The French government has taken action to support its struggling wine producers by allocating $216 million to address the surplus of wine that has gone unsold. This financial assistance comes as a result of various challenges faced by the French wine industry, including overproduction, inflation, rising costs, and shifting consumer preferences towards alternative beverages. Additionally, the Russian invasion of Ukraine has disrupted the supply of fertilizer and bottles, while climate change has negatively impacted growers with extreme weather conditions.
French Agriculture Minister Marc Fesneau explained that the government has chosen to pay farmers to destroy the excess wine in order to provide winemakers with an opportunity to generate revenue again. Lowering the price of the surplus wine would not be profitable for them. Particularly in the Bordeaux region, renowned for its vineyards, farmers have been forced to begin the harvest season earlier due to severe droughts.
To further assist winegrowers, the French government is also offering compensation for those in Bordeaux who decide to repurpose their land and remove their vines. The funds provided will enable farmers to convert the surplus wine into pure alcohol through distillation. This alcohol can then be sold at a loss to producers in the cosmetics, perfume, and cleaning supply industries.
The decline in wine sales in France is attributed to various factors, including a 32% decrease in red wine consumption over the past decade. Younger consumers in France are now opting for non-alcoholic choices, beer, and rosé instead. Consequently, the supply of wine has far exceeded demand within the country. The challenges faced by French wine producers mirror those of their counterparts in the United States, where there has also been a decline in demand for wine. The COVID-19 pandemic further exacerbated the difficulties for winemakers, as restaurants were closed and trade shows cancelled.
Jean-Philippe Granier, representing the Languedoc wine producers’ association, highlighted the issue of overproduction and declining prices, resulting in financial losses for winemakers.
The French wine industry’s struggles are not unique, as the US grape growers face similar challenges. A study titled “State of the U.S. Wine Industry Report” by Silicon Valley Bank revealed a decline in wine consumption, with only Americans over the age of 60 showing an increase in wine consumption. Climate change, inflation, the conflict in Ukraine, and the pandemic have all contributed to the difficulties faced by the French wine industry.
The report from Silicon Valley Bank indicates that younger consumers are becoming less interested in wine. In the 21-29 age group, only 35% consume alcohol, and even fewer (28%) in the 50-59 age group drink wine. This decline in demand has resulted in two consecutive years of negative growth in total US wine consumption by volume.
In conclusion, the French government’s decision to financially assist wine producers and address the surplus of unsold wine demonstrates their efforts to mitigate the challenges faced by the industry. The decline in wine consumption, combined with external factors such as climate change and global conflicts, has posed significant obstacles for both French and US wine producers.
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