The ANNOTICO Report

The French wine industry is in crisis. The world is not buying enough
French wine.

Wine represents 12% of France's agricultural production, and  accounts for
$9.9 billion of the country's GDP. French wine sales worldwide have been
gradually eroding for years. The situation became a crisis last year when
wine exports fell 9.2% in value on the heels of 2003 sales, which were
considered dismal.

Making matters worse, French domestic wine consumption has dropped to
historic lows, with the country drinking half as much wine per capita as it
did in 1960, partially due to an aggressive campaign against drunk driving.

Therefore with Wine being so important to the Economy, and International
and Domestic consumption headed due south,  French winemakers, more
comfortable basking in tradition than questioning it, are rethinking the
Rules governing how they Make and Name their wines, the Grapes they grow
and How they are grown. Even the look of their wine Labels is being
reconsidered. The French government is scrambling to Promote its wines in
America, even — gasp — considering a Madison Avenue Advertising campaign.

The French have finally come to the late realization that  "We can't
anymore tell the nice wine story". "France acts as if it still has a
monopoly on wine and can insist that consumers learn our complicated wine
story,"

"We have lived for centuries where the only problem was to make the wine
producer more comfortable. Today our problem is to make the customer more
comfortable. They buy whatever they like."

And the consumer is buying improved wines from Italy and Spain, along with
American, Australian, Chilean, Argentine and South African wines and  —
they are infinitely easier to comprehend.

It's also about looking modern. The bottle has to stand out, which isn't
easy in a crowded grocery store wine aisle. New World wine regions have
been doing it for years, and even Italy and Spain are sprucing up their
labels.

The model for French Wine Distributors? E.& J. Gallo's Red Bicyclette.

Gallo is showing  the way "Joe Gallo has the guts to believe in French
wine, to put his money there to make something happen. We are very thankful
for that," says Christian Berger, the agricultural counselor with the
French Embassy in Washington, D.C, noting that the Gallo wines produced in
France are increasing the sales of French wine in America.

Joe Gallo, the savior of French wine? Sacre Bleu!!!!

[RAA NOTE: Actually it is Who is Going to Save French Wines???
Actually, Who is Going to Save French-American Wines, since all French
wines are a result of grafting French Vines on American Roots, after
"phylloxera vastatrix" wiped out the vineyards of France and Europe in the
1860s. :)]

Facing a crisis, the French wine industry is finally forced to loosen its
grasp on tradition.

Los Angeles Times
By Corie Brown
Times Staff Writer
March 2, 2005

The notion that French wine has fallen into the hands of philistines is
sure to find an audience when the documentary "Mondovino" is released in
L.A. theaters April 29. Director Jonathan Nossiter belabors that idea for
two hours, 17 minutes and 11 seconds, cutting back and forth between crusty
traditionalists in worn sweaters and suspendered trousers who absolutely
love terroir and their spiritual opposites: chain-smoking pragmatists in
fancy cars who hawk modern methods of manipulating wine.

"Mondovino" is a lot of things; subtle, however, isn't one of them.

The French wine industry is in crisis. More comfortable basking in
tradition than questioning it, French winemakers are rethinking the rules
governing how they make and name their wines, the grapes they grow and how
they are grown. Even the look of their wine labels is being reconsidered.
The French government is scrambling to promote its wines in America, even —
gasp — considering a Madison Avenue advertising campaign. (Champagne
already has one, and it's the one French region for which sales are
actually climbing.)

The debate central to "Mondovino" — one that's raging across France's
storied wine regions — only appears to be a tug of war between art and
commerce. Those stark contrasts grow fuzzy in the gray light of the real
issue: The world is not buying enough French wine. Market forces aren't
known for encouraging individuality — Velveeta sells better than Taleggio.
But for the first time in the history of French wine, the demands of the
global market are an unavoidable fact.

"It has taken a while for our producers to understand that there is a
problem," says Christian Berger, the agricultural counselor with the French
Embassy in Washington, D.C. And even now that they have accepted that fact,
"there is no unanimity at all on what should be done."

Wine looms large on the French economic landscape. Representing 12% of
France's agricultural production, it accounts for $9.9 billion of the
country's gross domestic product. French wine sales worldwide have been
gradually eroding for years. The situation became a crisis last year when
wine exports (excluding Champagne) fell 6.7% in volume and 9.2% in value on
the heels of 2003 sales, which were considered dismal, according to the
French Federation of Exporters of Wines & Spirits.

Making matters worse, French wine consumption has dropped to historic lows,
with the country drinking half as much wine per capita as it did in 1960.
An aggressive federal campaign against drunk driving is part of the reason,
according to Berger. Strict new standards, more stringent than those in
California, have the French thinking twice before having a second glass of
wine with dinner.

But the real problem is there's too much French wine. Hoping for a quick
fix in the region that appears to be hardest hit, the government is paying
grape growers in Bordeaux to rip up marginal vineyards and turn surplus
wine into industrial alcohol. So far, however, only 475 acres of a targeted
25,000 acres of vineyards have been plowed under. The government plans to
distill a whopping 250 million liters of wine from the abundant 2004
vintage into alcohol, 10 times as much wine as would be distilled in a
typical year; most of it is labeled Appellation d'Origine Contrôlée (AOC).
Still, it won't be enough to sop up all of the surplus.

Altering the structure

Ultimately, it is the structure of the wine industry that must change,
according to René Renou, a Loire Valley winemaker and the current president
of the powerful National Committee for Wine of the AOC, the organization
charged with enforcing the country's strict regulations for the making of
premium wines. Renou has proposed a radical overhaul of the country's
winemaking rules — the most sweeping changes since the AOC was codified in
1929 — to give winemakers greater latitude in how they make and sell their
wines.

"People say I am burning the history of France," quips Renou. But perhaps
the better analogy is religion, he says, "like when they changed the way
the priest says Mass," referring to the Catholic Church's decision to
abandon Latin for modern languages in the 1960s. French wine sales are
suffering, he says, because France has failed to modernize its winemaking
industry.

Renou advocates producing less AOC wine. Perhaps 10% of it isn't up to
minimum standards, he says. "We can't anymore tell the nice wine story to
people and not have it correspond to what is in the bottle," he says.

When pressed about how much wine he'd like to see taken off the market,
Renou backpedals. "We're France. If you push too far, winegrowers will
riot. They go on strike and shout in the streets. The politicians don't
like it." While there is no formal schedule for considering Renou's
proposal, he says the French government could enact it as early as this
year.

It likely will take longer. "France acts as if it still has a monopoly on
wine and can insist that consumers learn our complicated wine story," says
Renou. "We have lived for centuries where the only problem was to make the
wine producer more comfortable. Today our problem is to make the customer
more comfortable. They buy whatever they like."

And they are buying American, Australian, Chilean, Argentine and South
African wines along with improved wines from Spain and Italy. For $10,
these wines may not equal fine French wine, says Renou, but they can be
very good. And from the point of view of the American consumer — Renou
likes to refer to a grocery store shopper in Little Rock, Ark. — they are
infinitely easier to comprehend.

"A second way to understand wine has been created by the New World. It's
about the grape type, the color, the sugar," he explains. In other words,
it's easier to understand Pinot Noir than to memorize the appellations of
Burgundy. "In Little Rock, wine is a quick, immediate pleasure, no dream,
no story, no explanation. The New World is more efficient. The French are
not prepared for this world," he says.

America matters because the U.S. spends more money on imported wine than
does any other market in the world. And while French wine sales have fallen
in America, overall consumption here is inching up. Americans now annually
consume roughly 10 bottles of wine each, up from seven bottles 10 years
ago. Compared with the French, who drink an average of 77 bottles a year,
there is plenty of room for the American market to grow.

The falling value of the dollar — a 40% shift over the last three years —
is making the American market more and more difficult to navigate. What was
a $10 bottle of French wine in 2001 now costs $14, taking into account the
shifting exchange rate. Wines from outside Europe haven't experienced the
same currency fluctuation, or the resulting price increases.

Most French vintners have cut their prices to try to keep their wines
competitively priced, according to American importers. But often that's not
enough. "With the 2000 vintage, I sold thousands of cases of Bordeaux wine
for $7 a bottle," says Steve Winfield, a Los Angeles-based importer who
sells only Bordeaux wines. "I'm scouting for wines with the 2003 vintage
that I can sell for $7, and they are hard to find. Everyone's margins are
squeezed."

There is no crisis for the best French wines, says Berger. "At the top of
the market, prices are a bit crazy, rising higher and higher every year
with no problem selling the wine. The difficulty is for the middle and
lower end segments. The global market for wine is more competitive there.
There are plenty of new producers."

And for these wines, America is the most important market. "The bulk of the
market is new to wine," says Berger. "They don't know much about it, and
they apparently like wines that are fruity with a lot of sugar. Our product
is not as well suited to this market as, say, Australian wine. French wine
is more subtle. We have no big brands. Our labels are difficult to read."

Bordeaux winemakers, says Berger, have been the most outspoken critics of
the changes proposed by Renou. After record sales of its celebrated 2000
vintage, "it has been hard for them to come down to earth," says Berger.
"The situation is very tense in Bordeaux."

Two branches of AOC?

Renou has proposed bifurcating the AOC into a higher and a lower level, or,
he says, they can be considered "the complex and the simple."

A new "excellence" category would require winemakers to follow more
stringent controls on wine grape growing and winemaking than current AOC
rules demand. The top 20% of current AOC winemakers likely would opt for
this "excellence" category, Renou estimates. This is the luxury market for
traditional wines, and "it must be protected," he says.

A second level of AOC wines, what Renou refers to as "normal" wines, would
be allowed to disregard many of the current AOC rules. These are the ones
that must compete with emerging international wines, he says. Winemakers
who opt for this category should be allowed to consider any grape-growing
and winemaking protocol. "Winemakers would propose their ideas to the
National Committee for Wine, and we would decide if those ideas would be
permitted," says Renou. "Everything is open for discussion, while today it
is prohibited to even talk about these ideas."

That means the question of when or how to irrigate vineyards or what grapes
to plant — variables that are tightly regulated now throughout France —
would be considered. There would be fewer restrictions on what grapes could
be blended together in particular wines as well. While Bordeaux and Rhône
blends would remain tightly controlled for the "excellence" AOC,
second-tier wines could have broad latitude with what could be considered
for their blends. In appellations in which blending is not now allowed, it
would be permitted in the second tier. Rules also would be relaxed
concerning blending grapes harvested from different parts of a region or
even across regions, among other things, according to Renou.

What about allowing the addition of oak chips during barrel aging to
exaggerate certain flavors, as is practiced in the U.S. and Australia, for
instance? "Why not?" says Renou. "We have to allow people to make decisions
for themselves about their own wine."

At the same time, Renou would like the French wine industry to police
itself more aggressively on quality. Producers who ignore vineyard yield
limits, a common occurrence today, says Renou, should not be allowed to
call their wine AOC. This overproduction "must disappear," he says. "If we
want to say we are the best, each bottle must be checked."

Renou's proposal also would relax AOC labeling rules to allow varietal
names and other New World conventions. While there are AOCs (such as
Alsace) that use varietal labeling, most don't. Winemakers have to opt out
of the AOC, labeling their wines simply vin de table, to do these things
now.

The French government isn't waiting for the AOC rules to change. It is
taking small but significant first steps to help French producers sell
their wines in the United States. "We didn't usually attend wine events in
America," says Berger. "Now we are going, asking for advice on what we
should do to improve sales. The idea is to give our producers a higher
profile."

Last month, the government sponsored its first five-city sales tour —
Miami, New York, Chicago, Atlanta and Los Angeles — for producers eager to
find American importers. It's the kind of dog and pony show the Spanish and
Australian wine industries have been taking on the road for at least a
decade. In Los Angeles, 30 vintners poured wine tastings for distributors.

"We decided to be proactive," says Charlotte Selles-Simmons, a producer
whose family has been making wine in Beaujolais and Burgundy since 1820.
She recently redesigned the domaine's labels to make them more appealing to
Americans.

"We make it so difficult to buy French wine," she says. "Especially for the
$10-and-below wines. Showing the varietal name on the labels at this price
point is crucial. Then they don't have to get out their reading glasses,
they don't have to ask for help."

It's also about looking modern, she says. The bottle has to stand out,
which isn't easy in a crowded grocery store wine aisle. New World wine
regions have been doing it for years. Even Italy and Spain are sprucing up
their labels. If you don't do it, there is no hope of creating a brand name
that consumers will remember, Selles-Simmons says.

Selles-Simmons sells her wines through Trader Joe's, but she would like to
find a traditional distributor as well.

The model for Selles-Simmons? E.& J. Gallo's Red Bicyclette.

Gallo is showing us the way, says Berger. "Joe Gallo has the guts to
believe in French wine, to put his money there to make something happen. We
are very thankful for that," he says, noting that the Gallo wines produced
in France are increasing the sales of French wine in America.

Gallo, the savior of French wine? The chasm separating the French
government from the traditional vintners in "Mondovino" just got a little
wider.

http://www.latimes.com/features/food/
la-fo-frenchwine30mar02,0,604988.story?
coll=la-home-food

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