Les vins français sur le marché (document en anglais)

French wines on the market

This study is realized in two sections.

This first part will describe the present capacities and choices of the French makers to produce wines and the different forecasts of this productivity. It includes the structure of the offer and the recent changes which appeared in the past few years. Then, the consumption of French wines on the market and the evolution of the customer’s characteristics. After that, the next part is focused on the four aspects of the mix marketing concerning the offer on the market: product, price, place and promotion. What is the range of products? What is the policy of price? How are they distributed? What about the communication and advertising? It’s a global picture of the various French wines which are present in the market.

The second part is about the different regions. This will provide an in-depth approach in the positioning of the many places and “terroirs” which are producing wine across the country.

I- THE FRENCH MARKET

A) Production of French wines

Production of still wine faced a strong decrease these past years. In 2004, the national production was 58 845 000 hl and in 2011, it reached 45 804 000 hl.

There are about 863 000 ha of grape vine across the country. France has the world’s second largest total vineyard area, behind Spain. This is split between different uses:

- 534 112 ha for protected denomination of origin (PDO= AOP)

- 216 000 ha for protected geographical indication (PGI= vin de pays)

- 39 334 ha for non geographical indication

- 78448 for cognac production

The non PGI wine areas strongly decreased this past few years and benefits from financial help to transplant with better grape varieties. They have been promoted to PGO or to PGI, in order to increase the quality of the wines. This results from political policies and a global restructuring of the French vineyard. As a result, some grape varieties had strongly decreased or totally disappeared from the market: carignan noir (-65%), aramon (-93%), grenache blanc (- 67%) or cinsault (-52%). Other grape varieties rose: syrah (+500%), merlot (+300%), cabernet sauvignon (+260%) or chardonnay (+ 300%).

Grape growers try to diversify and reach a better quality for their wine. As a result, part of the PDO area grows from 42 % in 2005 to 50% in 2010. However, in 2011, production of PGI and non PGI growth up by 13.1% whereas the PGO wines drop by 3.8%

In order to achieve this mutation in the French vineyard and to be more competitive, many producers are merging to share productivity costs or to set common marketing policies.

The French market consumes around 75 % of the French wine production, and the rest of the production goes to foreign countries. Even if the demand decreases, the national market stays the first opportunity for French wine growers; same case for Italy. At contrary, countries like Spain, Chili, South Africa or Australia become clearly exporter nations. The French vineyard is composed by lots of brands with a little volume, and few international brands of notoriety which are world wild known in foreign consumer countries.

B) Consumption of French wines

The local market stays the primary market for French producers, and the recent increase in foreign countries will not make up for the drop of local demand. Consumption of wine in France will continue to go down again in 2011. The total consumption of wine is under 30 millions of hectoliters in 2011. The main distribution sector is major outlets. More than 84% of the wines are sold in hypermarkets or supermarkets, and the volume sold will be affected another time by the effects of the crisis. Same for the consumption on place, less and less bottles are consumed in restaurants or café due to restricted budgets. In addition, people spend less time for lunch and the traditional bottle of wine matching the food is no longer a habit. Here is the challenge for French producers: to provide better answers for French people who consume less but pay more attention to the quality.

As a result, the French wine market changes and producers adapt to this new characteristics of the consumption. Innovations in the label have been launched by producers (new reference for PDO, bio labels). Bio wines are booming and half of the population consumes food coming from biological agriculture. Many producers make this choice, it is a sector with the best increase per year and wines are sold between 20 and 30 per cents more expensive. Brands of distributors have a strong increase. They represent 37% of the total sales in 2010. Bag in box as well, they represent 26.4% of sales for still wine in the major outlets (long life product, quality/price).Quality wines are the most consumed in the market, PDO wines represent more than the half of the market. The volume in consumption in 2010 drops by 2.3%.

C) Characteristics of the market

- Products

Red wines are the most consumed wines in the market, with more than 60% of the total sales. Rosé wines count for 22.7% and white wines have a 17.3% share. Every range of products is present on the French market; from basic wines (less than one euro) to icon wines (more than 23 euro). The French offer is hugely fragmented and unreadable: more than 450 PGO wines with insufficient notoriety, 140 PGI wines, and many small or medium vineyard areas inside each PGO or PGU label with few brand names or packaging.

French producers are concentrated in the popular premium segment and premium segment. Ultra premium wines and icons are disconnected of the regular wine market; they represent another market very specific with low offer, very sensible to the vintage. These wines are more and more targets for investments and speculation.

In volume, the basic wine segment represents 28.2% of the consumption, 59.6 % for popular premium and premium wines, 8.7% for super premium wines, and 3.3% for icons.

The part of French wines in the segment basic is 76%. This is the smallest share in the market, 24 % of wines sold less than 1.2€ come from a foreign country. French PDO wines are largely dominating the market above this price and the share of the countries progressively decreases with the price.

The

...