Friday, April 18, 2014

French wine quality: From thin air to a weapon of war

In a recent post I touched briefly on how the French appellation system had evolved into a standard of quality. Recent research has pointed out that this was not a benign evolution. Rather, quality was used as a hammer to dispose of the ongoing threat posed to the well-being of the French producers by the Algerian wine industry. And succeed it did. But that success is the story of another post. In this post I provide further detail on the origins of the appellation system, drawing heavily on the work of Guilia Meloni and Johan Swinnen (The Rise and Fall of the World's Largest Wine Exporter ..., Journal of Wine Economics, Vol 9 (1), 2014), both economists at the LICOS Centre for Institutions and Economic Performance in Leuvin, Belgium.

At the turn of the 20th century, the French wine industry appeared to align along three poles: the establishment (Bordeaux, Burgundy, and Champagne producers); the French south; and Algerian producers. And these groups had all "lawyered up" for the battle-royal in which they were engaged.

Selected Turn-of-the-Century French Wine-Producer Organizations
Fédération des Syndicats de la Champagne
Syndicat du Commerce des Vins de Champagne
Association Viticole Champenoise
Southern France
Syndicat des Viticulteurs (1887)
Confédération Génerale des Vigneros du Midi (1907)
Confederation des Vignerons des Trois Départments Algériens
Source: Meloni and Swinnen

According to Meloni and Swinnen, the continental French producers wanted to reduce/eliminate imports from Algeria because of its pricing effect (Bordeaux and Burgundy producers) and similarity of offering (Southern France producers) and pushed the French government, over a number of years, to enact legislation which resulted in the attainment of their goals.

The first of what Meloni and Swinnen call "Quality Regulations" arose out of the so-called "Leakey Affair" wherein Algerian producers had contracted with a British merchant to sell their wines in England. With Algeria being a French Colony, Mr. Leakey took the liberty of advertising the Algerian wine as French and this angered continental French producers when it came to their attention. They accused the Algerian producers of being in cahoots with Mr. Leakey in this "false advertising" campaign and, further, accused them of producing "non-natural, artificial" wine. One month after the Leakey contract went into effect, the French government passed the Frauds and Falsification Law of August 1905 which stipulated that French wines sold commercially had to indicate its origin on the label.

Once this law was in effect, the producers hastily pursued the advancement of their interests by championing laws which tied the quality of a wine to (i) its place of production and (ii) the traditional wine producing methods of that (those) place(s). To take full advantage of the new reality that had been created on the ground, Bordeaux, Cognac, Armagnac, and Champagne were demarcated between 1906 and 1912 and began to be referred to as appellations (The Champagne boundaries were not finalized until 1927 when Aube kicked the doors in. The Champagne case was a little different than the case of the still-wine producers but the motivations were similar. The Champagne Growers felt that the Champagne Houses were bringing in "foreign wines" and calling it Champagne so these quality initiatives advanced their cause also.).

Once the foundation had been laid, the legal terroir was extended and solidified by a series of additional "quality laws":
  • A 1919 law made it illegal for an unauthorized producer to use an appellation name
  • A 1927 law restricted the varieties and viticultural practices that could be used for appellation wine
  • A 1935 law created the AOC system which:
    • combined earlier legislation
    • stipulated regions, variety, minimum alcohol content, and maximum vineyard yield.

With the passage of the 1935 law, the French producers had completed the journey from selling whatever they could get their hands on to developing a framework which, on the surface, seemed altruistic and consumer-friendly, but, in reality, was a tremendous barrier to entry. Quality is a high-value, desirable word and who would fault the producer for pursuing quality? Only the ones who are frozen out by the "quality" initiatives. But who is listening.

Today we think of the French AOC system as being definitive of the taste of a region and, to some extent, a designator of quality wines. But that is only the part of the iceberg that is visible above the surface. Beneath the waves this is a significant barrier to entry which, in addition to saying who is in, serves to effectively keep the "other" out. This system was formulated initially by the French wine-producing establishment as a series of geographic exclusionary zones which were then legally reinforced with "quality" characteristics, made unique with variety and viticultural restrictions and, finally, with the AOC laws of 1935, codified for the state and, eventually, the rest of Europe.

Telecommunications providers have this old adage around bandwidth -- Build it and they will come. The French producers built this. And we all came.

©Wine -- Mise en abyme

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