Sunday, October 23, 2011

French Producer Strategies for Combatting Domestic Wine Consumption Declines

The much-heralded French wine drinking culture has died, as evidenced by a significant and continuing decline in domestic wine consumption.  A number of institutional initiatives have been implemented in order to stem the tide and producers are moving to take advantage of the openings provided by these initiatives.  This post will examine examples of these market-level initiatives and options.

The 2009 CMO allows for the production of Vin de Table wines without Geographical Indication and with/without varietal names indicated on the label.  Consumers around the world have been responsive to labels which indicate the varietal(s) included in the wine.  Some French producers have embarked on this path.  For example, Cahors, the home of the Malbec grape, and famed for its long-maturing "black wine", has moved to take advantage of Argentina's popularization of the grape, and its associated style, by producing a fruitier, easy-drinking style of wine which is labeled Cahors Malbec.

Italian wine makers in Bolgheri saw DOC rules as too restrictive and created non-DOC compliant wines which they sold as the lower-classified IGT wines.  These so-called Super Tuscans were high-quality wines and were rewarded with overwhelming market demand even at relatively high price levels.  Some French wine makers are taking a page out of the Super Tuscan book, but at the other end of the spectrum, and are producing their everyday wines under the less restrictive Vin de Pays -- now called Indication Géographique Protégéa IGP) -- level.

A "terminal option" available to individual producers is the sale of the estate.  And Chinese investors, with a different market in mind, appear to be ready buyers.  According to The Daily Telegraph (3/20/11), the recent purchase of the Cru Bourgeois property Chateau Laulan Ducos by Chinese businessman Richard Shen Dongjun brings to six the number of Chinese-owned vineyards in Bordeaux.  According to the article, the production of these estates is modified to meet Chinese tastes -- smooth, fruity, and deep-colored -- and then shipped in its entirety to China to meet that market's need for Bordeaux wines.  This approach is a win-win for all parties: the French owner cashes out; the gap between production and consumption in France is narrowed; and the wine that is sent to China is counted as French wine exports.

At this time it is not clear how/if France tourist wine consumption is included in national consumption figures.  Nor is it clear whether tourist wine consumption over the period of interest has been steady, increasing, or declining.  Regardless, tourists should be viewed as a viable target market by French wine producers.

According to (8/12/11), France has: the most cultural sites of any European country; some of the best food in Europe; the most spectacular scenery; and the liveliest city life.  The country played host to 75 million tourists (Germany, Britain, and Scandinavia are the largest sources) in 2010, notwithstanding its reputation of being an unwelcoming destination for visitors.  This apparent lack of appreciation for tourists is blamed for shorter stays and lower tourism revenues.  The Ministry of Tourism recognizes the problem and has initiated a long-term program to improve the country's performance in this area.  If successful, and longer tourist stays result, tourist wine consumption, it follows, will increase.  But, beyond these macro-level forces, producers need to mount marketing campaigns aimed at getting tourists to drink French wine while in France.  Every drinker of French wines while in France is a potential French wine drinker when they return home.

While many New World wine producers are vigorously pursuing wine tourists, French producers still largely view tourists as a bother.  The Joseph Report (4/21/08) ascribes this to the French philosophy of "to each his own craft."  In practice this means that the wine maker grows grapes, crushes them, and makes wine.  He then negotiates with someone else to do the selling of the wine to the consumer.  Selling wine at the cellar door thus does not fit easily into the French winemaker's psyche.  Further, in the cases where it is done, the focus is on selling wine while New World producers are seeking to provide a broader range of activities (food, picnic areas, events) to keep the wine tourist engaged.

In my next post I will discuss the issue of the occasional/non-drinker and their potential as target markets.


  1. Another well-researched piece - can't wait for the next one.

    I'd be very interested to see who (if anyone) visits France as a tourist and drinks non-French wine. Would the proposed tourist marketing blitz focus on this (puzzling) demographic, or primarily the occasional/non-drinkers?

  2. Jason, thank you for the kind words.

    As regards your second comment, I am speaking about the occasional/non-wine drinker. As I have stated in a post titled Towards a Unitary Wine Drinking Architecture, the distribution of wine consumers around the world is three-tiered: regular drinkers, occasional drinkers, and non-drinkers; with regular drinkers being by far the smallest group. Tourists to France, then, would most likely reflect something akin to this distribution and would, therefore, be fertile ground for wine marketing efforts; especially if it can be tied to the cuisine.