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France shows us the future of wine and it is polarized.

Lorenzo Biscontin

An interesting article entitled “The France of wine is in crisis” published in Italian last Friday by Samuel Cogliati analyzed the situation of the French wine sector starting from the data of the annual report of the Safer – Sociétés d’aménagement foncier et d’établissement rural ( Companies of land development and rural settlements).

In summary, purchases of vineyards by natural persons, both tenant farmers who exercise the right of pre-emption, non-tenant farmers and non-farmers, are clearly decreasing.

Purchases of vineyards by agricultural companies, both tenants exercising the right of pre-emption and non-tenants, are slightly decreasing.

On the other hand, transactions involving land development companies and, above all, those involving non-agricultural companies are growing: +228% in the last 7 years.

Overall, sales decreased by -7.6% in number and -12.8% in surface area, therefore with an increase in the value per sale of +15.8%.

In essence, the French vineyard land market is moving from individuals, winemakers, to companies that are not dedicated to cultivation and that have the financial resources to carry out high-value purchase.

As you can imagine, this trend is not uniform throughout France, but sees the most prestigious areas rewarded and the others, those whose wines show greater difficulties on the market, penalized.

The value of the vineyards therefore grows by +8% in Burgundy, after +9% last year, by even +17% in nearby Jura, in Alsace and in Champagne where the average price per hectare today exceeds one million euros, with a multiplier of 3.2 times over the last twenty years.

It should be noted that all these are northern regions, less penalized (if not favored) by the effects of climate change, which therefore seems to have an impact also on values ​​of the vineyards.

On the contrary, the vineyards of the southern Rhône, much of the Languedoc and even Bordeaux are losing value, apart from the most prestigious denominations such as Puillac, Pomerol, Saint-Julien and Margaux).

In summary, investments for the purchase of vineyards are concentrated in the most historic and prestigious areas, by companies which in their typical business do not carry out viticulture and are therefore linked more to patrimonial-speculative logics than to get revenue from wine making.

A picture that reflects the not encouraging market situation that red wines are experiencing and is surprising for the speed with which it has materialized, since it is an abrupt change compared to what was observed in 2022 by the same report.

Actually, the difficulties of the French wine sector have been evident for some time:

• In the decade 2008 – 2018, the share of French exports in the world wine market decreased both in volume and value (to the advantage above all of Italy).

• This despite the explosion of rosé consumption worldwide, of which France holds the undisputed leadership.

• Wine consumption on the domestic market from 2010 to 2024 constantly decreased from 2.98 to 1.02 million hl (from 46.7 to 22.5 l/capita per year).

• During this period, the consumption of rosé also grew among French consumers and in 2013 already represented 30% of all the wine drunk in France in 2013, especially to the detriment of reds.

• The consumption of red wine at a global level, especially the French one of “current” quality, has been supported mainly by Chinese imports, which however has always been a largely anomalous consumption linked to status and as a gift, and which have collapsed to starting from 2017.

• Underway trends were “on hold” in 2020, 2021 and 2022 because of the COVID pandemic. During the lockdowns, wine consumption held up due to the return to eating meals at home and the desire to indulge in some pleasure. Then they grew up wanting to meet again, we could call it revenge drinking.

Consequently, the speed with which the wine demand scenario is changing should not be too surprising because it is the conclusion of a process that began many years ago.

Over the last thirty years, France, Italy and Spain, the main producing and consuming countries, have faced the decline in consumption on national markets by turning to exports. This led the wine sector of these countries to focus on foreign markets, which offered greater and easier development possibilities, neglecting the internal markets.

When I started working in the wine sector in 2007, consumption in Italy was still above 50 liters per capita per year and many operators were convinced that it would stabilize at that value, given that it had already halved compared to the highs of the 70’s of the last century.

Year 2024 annual per-capita wine consumption estimates are 22.5 liters for France, 26.3 liters for Italy and 21.5 liters for Spain.

Therefore, from 2017 to today, consumption has further halved, demonstrating that it is illusory to expect consumption to stabilize on its own, just because it had already fallen significantly. To reverse the trend, the reasons that determine it must be addressed and resolved; vice versa, the trend continues.

Despite these strong declines, France and Italy remain the second and third world wine markets in terms of volume, after the USA, and it is therefore clear that the continued decline in consumption ends up impacting supply. Even more so today, when there are fewer and fewer new markets to explore (Africa remains) and those opened thirty years ago are becoming mature.

For thirty years now, the experience proposed by wine sector at a global level has remained substantially unchanged, attributable to the model of the expert connoisseur who drinks wine to savor it.

This model showed the first signs of crisis twenty years ago, when it began to become a meme. The sector, meaning the institutions and the vast majority of wineries, has continued undaunted to offer wines and languages ​​that speak more to the large niche of enthusiasts rather than to the consumer market (wine lovers vs. wine drinkers).

If the proposals for consumer experiences are not renewed, the situation changes suddenly when the generations of consumers who had made these experiences successful exit the market.

It’s not just demographic theory applied to consumption, I’ve seen it happen firsthand in the Italian Brandy market: 2010 production was 200,000 hecthanhydrides  (hectoliters at 100% alcohol), 2022 production was 1,800 hecthanhydrides.

Rapid and radical change is needed.

Note: I have mentioned the case of Italian Brandy also for his direct link on wine consumption given that 200,000 hecthanhydrides correspond approximately to 2,000,000 hl, or about 4% of Italian wine production, which must find another place on the market.

(Cover photo: shiraz wine crystal photographed in polarized light. Credits Fernan Federici)

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