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Culture: France’s Destruction of Surplus Wine Hints at an Existential Wine Crisis

Culture: France’s Destruction of Surplus Wine Hints at an Existential Wine Crisis

Last week came the shocking news that France’s government, along with the E.U., would spend more than 200 million euros to destroy surplus wine. In a press conference on Friday, Agriculture Minister Marc Fesneau told reporters that the money was “aimed at stopping prices collapsing and so that winemakers can find sources of revenue again.” But Fesneau also called out the industry, saying it needed to “look to the future, think about consumer changes… and adapt.” This followed a move in June to spend 57 million euros to tear out 9,500 hectares of vines in the Bordeaux region.

But France isn’t the only wine region facing a crisis. Last week, Wine-Searcher reported that Washington State’s wine sales had dropped more than 17% since last year. The week before that, Decanter reported that Australia’s wine exports had plummeted by a third over the past two years, in part because of Chinese tariffs and in part because of declining global demand.

All of this dovetails with the latest Gallup poll on American drinking habits, released in mid-August, which found that wine was Americans’ least preferred alcoholic beverage at 29%, trailing beer (37%) and spirits (31%). Of course, the decline of wine drinking is not just an American issue: In June, the European Commission estimated that wine consumption will fall by 7% in Italy, 10% in Spain, 15% in France, 22% in Germany and 34% in Portugal.

Let’s not beat around the bush, folks. Worldwide, the wine industry is not in a good place. But what explains all this bad news? The easy answer is to blame it on young people. Young people aren’t drinking wine in the same way as their parents and grandparents, the argument goes. They prefer craft beer or cocktails or other things in a can. Or maybe they enjoy cannabis, or don’t drink at all.

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At the beginning of the year, New York Times wine critic Eric Asimov wrote an article asserting, “The American Wine Industry Has an Old People Problem,” based on the annual State of the U.S. Wine Industry Report published by Silicon Valley Bank. Calling the state of the industry “grim,” Asimov said: “Winemakers and advertisers are missing out on younger consumers, the report says, by failing to produce wines that fit their budgets and neglecting to reach out to them with targeted marketing campaigns.”

The SVB report’s author, Rob McMillan, has been telling the industry for years that younger generations are buying less wine. He says people under 60 years old are even less interested in buying wine today than they were in 2007. “It’s worse than I thought,” McMillan told the Times. “I thought we would have made some progress with under-60s. I’ve been talking about this problem for seven years and we still haven’t reacted.”

While it’s true that the industry does indeed need to react, I think blaming the problem on young people is not the answer. We need to see the problem for what it is.

For U.S. wine consumers, there’s essentially a line in the sand: $15. Above that is what the industry calls “premium wines,” and those sales are relatively solid. Below that price point is a vast ocean of American mass-market wines, and sales of these mostly lousy wines are exactly what is in decline. Perhaps the price point is somewhat different in France and the rest of Europe, but it is exactly this kind of middling wine that has been overproduced.

Now, I know certain industry people will cry, “But those are… starter wines!” I wrote about the myth of so-called starter wines last year in Everyday Drinking. To me, “starter” or “entry-level” are just euphemisms for garbage wine. It is a false idea that younger drinkers with less developed palates will begin drinking these bad wines and then evolve, as they get older, to consuming more sophisticated, higher-end beverages. There is no conclusive marketing study that backs up any of this. The same percentage of people would be just as likely to move to high-end Burgundy from kombucha or juice boxes or Frappuccinos.

McMillan, in his 2022 SVB report, called out “the decline of entry-level wine” as a major problem facing the industry. He noted that the price of “entry-level” wine has stagnated in the $9.99 to $11.99 range for more than a decade: “The wine industry has allowed the lower-priced entry-level wines to be produced without transparency as to ingredients and in a homogenous and uninteresting way that’s unlikely to appeal to those young consumers who want to drink better and drink less today.”

American consumers—young and old—have been telling us, for years, that they do not want what the industry is selling at $11.99. At that price, there are dozens of other beverage options. Study after study shows that young people are drinking less but spending more.

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Dave Infante, in his industry newsletter Fingers, argues that the future of wine is something like BeatBox, which is tracking another year of triple-digit growth for its flavored party punch in a cardboard box. Beer Marketing Insights reported that BeatBox is projecting $90 million in revenue and 4.5 million cases in volume shipped for 2023. BeatBox is about half the price of a so-called entry-level wine.

“I have yet to encounter a meaningful answer to BeatBox et al. from ‘core wine’ producers,” Infante writes. If this is the future, it is exceedingly bleak, but his point is well taken.

Infante also talks about a “high-low limbo,” and I think this is the danger zone in which the wine industry finds itself. Too many brands want to sell $11.99 poor-quality wines, and at the same time are still desperate to be taken seriously as wineries.

I believe the future can also be the flipside of something like BeatBox: quality wines that are slightly higher in price, are interesting, have transparency about how they’re made and offer value. Where are the wines for this emerging generation of drinkers? I would argue that they already exist, but the industry chooses not to promote them. Earlier this year, in my newsletter, I suggested looking at Chardonnay from Mâconnais as an example of the type of value wines that can have wide appeal.

The good news is that there are plenty of excellent wines from all over the world that sell from $17 to $24. The industry just needs to do a better job of connecting them with a generation that drinks less, but spends more.

You can follow Jason Wilson on Wine Enthusiast and click here to subscribe to his Everyday Drinking newsletter, where you’ll receive regular dispatches on food, travel and culture through the lens of wine and spirits.

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