done through brands and not just through an appellation. As proof, in the appellations with little notoriety, winemakers manage to sell bottles at 10-20 euros thanks to their reputation, which plays the role of a brand, more than thanks to the PDO.
In this context of commercial weakness, he thinks that, yes, France produces too much wine. He cites the large groups such as Gallo or The Wine Group capable of creating dozens of brands per year to target a market. He notes a misplaced image of PDOs: "a Nordic or Canadian monopoly will look for Chablis or Chateauneuf du Pape at so many euros a bottle as if they were buying a basic product. He also regrets the lack of interest in the World Bulk Wine Exhibition (WBWE), which he considers to be an absolutely major venue for the marketing of wine.
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Jean-Marie Cardebat also points out the lack of brands in France by observing countries like Australia "where they have good entry-level wines and thousands of hectares around a brand". For him, as for Robert Joseph, following this logic should lead the vineyard to concentrate in number of estates, for a better structured market. "From my point of view, there will always be a diversity of models in the industry, but we are not exploring the entry-level model with economically efficient wines," says the economist.
Getting away from the absolute dogma of the appellation of origin
"There is a form of dogmatism that says that it is the PDO that sells. This is true, but not for everyone," agrees Jean-Marie Cardebat. Robert Joseph criticizes the supposed hierarchy of ever-increasing appellations at the risk of losing the consumer. He co-founded the wine company Le Grand Noir in the Minervois (3.5 to 3.8 million bottles a year, 97% PGI) and says that when he launched an AOP wine, his French friends advised him to choose the AOP Minervois because "the AOP Languedoc was lower. He didn't listen to them as he sells his wines mainly for export where the reputation of the AOP Languedoc is more obvious. "Are wines without GIs really at the base of the pyramid," asks Michel Chapoutier.
"I believe in appellations, they reflect something unique but I don't close any doors. We must listen to all solutions. The appellations should probably also evolve more quickly," says Jo?l Boueilh.
Consumers in perpetual motion
Marketing requires listening to the evolution of consumers. There is already the climate, which leads them to consume differently and therefore demands adapted products. There is also their new relationship with wine. Today, we can assume that we do not drink wine, which was not the case twenty years ago.
In fact, as an aperitif or at the table, wine is an option, not an automatic. The famous French gastronomic meal is a formidable vector of image, but it must not fossilise wine either. Robert Joseph is also against the idea of wine as a cultural product. "In reality, wine is always a drink. For me, Italian pinot griggio, Provence rosé, New Zealand sauvignon blanc, prosecco, these are all drinks," he says. The conviviality of wine has many faces.
Distribution must adapt as more and more consumers, especially in the UK, buy the bottle a few hours before drinking it. "If intermediation is an accelerator to be present on the market, all the better. But if it's a succession of layers that slow down logistics, it's a problem", warns Fabrice Chaudier. It is no coincidence that large groups are buying up e-commerce sites, such as Castel, which has acquired Vinatis. Jean-Marie Cardebat sees the technologies deployed in e-commerce, NFTs and virtual sommeliers as ways of enhancing the value of wine among targets that have little interest in it.
Purchasing behaviour remains poorly understood. In supermarkets, consumption is tracked by the Kantar or Iri institutes. But elsewhere? What wines are bought in direct sales, wine shops, different types of restaurants, the web, producers' shops, delicatessens or food shops? It is clear that there is a lack of data, whereas the sector is in dire need of steering indicators.
Four strong trends on the French market
Fewer wine purchases by households: 88% of households bought wine in 2010, 83% in 2020 (source Kantar-FranceAgriMer).
Disaffection for red wines: in 2021, they have lost a third of their volume sold in supermarkets compared to 2010 (source IRI). The increase in rosés and whites is far from compensating for this loss.
Premiumisation: in supermarkets, the under 4 euro wine segment is suffering the most, while the 6-10 euro segment is growing.
Beer success: it now represents half of the volume of alcoholic drinks sold in supermarkets. Mixed drinks and non-alcoholic beverages contribute strongly to its dynamism.