Monday, July 14, 2008

Study: France set to cede top spot in world wine production to Spain by 2015

PARIS: France is set to cede its spot as the world's largest wine producer to Spain unless it unshackles from centuries-old traditions, according to the country's independent wine producers.

Under the current trend France will fall behind Spain in 2015 as wine production drops to 43.9 million hectoliters (1.16 billion gallons) from the 2000-2004 annual average of 52.8 million hectoliters (1.39 billion), according to a study by Credoc, a research group, for the Vignerons Independants winemakers association.

The expected drop follows decades of decline due to falling consumption at home and France's failure to adapt to new consumption habits and to new competitors.

Innovative wines from places such as the United States, South America, Australia and New Zealand, are bidding to dominate emerging markets, and the Credoc study shows France's traditional competitor, Spain, is adapting where it has failed.

But Eric Rosaz, director of France's independent wine producers association, vowed to prevent France losing its crown.

"I am convinced that France has the arms to fight and keep her place as leader, but for this we need to get away from weight of history, the weight of our culture, and enter a new dynamic," he told The Associated Press.

Rosaz says French producers have been making progress to make their wine more accessible and hold off New World winemakers — although more needs to be done. Screw tops, boxed wines, colorful easy-to-understand labels and sophisticated marketing — innovations pioneered by countries like Australia and South Africa — have been making inroads.

"We have the best 'terroir,' we have the best wine, and we have the best image of wine in the world, but we have problems at the company level and in terms of dynamism."

Independent producers should band together to promote their wines abroad and gain better access to supermarkets and other outlets, and also reduce costs, the survey said.

Wine makers also need to adapt to the tastes of new types of consumer — women, young people and people overseas — paying attention to flavors, packaging, and marketing, it said.

In 2015, the U.S. will be the world's largest wine consumer with 33 million (871 million gallons) hectoliters, ahead of France's 26 million (686 million gallons) and Italy's 23 million (607 million gallons), according to the study. Britain is moving up the chart with an expected consumption of 13.5 million hectoliters (356 million gallons) in 2015.

But France is failing to adapt to American and British taste-buds, the study also showed.

Last year, France's wine and spirit industry exported nearly $15 billion (€9.4 billion) worth abroad, a record and an increase of nearly 7 percent year-on-year, according to the French Federation of Wine and Spirits Exporters.

But the good overall export performance masks a broader crisis. While Champagne and fine Bordeaux find overseas markets, lower-quality wines and lesser-known wine regions have struggled against competitors from New World countries, such as Australia and Chile.

Chronic overproduction has also hurt, forcing European producers who can't sell their wine at decent prices to distill billions of bottles of perfectly drinkable wine into pure alcohol for use in disinfectants, cleaning products or gasoline additives.

The European Union agreed in December on a massive overhaul of the industry, including tearing up swaths of vineyards, doing away with overly intricate labeling and reaching out to consumers around the world instead of relying on age-old reputations.

The Associated Press