Little cheer for French wine traders

With the sluggish economic conditions which affected 2003 sales set to continue into the current year, wine producers and traders face another difficult 12 months, according to the report from French market analysts Xerfi​.

But while lower consumer spending power has a short term effect on sales - albeit one that traders would rather do without - a rather more worrying long-term trend is emerging, according to the report.

The French have a reputation as major wine consumers, but in fact regular wine drinkers are becoming increasingly rare, according to Xerfi. Over the last 40 years, total consumption has dropped from 46 million hectolitres a year to 34.3 million in 2001, with health concerns, tougher drink driving rules and increased competition from other products all having a major influence.

For 2004, the situation will not improve, according to Xerfi's predictions, with household wine purchases likely to drop by 0.2 per cent in 2004 (compared to a minute 0.1 per cent gain in 2003), in turn leaving wine traders with value sales up by just 0.7 per cent.

The difference between the volume and value increase is due to expected price increases this year, justified by the excellent quality of the 2003 harvest following the exceptionally warm summer weather. Value sales in 2003 were 0.3 per cent lower than the previous year, according to the report.

It was this same hot summer weather which contributed to the slight gain in sales for 2003, with white and rosé wine consumption increasing during the heat wave as consumers tried every means possible to cool down.

But wine producers are not sitting idly by and watching their market disappear, according to Xerfi. Increasing efforts to market wines as branded products - so successfully achieved by New World producers - should limit the decline in sales in 2004, according to Xerfi, although a more rapid move down the branded route could arguably have helped producers avoid a decline altogether.

New World wines, with their consumer-friendly branded approach, have taken a massive share of France's international export business, and this is another worrying factor for French producers, not least because consumers used to New World winemaking techniques may be hard to entice back to Old World styles, even with better branding.

Added to this are the increasingly poor relations between France and the US, the second largest export market for French wines. Disagreements over the war in Iraq have already led to US consumers spurning French products such as wine (replacing them, increasingly, with their Spanish counterparts) and tough new bioterrorism measures introduced by Washington in December could make it even harder for French producers to find a market in North America, according to Xerfi.