Not A Vintage Era For French Winemakers

With domestic consumption way down, they're losing power, prestige, and profits

Bernard Piette, a 57-year-old financial adviser in Paris, sighs as he remembers "mon petit ballon de rouge" -- the glass of red wine he used to enjoy with lunch every day. But Piette, who often hops into his car to visit clients in the afternoon, gave up his noontime drink after the government of France stepped up enforcement of drunk-driving laws in late 2002 -- to combat one of the worst traffic-fatality rates in Western Europe. "Now I'm on water every day," he says with a pained expression.

Piette isn't suffering alone. France's $17.3 billion wine industry is reeling from a record 6% decline in domestic consumption last year. That's a body blow to French growers, who sell 70% of production in their home market. It is also far worse than the 2.4% drop in exports in 2003, when the euro strengthened and U.S.-French political tensions were running high.

Although national consumption has been declining for years, the recent falloff is due mainly to the drunk-driving crackdown, under which drivers with blood alcohol levels above 0.05% -- the equivalent of two or three glasses of wine -- face fines and the loss of their licenses. While growers have battled past disasters, such as the 19th century phylloxera blight, this one has stumped them. "France is taking a direct hit to its heritage, and we don't know how to deal with it," says Michel Issaly, whose family has made wine since 1847 at Domaine de la Ramaye in Gaillac, in southwestern France.

While wine producers once enjoyed prestige and power in France, they're looking like underdogs now. In March, after Bordeaux growers launched a billboard campaign urging wine lovers to "drink less, but better," a court ruled that such ads violated a 1991 law that bans alcohol advertising. Burgundy producers recently lost a similar case. Now, winemakers want the government to loosen ad restrictions and sponsor a publicity campaign to remind wine lovers that a glass or two with a meal won't push them above the legal limit.

That will be a tough sell. With highway deaths down 20% since the campaign began, the effort has strong public support. Even worse for the industry, France's most popular politician, Nicolas Sarkozy, who masterminded the crackdown as Interior Minister, is rising in the center-right hierarchy. He was named Finance Minister on Mar. 31.

CHANGING TASTES. Apart from the highway-safety campaign, a change in consumer tastes is behind a long-term decline in wine consumption. Last year, the French quaffed 51.7 liters per capita, compared with almost 100 liters in the 1960s. And French twenty- and thirtysomethings often prefer sweeter mixed drinks to the drier, more acidic finish of a Bordeaux. Indeed, sales of hard liquor in France held steady in 2003 even as wine sales fell.

Some growers want to change the system of wine classification, or appellation, to allow producers to try blends that could appeal to younger consumers. They also want to simplify the strictly regulated labeling system, which can bewilder novice buyers. But such reforms could take years to produce results, and the industry is looking for quick fixes. When sales in restaurants fell 20% after the crackdown, some wine associations began distributing stylish "Bordeaux bags" to encourage patrons to buy a bottle and take home the unused portion.

French producers can take heart that wines from Australia, Chile, and the U.S. haven't made much headway in France. "Ninety-eight percent of wine drunk in France is still French," says René Renou, president of the Institut National des Appellations d'Origine, which oversees the classification of wines. "But if we don't do something soon, the New World could start to seduce the Gallic heart." That would give any grower a hangover.

By Rachel Tiplady in Paris

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