Support for French winemakers fails to tackle overproduction issue

Overproduction​ has long been one of the greatest challenges to the French wine industry but producers appeared to have been getting to grips with the problem. Until this year, France had successfully started a trend of reducing its output, with total production dropping 12 million litres (20 per cent) between the 2000 and 2003 vintages.

But this year French production went up 23 per cent on 2003 to 59 million hectolitres, an increase of over 11 million hectolitres - a quantity of wine equal to the production of Germany and Switzerland combined. To put the increase in even more perspective, Australia, which recently overtook France as the UK's largest source of wine, only produces 13 million hectolitres a year.

With production exceeding demand by as much as 30 per cent, many French winemakers are struggling financially, and a large part of the €70 million package agreed by the French authorities - some €40 million, to be precise - will come in the form of preferential loans for already indebted businesses.

A further €15 million will be made available in low-interest loans for wine co-operatives, while just €3.5 million will be set aside for promoting French wines - a trivial sum compared to the big budgets of New World wine producers such as California's Gallo, which is planning to invest $5 million (€3.8m) in promoting just one brand - ironically, a French red wine called Pont d'Avignon.

But it is not the paucity of cash to promote French wines which is the real problem; there are simply too many producers making too much poor quality wine.

Although the share of quality Appellation d'Origine Controlee​ (AOC) wines has increased steadily over the last 20 years - from 21 per cent in 1980 to around 49 per cent today - large quantities of cheaper, lower quality wines are still produced. Some 29 per cent of total French output is vin de pays​ (which at least has some quality restrictions) while 22 per cent is vin de table​, whose production is virtually unregulated, at least in quality terms.

Vast quantities of this wine will never be drunk, and there are real fears that the latest financial package will simply allow poor quality production to continue. Granted, the government has set aside cash to finance the early retirement of some 500 or so winemakers, but this is a mere drop in the ocean compared to the thousands of tiny producers currently plying their trade making mediocre wine.

The fear is that the cash offered by the government will simply allow these companies to continue operating - companies which in any other industry would have long succumbed to market forces and fallen by the wayside.

The cash could undoubtedly be better spent on investing in the AOC system, not least in making it less impenetrable to a wine-drinking public demanding simple-to-understand, value-for-money wines - a demand which is currently being met primarily by New World producers.