France to pay farmers €200mn for destroying wine surplus

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Drinkers’ fading appetite for French wine has left farmers with a glut that the government is planning to spend €200mn destroying.

The French agriculture ministry has obtained approval and financial support from the EU to pay so-called crisis distillation aid, which is expected to go mostly to the regions of Bordeaux and Languedoc. Under the programme, wine is distilled into ethanol that can be sold for industrial uses, such as perfume or hydroalcoholic gel.

It is part of a wider government effort to help the country’s wine producers struggling to adapt to falling demand among French drinkers, competition on the export market and weaker sales in China.

Agriculture minister Marc Fesneau said on Friday during a visit to a distillery that the government was seeking “to stop the collapse of prices and [help] winemakers find new sources of revenue”. He added that farmers needed to “adapt to changes in consumption and adjust production to the demand of tomorrow”.

The wine industry had estimated that this year’s surplus would be as much as 3mn hectolitres, which would amount to 7 per cent of last year’s production of 42mn hectolitres. It had lobbied for €240mn in crisis distillation aid.

Another scheme compensates farmers who agree to rip out vineyards and convert the land to woods or leave it fallow. About 1,000 farmers in Bordeaux have applied for such aid to remove 9,200 hectares of vines, which represents about 8 per cent of the total growing area in the region.

The moves come as the country’s grape harvesting known as the vendange gets under way and mobilises hundreds of thousands of temporary workers for a four to six-week period. The calendar of the vendange has been creeping forward in recent years because of rising temperatures linked to climate change. In Champagne, the harvest has been moved back by three to four weeks.

The outlook for production varies by region this year with drought affecting some regions like Languedoc-Roussillon, while a mildew disease caused by alternating storms and high temperatures cut output in southwestern vineyards. But the Champagne region is expecting better yields, and overall volumes are forecast to be stable compared to last year.

French people’s consumption of red wine fell 32 per cent in the decade to 2022, according to a study from market researcher Kantar, with steep declines among young people, many of whom prefer spirits and beer or are simply drinking less alcohol.

Demand for premium wines and champagne have held up better than more affordable table wine, so some French producers have successfully moved upmarket to cope with lower demand. Rose wines have also grown more popular so big groups such as LVMH and Pernod Ricard have snapped up names like Whispering Angel and Sainte Marguerite en Provence.

Wine and spirits remain among the top products for French exports, reaching €17.2bn last year, a 10 per cent increase from a year earlier, according to the Federation of French Wine and Spirits Exporters.