Are French winemakers really in the red?

¡°In France, God makes the wine; elsewhere, it's men¡±.

This celebrated saying by Patrick Ricard, president of the Pernod Ricard group, has long been quoted in the proud world of French winemakers. The international prestige, and notoriety, of the great French wines remain unsurpassed. For the past several months, however, reports on the health of the country¡¯s wine industry have been rather alarmist after production hit new lows in 2008.

After having yielded its position as the world¡¯s leading exporter of wine in 2005, and then its status as the world¡¯s top wine consumer in 2007, France lost its first-place ranking as the premier global wine producer in 2008. All three of these honours have now gone to Italy. Should France be concerned at this turn of events? Is the wine industry, one of the laurels of French culture and a sector that employs some 250,000 people, really in a crisis?

¡°It is necessary to compare the figures from 2008 to those of 2007, which was one that broke several records,¡± says Frederic Dupray, in charge of economic studies at the Interprofessional Office of Burgundy Wines (BIVB). ¡°Indeed, today¡¯s figures are in decline, but they remain at 2006 levels.¡±

¡°The year 2008 was a good one for the trading companies, even if this was not true for wine growers,¡± says Robert Beynat, director and cofounder of Vinexpo, a trade association for the wine and spirits sector.

Observers, however, await the figures for the first six months of 2009 with apprehension. According to the Federation of Wine and Spirit Exporters, the slowdown in the last quarters of 2008 merely ¡°presages what is expected for 2009.¡±

Exports of wine and spirits, which represented 2 percent of total French exports in 2007, suffered from the effects of the global financial crisis, registering a 0.3 percent loss. The United States and the United Kingdom, two of the main importers of French wines, have been hit hard by the economic downturn.

¡°The situation is worrying because the British market, one of the largest wine importers and the primary market for most French vineyards, has been the most affected¡± by the economic slump, says BIVB¡¯s Dupray.

And what of markets worldwide? The situation overseas is certainly worrying, since almost 40 percent of French wine production is intended for consumption abroad. But the prognosis is far from dire.

According to Herve Henrotte, wine and spirits project manager for Ubifrance, the French agency for international development, things could have been worse. ¡°The slowdown in exports due to the global crisis could have been more serious in 2008,¡± he says. ¡°It¡¯s impossible to foresee, but at the moment there is nothing to suggest that 2009 will be a similar vintage.¡±

In an increasingly competitive climate, France remains the global leader in the value of its wine exports, worth €6.76 billion compared to Italy¡¯s €4.4 billion. Indeed, French winemakers insist on quality rather than quantity, in contrast to their neighbours across the Alps, who mainly export table wine.

¡°The 2008 harvest was weak, so there will be less volume to sell and no problem with overstock, which is lucky, given the economic situation,¡± Henrotte says.

This marriage between quality and rarity could make for beautiful prospects in 2009.