EUR 70m sweetener for bitter French wine sector

1st February 2005, Comments 0 comments

PARIS, Jan 31 (AFP) - The French government Monday announced an aid package worth EUR 70 million (USD 91 million) for its wine sector, which is losing ground to competitors from new producer countries and suffering a glut which is stunting profits.

PARIS, Jan 31 (AFP) - The French government Monday announced an aid package worth EUR 70 million (USD 91 million) for its wine sector, which is losing ground to competitors from new producer countries and suffering a glut which is stunting profits.

But most French winemakers immediately criticised the plan - which largely involves cheap loans - as being grossly inadequate and saying it would do nothing to resolve the worst crisis they have faced in decades.

Agriculture Minister Dominique Bussereau said after meeting wine industry representatives that the new package would "create a positive climate around French viticulture."

The bulk of the initiative rests on EUR 40 million in five-year loans for winemakers. Another EUR 3.5 million will be released to encourage French wine exports.

A disappointed head of the National Federation of Farmers' Unions (FNSEA), Jean-Michel Lemetayer, said after the meeting that the package "was much less than what we were hoping for."

Jean Huilliet, the president of the French Confederation of Table Wine, was harsher.

"I'm extremely disappointed," he said, adding that the government aid "would change nothing for French grape-growers."

France's wine exports fell six percent in terms of volume and 10 percent in terms of value last year, confirming a downward trend the sector seems to be unable to reverse.

Much of the problem lies with so-called New World wines from producers in Australia, South Africa, Chile and Argentina garnering greater and greater market share as their quality and reputations improve.

Relatively small vineyards that make up much of France's output cannot compete with huge wine companies in other countries that rely more on technology than tradition.

Bordeaux, arguably the best known of France's wines, has been particularly badly hurt.

But making matters worse is the fact that production in France is also far outstripping demand, by around 30 percent - and that demand itself is declining gradually as tougher drink-driving rules and changing lifestyles encourage greater moderation.

A study by British consultants ISWR/DGR released last week suggested that within three years the United States will overtake France as the biggest wine-consuming nation, followed by Italy.

The study calculated that the value of all wine sold throughout the world each year was USD 100 billion (EUR 77.0 billion), equivalent to the value of the market for cosmetics. But this is less than the value of spirits sold, put at USD 150 billion (EUR 115 million), of which 60 percent was to Asian consumers.

According to the French wine association Onivins, quoting International Wine and Vine Organisation figures, global wine production is estimated to have reached 287 million hectolitres (7.581 billion gallons) last year, up 9.5 percent on 2003 - and the biggest amount since 1992.

Production is expected to have outstripped consumption by about 57 million hectolitres in 2004, the biggest spread ever, the association said.

© AFP

Subject: French News

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