FRANCE – French Government has set aside 200 million euros (US$216 million) to fund the destruction of surplus wine production and US$61.57m financing to help grape-growers shrink their vineyards.

A fall in demand for French wine has led to over-production, a sharp fall in prices, and major financial difficulties for up to one in three winemakers in the Bordeaux and Languedoc regions, according to the local farmers’ association.

The demand fall has been attributed to a cocktail of problems from changes in consumption habits, the cost-of-living crisis, and the after-effects of the COVID-19 pandemic.

Marc Fesneau, French agriculture minister, told reporters that the money to destroy surplus stock is meant to stem a collapse of prices and allow winemakers to “find sources of revenue again” as the country prepares for a surplus of 3 million hectolitres of wine—about 400 million bottles—this year, the Financial Times reported.

The financial cushion to market uncertainty will allow wine producers to distill the alcohol from their surplus wines, which is expected to represent about 7% of last year’s production, to pure alcohol.

The pure alcohol will in turn be sold at a loss to the makers of hand sanitizer, perfume, and other industries.

“We’re producing too much, and the sale price is below the production price, so we’re losing money,” Jean-Philippe Granier from the Languedoc Wine Producers’ Association told AFP earlier this month.

The agriculture ministry also announced 57 million euros (US$61.57m) in June to fund the pulling up of around 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.

A good harvest last year combined with the waning demand created a glut across Europe, the European Union (EU) said.

As of June, production this year was estimated at about 4% – higher than usual – but consumption is down about 7% in Italy, 10% in Spain, 15% in France, 22% in Germany and 34% in Portugal.

Wine production in the EU, the world’s biggest wine-making area, rose 4.0 percent. The bloc wine exports from January to April this year, however, took a slump of 8.5%.

The EU said across the bloc, the most affected wines are reds and rosés produced in certain parts of France, Spain, and Portugal.

Wine producers in Languedoc, known for their red blends, said there has been a decline in red wine sales, going down by 32% in France over the last 10 years as young drinkers turn to rosé, beer, and non-alcoholic options instead.

It is not the first time the government has instituted such a buy-back program, with French wine market expert Elizabeth Carter telling the Washington Post that France has for years struggled with more wine than is consumed and limiting quantity should help prop up prices.

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