French wine come-back fuels market scrap

Related tags French wine Wine France

Crisis in the French wine industry is spurring producers'
acceptance of aggressive marketing strategies that, whilst perhaps
long-overlooked, could be worrying for foreign producers on an
increasingly competitive world market, writes Chris Mercer.

More than 300 French wine co-operatives came together for their 33rd annual conference, with a focus on swift and radical restructuring throughout the industry and a new emphasis on selling wines to unknowledgable foreigners.

Denis Verdier, president of the Confederation of French Wine Co-operatives (CCVF), has been one of the most vocal pro-reformers to have emerged from the problems of over-production, falling consumption and shrinking export markets, that have left parts of the industry in melt-down.

And his strong assertion that the industry must do more to seduce new consumers with little wine-drinking experience has now been embodied in the CCVF's action plan.

The group said it wanted to see the creation of four or five leading groups of producers capable of developing brands to conquer new markets. These groups should benefit from investment projects and work together with authorities and agents.

"By re-building our industry around the concept of strong brands, we will be able to re-launch ourselves on the market."

The move is the latest, and one of the biggest, signs that more French vintners are embracing 'anglo-saxon' marketing models as the only way to compete with aggressive new world exporters.

There was a noticeable vigour about French wine marketing at last month's global wine show, VinExpo, in Bordeaux. New batches of wines with colourful, simplistic labels that give greater prominence to grape variety have also appeared in France's supermarkets.

Meanwhile, the wine producers' union in France's southern Aude region, part of Languedoc-Roussillon, have announced they will hand out 400,000 bottles of wine, mainly to tourists, later this month. Vintners will also distribute leaflets explaining the current French wine crisis alongside the wines.

One wine maker based in the popular Roussillon coastal town, Collioure, told​ that tourists had become a lifeline for sales and were helping to open up new avenues for exports, especially in Scandinavia and Canada.

The new vigour of French wine marketing, whilst perhaps long overdue in an industry where some segments have shunned grand marketing strategies as a symptom of globalisation sickness, is likely to intensify competition on an already tight world wine market.

Australians have already been facing similar over-production problems to the French after a record harvest in 2005. Around half of the Australian wineries that participated in a financial survey by Deloitte​ announced pre-tax losses for 2004.

Deloitte said this situation was unsustainable and would inevitably lead to mergers, and possibly even closures. Wineries in the AUS$10m - $20m range were worst hit.

Italy too is facing trouble. The country has only just applied for EU crisis distillation, like the French earlier this year, but UK consultancy IWSR forecast that Italy could lose 37.6 per cent of its export markets, mainly to New World wines, by 2008.

The battle for consumers' hearts, both in emerging and developed markets, will also inevitably focus on price. The French are well-positioned geographically to undercut competitors on transport costs, but many French vintners complain that they pay higher taxes and social charges than their rivals.

Accordingly, the CCVF's new action plan also calls on these charges to be lowered. One vintner from the Côtes Du Rhone region said at a recent protest in Nimes that French vintners are "playing the same game but by different rules".

The good news is that world wine retail sales are forecast to rise by 62.5 per cent over the next decade. The problem, as shown here, is that there still seem to be too many small-to-medium wineries to go around.

The biggest wine exporter in 2004 was Italy with France and Spain tied in second. These three constitute around 60 per cent of the global export market, with closest rivals Australia and the US on eight and six per cent respectively, according to a report by the US Department of Agriculture.

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