Vin de France: Reconquering the entry-level segment

Friday December 04 2015 by Vitisphere

The low-key title of the conference organised on November 26 during Sitévi in Montpellier by SupAgro-IHEV/INRA, Vinseo, ICV and Anivin – ‘Reducing production costs’ – belied the scope of its content for the French wine industry at large. Designed more as a roadmap for the industry than as a cost accounting exercise, the conference’s aim was to demonstrate both economically and technically that there is an undeniable opening in the marketplace and real necessity to develop non-GI-labelled wines in France. “We need to plant between 10,000 and 20,000 hectares”, claimed Bruno Kessler of Anivin. Just a few days before planting quotas for 2017 are set, his message prompted many questions.

The basic analysis is very straightforward: over the last three years, imports from abroad have regularly increased. In 2015, France is likely to have imported 7.2 million hectolitres, up 9% on 2014. The wine category supporting the growth is non-GIs which account for 4.8 million hectolitres and could be bought in France (in 2013, the amount was 3.2 mhl). “At the moment, wine producers are satisfied – they are successfully increasing prices. But at the same time, substitution is occurring more and more: shipping companies are turning to entry-level foreign wines”, explained Bruno Kessler.  Most of the 1.2 mhl of foreign wine replacing home-grown products are used for entry-level brands that are often re-exported.

The trend may even grow to include buyers’ own brands. In this particular segment, there is very little room for manoeuvre when it comes to pricing and even small price increases per hectolitre can have disastrous consequences on purchases because consumers are extremely price-sensitive. For instance, if the psychological price barrier of 10 euros per 5-litre wine box is broken, sales spiral downwards. Similarly, supermarkets are warning producers that the 2-euro price segment for bottled wines is increasingly being deserted as a consequence of French producers moving their wines upmarket. In these times of structural recession, with unemployment failing to improve, entry-level wines are an essential component of the supermarket range, insist retailers.

For the moment, Anivin’s primary ambition is to claw back the 1.2 million hl of foreign wines that have replaced French offerings and to increase French sources of base wines for the sparkling category as 1 million hl are imported to France for this purpose. To be able to achieve this, high-yielding vineyards – in the range of 200 hl/ha – have to be planted. Anivin has decided to offer technical solutions to growers willing to join the scheme, whilst shipping firms are offering to enter into 10-year contracts and provide a guaranteed income of 7,000 to 8,000 euros/ha. At that level, some growers may well be inspired to do so…

 

[Source: Vitisphere; Illustration: Anivin]

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