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The Honolulu Advertiser
Posted on: Thursday, July 22, 2004

France pours marketing money into wines

By Laurence Frost
Associated Press

PARIS — France's agriculture minister pledged yesterday to inject more money into the promotion of French wines as the industry braces for a new dilemma: a bumper harvest.

After meeting with winemakers, Herve Gaymard announced plans for a 50 percent increase in public financing just two days after his ministry forecast that the country will produce 1.5 billion gallons of wine in 2004 — 20 percent more than last year. Production was hurt last year by a record-breaking heat wave that scorched Europe.

For an industry that's already overproducing, a good harvest can be bad news.

"On the one side, we've got a market that's shrinking, and then — in France at least — there's a potential production that's very high," said Roland Feredj, director general of the Council of Bordeaux Wines, in a television interview. "The risk is there will be a very strong imbalance in the market because supply is going to be strong and demand will be weak."

Gaymard's talks with winemakers were aimed at reviving the flagging fortunes of France's vineyards, which are squeezed between falling consumption at home and tougher competition abroad.

Gaymard said the money available for "promotion and communication" for French wines would be increased to $18.5 million from $12.3 million.

Global prices are already depressed by an oversupply of up to 1.6 billion gallons a year on world markets, Feredj said.

According to figures published yesterday in the financial daily La Tribune, the value of French wine exports fell 10 percent in the first five months of the year compared with the same period in 2002.

Exports also fell compared with 2003, which is seen as an atypical year because of the heat wave and a lucrative sell-off of Bordeaux wines made in 2000.

Wines from places like Chile, Australia and California overtook French wines on global export markets for the first time in 2003. France exported 1.78 billion bottles; so-called New World vintners exported 1.93 billion.

The global oversupply of wine and downward pressure on prices makes mass marketing campaigns crucial to winning and keeping market share.

Improving cooperation among France's thousands of small vineyards and simplifying their message abroad were among the items discussed yesterday.

Not all the winemakers' problems lie overseas. Wine consumption has been falling steadily the past four decades in France, where the average person over 14 now drinks just a quarter bottle a day. In 1961 it was a half bottle.

Sales have been hurt by an onslaught of anti-alcohol campaigns and tougher drunk driving rules the last two years. This has prompted protests by winemakers' groups, who earlier this month gave out free bottles of wine at highway toll stations to protest what they see as overzealous rules.

To boost consumption, powerful wine-loving lawmakers are demanding the lifting of advertising restrictions.