France to spend $216M to destroy 80 million gallons of wine

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The French government will pay its wine producers some $216 million to destroy nearly 80 million gallons of surplus vino that they were unable to sell.

French wine producers are getting bailed out after being hammered by a confluence of difficulties — including overproduction, inflation, skyrocketing costs and changing drinking habits among French citizens opting for other beverage choices in a hyper-competitive environment.

The Russian invasion of Ukraine has also disrupted shipments of fertilizer and bottles, while climate change is wreaking havoc on growers who must contend with extreme weather.

French Agriculture Minister Marc Fesneau told AFP on Friday that the government is paying farmers to destroy the excess wine so as to allow winemakers, who would be unable to turn a profit if they lowered the price of the surplus wine, to “find sources of revenue again.”

In the southwestern region of Bordeaux, which is famous for its vineyards, farmers have had to move up the harvest season, which once began in mid-September, to mid-August due to severe drought.

France will pay wine producers $216 million to destroy surplus wine that has gone unsold. AFP via Getty Images

The French government is offering winegrowers in Bordeaux compensation if they choose to repurpose their land and rip up their vines.

The government funds will enable farmers to distill the alcohol from the surplus wine to pure alcohol, which can then be sold at a loss to producers who make cosmetics, perfume and cleaning supplies.

Over the last 10 years, sales of red wine have fallen by 32% in France, where young people are instead consuming non-alcoholic choices, beer and rosé.

Supply has far outstripped demand for wine in France, where young people are opting for alternatives. AP

Winemakers have also struggled to recover from the coronavirus pandemic, when restaurants were closed and trade shows canceled.

“We’re producing too much, and the sale price is below the production price, so we’re losing money,” Jean-Philippe Granier of the Languedoc wine producers’ association told the Guardian.

The challenges facing the French wine industry mimic those of US grape growers who must also contend with a decline in demand for wine.

Earlier this year, Silicon Valley Bank released a study titled “State of the U.S. Wine Industry Report” which found that Americans over the age of 60 are the only group of consumers who are drinking more wire than in previous years.

Climate change, inflation, the war in Ukraine, and the coronavirus pandemic have taken their toll on the French wine industry. Getty Images/iStockphoto

The report found that “younger buyers are increasingly less engaged with the wine category.”

According to the report, just over one-third (35%) of those between the ages of 21 and 29 consume alcohol, but do not drink wine.

That number falls to 28% for individuals between the ages of 50 and 59.

Last year was the second consecutive year of negative growth when measuring total US wine consumption by volume, according to the Silicon Valley Bank report.

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