French wine glut heading to distillery

The news today says that the French have hundreds of millions of bottles that they can't sell and now want it distilled for industrial alcohol.

267 million bottles of AOC wines can't be sold and are in the hopper. French sales in the US dropped 6.7% by volume and 6.1% by value. These numbers tell me that they should reduce their prices immediately but it shows that they have raised them by the fact that the % by value was not as great as the % by volume. When are they going to get a clue. Bill

They should dump the whole lot! Who needs F_____ crap?

I don't know what to say.....

I guess they rather maintain their margins and destroy product. Its artificial Price supports.

According to Decanter,

the proposal is for 1 billion liters, of which about 25% would be French. The world wine glut is not merely French. This is not for destroying inventory, but rather part of the abundant 2004 harvest. Maybe that abundant harvest will help counteract the weak dollar!

guess prices are not coming down...this is a way to artificially maintain higher pricing.

Interesting. While the easiest interpretation of this might be relating it purely to supply/demand functions and a bountiful harvest, there could be underlying causes.

Let's note first that wine consumption in the US, Oz and other regions is expanding not contracting. While a decade ago it was not uncommon to find restaurants with virtually no wine lists, today any house that is much beyond the fast-food with drive-up window is going to have a wine list and it is going to accompany the menu to every table. So, maybe the excess in France isn't because of their harvest.

Let's also note the outrageousness (say that with a very Brit-based French accent like Monty Python players), of the French pricing system particularly for Bordeaux and Burgundies. Is it really a good investment to spend hundreds of $$ per bottle for first growths and premier crus which generally are not viewed as drinkable for a decade or more (and which then run roughly a 30% chance of being TCA tainted)? While many are drinking more wine, fewer are building huge long-term cellars of "investment" quality wines.

Then, finally, let us note the distinct cooling of the relationship between the US and France. The rather questionable under-cutting of US policy in the UN by Devillpin (sp?) during the run-up to Iraqi Freedom, the decidedly negative pronouncements by President Chirac, and the very shady economic relationship between France and Sadaam driving their policy has been less than constructive (note diplomatic wording here) for the view of many Americans regarding French products.

While I will be the first to acknowledge that a nation's producers are not directly linked to a nation's policy-makers, many consumers are not so sophisticated (nor am I very humble). Lots of folks in the US have declared a boycott of French products and one of the most visible of them is French wine. Let's say a million Americans (less than .3%) boycott French wines--it doesn't take long to have those major wine consumers generate a unsaleable backlog of 267 million bottles--that's a bottle five days a week for a year per boycotter.

I wouldn't lean too heavily on the bountiful harvest explanation.

Ed Rasimus Fighter Pilot (USAF-Ret) "When Thunder Rolled"

Ed, most people I know that support the French Boycott were not wine drinkers and were not drinking French wine before or after the boycott.

That said its a boycott in principle. Like I don't like Cows liver so I am boycotting it. Does not affect economy much.

I think what is hurting the most is that of Supply and Demand. We are having increasing demand but not at the rate the supply has advanced.

Plus I bet not one bottle of Chateau Margaux is in the dumpers here, or Phelps Insignia. The increase grapes are mostly from the unclassified areas. In California it the Livermores, Lodi and other places with issues...Not the NAPA premium bottles.

I think the supply increase is mostly from the inexpensive but nice quality PQR Austrailian wines, New Zealand, some Spanish that is creating the glut. Lets not forget that restaurants business have not fully recovered in USA from (9-11) and that we are not traveling as much. That demand has major impact as well.

Respectfully,

Dick

alcohol.

Here is my tuppence, Bill. In my local PA-state store, they are only giving "everyday" French wines about half of the shelf space that they used to get. I don't know if this true of the pricier ones (never looked at them), but I have noticed that they are giving MUCH more space to Oz wines. The combination of factors already cited (boycott, prices, etc) probably have a lot to do with this. Of course, it might help their US sales if more producers would mention the grape varieties on their labels. E.g., many beginning drinkers wouldn't know that red Burgs are made of Pinot Noir.

Dan-O (staying out of the politics, already got enough doo-doo for that)

Well, please go the the dumping site and send me some unclassified Sociando Mallet 2000 or 2001 and get them before dumping.

I like that wine and would appreciate you saving those from disposal :-)

Dale, I agree with the importance of these factors, but another important one is the declining consumption of wine in France itself. I don't have the numbers at hand, but there's been a very significant drop in the per capita amount of wine consumption in France as cocktails and beer have become more popular among the younger set. Granted, this decline hasn't happened overnight, but coupled with the decline of the dollar and the flood of inexpensive wine from Oz, Spain, SA and elsewhere, it has contributed to the glut of vin ordinaire.

Mark Lipton

I think this is it exactly. Even moderately savvy customers (the bulk of the consumers in the U.S.), don't understand what they are getting, and they don't take the time to research it. It's very easy to be burned by French wine if you don't know what you're buying. Inversely, it's pretty hard to be burned by wines from the U.S., Oz, Chile, Spain, etc., when you know the varietal. Sure, there's levels of quality, but if you know that you like Syrah, you'll feel equally confident with a bottle from Santa Ynez or Australia.

This whole appellation restriction & associated labelling issues are mainly what's killing French wine sales.

I would have to disagree with this notion. It's difficult to have any idea of what the quality of the wine is just because the varietal is on the label, it's also not alwasy on the label in the case of meritage or proprietary named wines such as Cardinale, Opus, Orion etc. Many wines from Spain or Italy don't have the varietals on the label or the percentage of the blend and since there is no quality designation it's impossible to know what's in the bottle unless you taste it. I've had plenty of poor bottles of wine from Santa Ynez and Oz and just because I knew the vareital composition it dodn't change the quality of the wine. Stastisically French wine sales are down in the US perhaps because of the negative impact of the fallout from the Iraq issue, the rising cost of French wines, and the weak dollar in the face of a flood of low cost wines from other regions. I would suggest that overproduction is the biggest cause of the decision to distill over 250 million bottles of wine since even the decrease in US consumption wouldn't create that much of a surplus. I would agree that there is confusion in the US regarding the AOC designations in France but no more so than the confusion regarding the same issue in Italy, Spain and to an extent Germany since many German wines are just to hard to pronounce for the average American consumer! Bi!!

I agree with virtually your entire post. But here is one question:

Do you actually know people that DID drink French wine that choose not to due to IRAQ.

I know people that did not drink wine in general, and rarely or never French...and they are the only friends/family I know boycotting french.

Wine sales down primarily for competitive pricing of Decent Aus, Spain, NZ wines. Thats my take.

The boycott has virtually nothing to do with this.

I didn't say "quality," I theorized that the lack of varietal information frightens the consumer. The A.D.D. nature of the harried consumer doesn't lend itself to motivated information gathering -- and all I'm saying is that the AOC requirements aren't exactly helping to sell the wine. Consumers will pick what they know they like. Sure, consider the price of the wine, and that's a huge factor. As for the wines from Germany/Italy/Spain -- they don't even add up to a fraction of what Australia is exporting to the U.S. Australian wines don't scare the consumer. They know the grape(s), the wines are approachable pricewise, and the consistency is top notch. All three of which you cannot necessarily say about French wines. It might be hard to get a great Australian wine, but it's also hard to get an awful one. There's plenty of bad French wine here in San Diego.

Even if the typical U.S. consumer buys & likes a French wine, chances are small he/she will even remember the producer. The names are obviously foreign, and so many are named almost identically (Chateau, etc.), plus the labels offer no real recall factor. It adds up to them being scared to buy another one.

Agreed. But, at least you know what you're getting.

B.S. People who were drinking French wines before the U.N. fallout would continue, unless there was another reason. Why hasn't there been a fallout in the purchase of German automobiles since then? I don't think you could point to any evidence to support this idea.

Agreed.

The weak dollar should be affecting all importers of wine to the U.S. Why is France the only one flopping its market share? Because Australia has put forth a more consistent, more approachable, more affordable product. And, France defies market demands by adhering to outdated & arcane laws, and they keeping raising the prices to boot!

Unfortuantly yes I do know a number of folks who prior to the Iraq issue drank French wines and now do not. I also have an interest in a wine store that has shown a significant decline in sales of French wines, especially the lower cost wines. As an example, prior to Iraq the store would sell about 20 cases of Nouveau each year on release, this year it sold 3 cases. Bi!!

snipped-for-privacy@aol.com (RV WRLee) wrote in news: snipped-for-privacy@mb-m05.aol.com:

this of course is to the non wine drinking wine drinking public, exactly the type who would shun French wine after all they never had anything special anyway.

On the other hand I live in a fairly conservative area where no French bumper stickers are still common and every soccer mom van is adorned with faux ribbons proclaiming "God bless our troops!" But French wines are finding themselves back to the endcases in the supermarkets and the anti mood is at least back to an approximation of its jingoistic former self.

The good news is that we have been able to get some really nice prices on things at a local warehouse style wine merchant.

The tragedy of it all is what is going to happen to the small producers. Yes they don't produce great wine, but they do have families and buy on their local economy. The poverty and depression on that level is the real story not told in the distillery noise.

Where is the wine shop..city/state?

And, I'll respond in a continuation OT:"

No one in the administration has ever suggested that the war was fought for cheaper oil. That's a canard offered in campaign rhetoric but unsubstantiated. (While the US purchased about 45% of Iraq production pre-war, the percentage of total US consumption filled by Iraq was less than 5%--and that is only relevant as an alternative to consumming US reserves.) Bottom line not the reason for the war.

Even French intelligence estimates were that WMD were present. Coupled with US, British and other Russian intel estimates the concensus (although now proven wrong) was that WMD were present. Add the 20 year earlier development of an Iraqi effort to develop nuclear weapons at Osirik and the very visible employment by Sadaam of chemical weapons against the Iranian Army and the Kurds to get a strong impression supporting the contention.

You mean beyond the 12 year record of non-compliance and non-cooperation by the Sadaam government and another UN resolution demanding cooperation "or else"--would that have been number 19?

Containment was a fine principle when espoused by Kennan post-WW II, but when the enemy and the danger is global Islamist terrorism rather than a nation-state, the principle becomes a little bit murky.

And, you haven't seen the hand of Al Quaeda in Iraq? Al-Zarqawi?

Considering the scope of the operation and the conditions under which it was conducted, the losses although regretable are remarkably low. As a retired military officer I'm well aware of the cost of lives in any operation. It's a price that must often by paid.

Can we trade-off the cost of fighting global (not Afghan) terrorism against the cost to the US economy from a WTC attack? Or failure to prevent another strike?

That's hyperbole. You might note that the UK, Australia, Italy and most of Eastern Europe is very supportive of the US. It seems that most of the displeasure with US policy is fomented by France which seems intent on maximizing their own influence and creating an EU which will provide a balance of power to the US. That will only happen in the distant future when the EU creates a meaningful and effective military.

Great argument, intelligently presented. Would that result be a better thing for the people of Iraq, for the middle-East, for the US and for the world?

It isn't treason (few thing are.) But it is a failure to recognize the operation of a free market. France chooses a policy. Consumers choose products. If consumers think opposition to the policy is more beneficial to their self-interest than consumption of the product, then the market will move in a certain direction.

See above for explanation of only one market force.

You haven't yet acknowledged EU tariffs against American products (and US counters). It ain't a simple equation.

And now, hopefully a return to topic.

Ed Rasimus Fighter Pilot (USAF-Ret) "When Thunder Rolled"