France to spend ₹1780 crore to destroy its ‘surplus’ wine as prices crash down

France is allocating €200 million (over ₹1780 crores) to destroy its surplus stock of wine and support producers. The surprising move comes amid a falling demand for wine as more people switch to beer. This has resulted in over-production leading to a sharp fall in wine prices, due to which the wine-makers in the country are struggling. Wine consumption has fallen by as much as 34% causing the prices to collapse. The move is aimed at stopping prices from collapsing so that wine-makers can find their revenue sources again.

The European Union (EU) has now stepped in with a huge payout. The EU has paid France €160 million to destroy their surplus wine as the fall in sales and dwindling prices have badly affected the European wine market. The fund, which the French government has topped up to €200m, will be used to buy up unsold wine – the alcohol so obtained is set to be used in production of items such as hand sanitisers, cleaning products and perfumes.

Money will also be made available for winegrowers who want to diversify into other crops, such as olives, in a bid to reduce overproduction. France’s Minister for Agriculture and Food Marc Fesneau said that the aim was to stop “prices collapsing… so that wine-makers can find sources of revenue again”. In June, the Agriculture Ministry also announced €57m to fund the pulling up of about 9,500 hectares of vines in the Bordeaux region, while other public funds are available to encourage grape growers to switch to other products, such as olives.

France

Fesneau stated that the wine industry needs to “look to the future, think about consumer changes … and adapt”. According to a report, the European Commission data shows that, for the year to June, wine consumption has fallen 7% in Italy, 10% in Spain, 15% in France, 22% in Germany and 34% in Portugal. Meanwhile, wine production across the EU – which is the world’s largest wine-making area – rose by 4%.

Several major wine-producing regions in France, particularly the Bordeaux area, are struggling because of a cocktail of problems majorly attributed to the changes in consumption habits and the after-effects of COVID-19. The country’s menace of wine surplus is being blamed on a combination of factors, including the increasing popularity of craft beer all over the world, the increasing cost of living crisis, and mass overproduction. As well as a long-term trend of consumers switching to beer and other drinks, the industry was badly hit by the pandemic restrictions that mandated that restaurants and bars be shut worldwide, leading to a sharp fall in sales.

Recent rises in the prices of basic survival necessities like food and fuel, linked to rocketing global energy prices and the Russia-Ukraine War, have also seen buyers reduce their spending on non-essential goods such as wine. Wine consumption has fallen by as much as 34% in many of the EU countries – while wine production across the bloc rose by 4% leading to this extraordinary crisis.

A fall in demand for wine has led to over-production, a sharp fall in prices, and major financial difficulties for up to one out of every three winemakers in the Bordeaux region, according to the local farmers’ association. The south-west Languedoc region, the country’s largest wine area, known for its full-bodied reds, has also been hit hard by the fall in wine demand.

“We’re producing too much, and the sale price is below the production price, so we’re losing money,” said Jean-Philippe Granier, spokesperson of the Languedoc Wine Producers’ Association.

Europe last suffered a simiar “wine lake” in the mid-2000s, which forced the EU to reform its farm policy to reduce the massive overproduction of wine that was being stimulated by its own subsidies. The 27-member bloc still spends €1.06bn annually on the sector, according to EU figures.

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