French wine industry will survive current downturn

Related tags Wine Alcoholic beverage Fermentation Canadean

Sales of wine in France have been falling recently as competition
from other drinks sectors heats up and younger consumers opt for
less alcholic beverages. But wine still far outperforms all other
alcoholic drinks in France, and its days are far from numbered.

The future of the French wine industry remains healthy despite a fall in per capita consumption and strong competition from other sectors, especially soft drinks. A new report from beverage industry analysts Canadean​ shows that wine still accounts for more than half of all the alcohol sold in France with sales 60 per cent higher than beer and more than ten times those of spirits.

The 1.7 per cent fall in per capita consumption between 1998-2002 is attributed to population increases, since volumes rose 0.7 per cent in the same period. The trend was accentuated last year with volume up significantly on 2001, fuelled mainly by outstanding growth in the light wine and sparkling wine segments.

The recovery of light wine sales after two years of stagnation was accompanied by a sharp fall in imports as consumers turned to quality native products. The sheer size of the sector, accounting for almost 90 per cent of wine sales, means that further growth this year is unlikely, although Canadean predicts more increases from 2004.

Demand for sparkling wine rose 2.5 per cent driven mainly by Champagne sales, which have bounced back after the over-selling spree which took place in anticipation of the Millennium celebrations. Consequently the larger 150cl bottle lost out to growth in the 75cl, 37.5cl and 20cl formats, Canadean said.

Total sales in the relatively small fortified wine sector, which accounts for just 3 per cent of wine category volumes, continued to fall, affecting the majority of brands. However, the promotion of Martini as a long drink appears to be working well and could offer pointers for other brands, some of which are already doing a good job in expanding sales.

Despite an overall fall in port sales, imports, such as aged tawnies and premium ports, have also increased sales. Sandeman's adoption of Pernod as distributor is likewise expected to arrest declining volumes, the market analyst suggest.

Looking to the future Canadean believes that wine producers will have to continually adapt to a market in which the main threats come from the shrinking proportion of young drinkers in the population and the increasing popularity of soft drinks, especially packaged water.

Light wine brand development has been weak and rectifying this situation could present a good future opportunity, provided significant investment is forthcoming. Sparkling wine may return to pre Millennium growth levels if pricing is kept competitive, and while the fortified wine sector's fortunes are influenced by its ageing consumer profile, Canadean believes that sound marketing has already shown that it has an important role to play in a fight back.

For details on how to buy your copy of Canadean's Wine Watch Report 2003 - France​, click here​.

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