Declining European Wine Sales and Consumption

[HenryTo]

The Europeans doing what they do best when trying to face business adversity: Provide subsidies and/or delay the inevitable as much as you can. By the way, a lower Euro will no doubt help these vintners as well.
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Posted on Fri, Dec. 22, 2006
EUROPE
Sour sales turn European wine into additives
Trying to stay afloat after dipping domestic consumption and fierce overseas competition, European vintners are transforming wine into alcohol for disinfectants or gasoline additives.

BY JENNY BARCHFIELD

Associated Press
BELLEVILLE-SUR-SAONE, France - At some of France's most celebrated vineyards, vintage wine is being transformed into alcohol for disinfectants or gasoline additives -- a high-tech process winemakers hope will help them stay afloat.

Chronic overproduction, dipping domestic consumption and fierce overseas competition have created a European wine crisis of unprecedented scale.

With lakes of unsold wine threatening to undermine prices, the European Union has resorted to paying vintners to destroy some of their stock each year, distilling billions of bottles of perfectly drinkable wine into pure alcohol.

The steaming grape juice that's left is hauled back to the vineyards, where it will be used to fertilize next year's vintage.

Skeptics say the measure, which cost EU taxpayers $190 million last year, is a quick fix that does not get at the root of the problem -- Europe simply produces too much wine for too few consumers.

A contested new EU plan aims to downsize Europe's wine industry, shifting from distillation to ripping out huge swaths of vineyards -- some 100,000 acres of vines, or more than 10 percent of Europe's total, over the next five years.

Across Spain, France and Italy, Europe's vintners are putting up a united front against the proposal. But as more wine is distilled each year -- reaching 740 million gallons in 2005 -- even the most virulent opponents acknowledge something has to be done.

''For years, we shrugged the crisis off as a temporary downturn,'' said Gilles de Longevialle, who heads a group representing the vintners of Beaujolais. ``But we're beginning to see it's here to stay.''

`CRISIS DISTILLATIONS'

Until last year, so-called ''crisis distillations'' were only for the cheapest table wines. Now, however, quality wines are also boiled away in large quantities.

So for the second autumn in a row, Philippe Terrollion, director of the Beaujolais Distillery in central-eastern France, sent out a fleet of trucks to pick up an expected 2.3 million gallons of unbottled, unsold Beaujoulais wine -- enough to fill about 125 swimming pools.

''For vintners, the decision to distill is a hard one,'' said Terrollion. ``But in the end, they have to do it to get rid of the old stuff to make room for the new.''

With funds from the EU and local authorities, Terrollion paid vintners the EU-fixed price of about $1.66 per gallon -- about one-fifth of the average price paid by wholesalers for bottled wine sold for consumption.

While European vintages languish on the shelf, consumers around the world are reaching for bottles from so-called New World producers in Chile, the U.S., South Africa and elsewhere.

NEW WORLD IMPORTS

New World imports now account for 70 percent of wine sales in Ireland and Australia recently overtook France as Britain's main supplier.

''In France, we used to think we were the biggest and the best and no one could touch us,'' said Louis-Fabrice Latour, who heads the prestigious Louis Latour label in the Burgundy region. The feelings of superiority blinded vintners to the threat from foreign rivals, he said.

But overseas competition is not the only reason behind Europe's wine troubles. Changing continental drinking habits are also to blame. Wine consumption is down throughout the continent, with wine-drinking champions Italy and France leading the decline.

In 1980, the French and the Italians each consumed about 1.3 billion gallons of wine a year, according to the European Commission. By 2005, yearly consumption had dipped to roughly 800 million gallons.

Many French vintners blame tougher laws aimed at curbing drinking and driving for the country's precipitous decline in wine consumption. In 1960, the average Frenchman drank 3.1 bottles of wine per week. Today, the average intake is 1.4 bottles per week and falling, according to Michel Baldassini, who heads the main Burgundy wine growers' association.

[rffrydr]

They call it a "lake of wine" and it goes to industrial alchohol. Merkel has declared war (wants to pull the 300E+ subsidies) and the low end seems to be going south. Brits leading the way in taking their tastes to the new world.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

An update on the wine situation in Europe:

http://www.time.com/time/business/article/0,8599,1639674,00.html