The Losh Cause – EU lacking moral courage, again
With tough market conditions at home and a strong euro hampering exports, Chris Losh believes European wine producers need policymakers to make bold decisions rather than resisting or fudging changes that are in step with modern consumer demands..
Three items of news have caught my eye over the last fortnight: the somewhat subdued trading figures from Majestic in the UK; the EU's hesitant position on artificially lowering alcohol levels in wine; and Brussels' 180 degree reversal on earlier plans to permit the blending of red and white wine to make rosé.
On the face of it, there isn't a lot to link these three stories. But taken together I believe they provide a highly illustrative snapshot of where the wine world is just at the moment.
Let's take the Majestic figures first. They weren't dreadful. Indeed, sales in the UK have actually gone up over the last year. No, the group's slide in profits, from GBP16m (US$26.1m) last year to GBP7m in 08/09, was largely due to a collapse in the company's sales in France.
Fewer visitors went on the cross-Channel booze-cruises, and those who made the journey spent less. With the strong euro wiping out any benefits of lower duty, a day in the (now 30% more expensive) Pas de Calais has become a luxury rather than a bargain.
And Majestic is never going to be able to rely on French consumers to pick up the slack. Per capita consumption in France is, at 43 litres per head, almost a third of what it was 50 years ago, and continues to fall.
André Barlier of the French agricultural statistics office, AgriMer, got it right when he called the situation there "depressing and worrying". Not only is the home market moribund, but the strength of the euro has kicked a huge hole in French export figures as well.
The EU 'lower alcohol' story is rather more complex. Currently the process of lowering alcohol levels with reverse osmosis machines is banned in the EU, though it is permitted for (marvellous term) "experimental purposes". Indeed, some pretty well-known names in Bordeaux have been reported as experimenting with great abandon.
Now, though, Brussels is tentatively (and without any great enthusiasm) tabling measures to permit de-alcoholisation for the first time, but only up to a maximum of 2%.
It is, I guess, progress. But Louis Escudier of the French National Institute for Agronomic Research believes the 2% limit is unnecessarily niggardly.
Having carried out tests on over 1,000 consumers, he concluded that (French) wine drinkers were perfectly happy to drink decent quality wines that had had their alcohol reduced from 14% to 11%. This, he says, could be a great way of lowering alcohol levels in wine back to where they were 30 years ago, only with the advantage that the fruit is actually ripe to begin with. Not only that, but it is in step with the Europe-wide governmental pushes on reducing alcohol consumption.
Even so, it will be interesting to see whether the Reverse Osmosis proposals get through the EU at all, given what happened to the Rosé legislation.
Having been adamant all along that they were going to stick to their guns to permit European producers to sell rosé wine made by blending red and white grapes (rather than using the saignée method), Brussels performed a smart about turn earlier this month under pressure from grower lobbies in the likes of Tavel, Anjou and Italy.
According to the usually sensible EU agriculture minister, Mariann Fischer Boel, "ending the ban on blending could undermine the image of traditional rosé". Given that most consumers have next to no idea how rosé is made (indeed, most believe it to be a mix of red and white in the first place) it's hard to see quite what 'traditional rosé image' could potentially be undermined by permitting the change.
The reasons given by French Agriculture Minister Michel Barnier were even more laughable.
"We will maintain a ban on production [of mixed rosés] on our territory out of respect for the consumer and out of respect for the efforts made by French vineyards for quality and tradition," he said.
Hear that? It's being done with the good of the consumer in mind. Nothing to do with protectionism, and keeping out cheap non-EU blended pinks at all.
Are you starting to see yet how these three stories interweave?
For me, the Majestic figures are at least partial evidence of a European wine market that has largely stagnated, while European exports are, with such a strong currency, looking at their least attractive for a very long time.
At the same time, potentially helpful changes that are broadly in step with what the consumer wants, such as lowering alcohol in wine, or loosening the regulations on rosé, are resisted or fudged, the reasoning hidden in bureaucrat-speak.
The rosé volte face, for instance, is clearly nothing to do with 'respecting the consumer' or 'preserving the tradition' of rosé. After all, there are oceans of awful European saignée rosé out there. It's about blocs of votes and political horse-trading, and keeping powerful lobby groups off your back.
In other words, at a time when sales are undeniably tough, both at home and abroad, the response within Europe has been an all too predictable raising of the drawbridge, to try and keep out foreign competition.
But as the bureaucrats peer nervously over their high walls, it's obvious that their policy of resistance to change and to taking brave decisions is doomed to failure. Without the cleansing air of innovation and competition, the 'fortress' will simply rot from the inside out...
With tough market conditions at home and a strong euro hampering exports, Chris Losh believes European wine producers need policymakers to make bold decisions rather than resisting or fudging changes ...
As administrators plough through offers for collapsed First Quench Retailing, a sales rise from Majestic Wine today (16 November) proves that there is life yet in independent and specialist wine retai...
Recession has been the final straw for First Quench Retailing, owner of Threshers wine stores, but company accounts show the business has been struggling for some time amid a turbulent period for the ...
Les Domaines Paul Mas' Estate Single Vineyard Collection...
- Why Chinese beverages won't conquer the world
- Gin: Plymouth's from Plymouth, London's from...?
- Is “Craft” the Next Big Thing for Soft Drinks?
- Coca-Cola pressure builds as bid rumours swirl
- Petropolis Finally Moving into SABMiller's View?
- Pernod launches online Ballantine's "experiment"
- Anheuser-Busch InBev cuts jobs in US shake-up
- Diageo confirms Australia RTD abv drops
- Diageo targets Millenial women with Baileys push
- SABMiller returns to Brazil with Petropolis tie-up
- Early Signals: future scenarios that will drive consumption and product innovation over the next five years
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global Beer Opportunities: Beyond Standard Lager
- Global vodka insights - market forecasts, product innovation and consumer trends research
- The IWSR Forecast Report - 2014-2019 Global Review