Supply glut smashes French wine prices

By Chris Mercer

- Last updated on GMT

Related tags Wine industry French wine France

Under-pressure vintners in southern France have handed out 50,000
free bottles of wine to tourists to publicise their plight as
prices continue to crumble amid a huge bottleneck in supply.

The local wine co-operatives union in Narbonne spent €47,000 to orchestrate the give-away at toll booths and stations in the region.

Each bottle was handed out with an A4 leaflet describing the crisis that has beset France's wine industry over the last six months.

New figures from the government's wine industry agency, Onivins, show that France currently has almost a fifth (18 per cent) more of its wine still sitting unsold in vats than at this time last year.

The worst hit regions are the Midi-Pyrenees, where unsold stocks are more than 50 per higher, followed by the Rhone Alpes region (43 per cent), the Loire valley (26 per cent) and then Languedoc Roussillon (23 per cent).

The news is a worrying sign for the French wine industry with less than two months to go until the next harvest.

Those producing vins de pays and table wines, generally of a lower standard than their Appellation Contrôlée (AOC) counterparts, are in more trouble in all regions except for Rhone Alpes.

France's supply glut, largely caused by a 23 per cent production increase to 59m hectolitres in 2004, has caused prices to tumble throughout 2005.

The crisis has been especially acute in Languedoc-Roussillon where there have been mass protests, and attacks on distilleries, lorries and shops containing foreign wines by militant vintner group CRAV (comité régionale d'action viticole).

Sources say CRAV has now ceased activities until the new wine season begins in October, but the crisis shows no signs of disappearing at the moment.

Many wine makers report that vins de pays prices have halved since last year - down from more than €60 per hectolitre to somewhere between €25 and €37. Meanwhile, retail prices have not changed - leaving agents and supermarkets raking in the profits.

A few vintners have not sold a drop of wine so far in 2005.

Many in the industry believe there will be closures in the next few years. A range of estimates say that between a quarter and a half of businesses will be forced out of the market or required to merge with others for survival.

France lost ground in all of its major export markets last year, despite still controlling 19 per cent of global wine exports, and domestic consumption has halved in the last 20 years.

All of these factors have now begun to hit at the very heart of France's wine sector, the AOC wines, for the first time.

The European Commission has agreed to give crisis funding to French vintners to distil 1.5m hectolitres of AOC wine into undrinkable, industrial alcohol, but this may not stem the tide long-term.

Onivins predicted that AOC stocks in the 2005/2006 campaign could reach their highest levels for 11 years, putting further pressure on vintners in tough market conditions.

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