With sales falling at home and abroad, the implementation of EU wine reforms imminent and the prospect of even tighter regulation on wine marketing in France, it is not hard to see why emotions among French wine producers have once again boiled over. Chris Losh argues that some contraction of French wine production will be no bad thing but believes the Government should not be passing legislation restricting more commercially astute operators from moving forwards.

As news stories over the last six weeks show, the French wine industry is in turmoil.

First, at the end of June the (now annual) protest of several thousand growers in Montpellier turned violent, with a small group of baseball-bat wielding vignerons taking out their frustrations on supermarket wine aisles and branches of the Crédit Agricole bank.

Then, in early July a research body predicted that France would lose its 'biggest global producer' spot to Spain in less than a decade. While barely a fortnight later the press got wind of new laws that, if passed, would make it all but impossible to sell wine on the internet in France.

Finally, to round the whole sorry period off, a few weeks ago, a disaffected grower was taken first to hospital, then to the police station, when a home-made bomb that he was constructing blew up in his face.

Somehow, this tragi-comic episode summed up the whole industry: the impotent rage, the misplaced energy, the incompetence - and the final humiliating victory for the forces of the state over the little guy.

Forget the Neverland unreality of the super-premium and icon wines, this is an industry under siege from almost every direction.

For starters, domestic consumption - for centuries the bedrock on which French wine was built - has crumbled, from around 100 litres per capita in the early 1960s to half that today. According to the Office National Interprofessionel des Vins (Onivins), almost two-fifths of the population don't drink wine at all, while the number of regular drinkers has halved to 24%.

The problem is generational and, apparently, irreversible. The older 'regular' drinkers are dying off, while health-conscious 30 to 50-year olds no longer see wine as an everyday product, but as an affordable luxury.

It's a social change that brings France more into line with northern Europe, but augurs badly for the wine industry, particularly since there are concerns that the younger generation are showing little interest in wine at all.

The French drink 10m hl less wine now than 45 years ago, and export markets - broadly steady for the last ten years according to Onivins - can't take up the slack.

There is, moreover, worse to come, as global economic jitters and the turbocharged strength of the euro - particularly compared to the dollar and the yuan - bring export growth to a shuddering halt. After a 3% gain in 2007, CREDOC (Centre de Recherche pour l'Etude et l'Observation des Conditions de Vie ) shows them down around 6% for early 2008.

In fact, it is this same body that predicts that Spain will surpass France as the world's biggest wine producer by 2015. In a report commissioned by the Independent Growers of France (VIF), it predicts that French production will fall 20% from its current 52m hl per year, to 43.9m.

French pride might not permit agreement, but from an economic level this would be no bad thing. The EU's new Common Agricultural Policy guidelines come into force this month, with subsidies for uneconomic growers to pull out vines, and an end to the crisis distillation subsidy.

Pushed through by Marian Fischer-Boel, the measures are intended to address Europe's chronic and persistent problem of overproduction. And, while not exactly popular with growers in places like the Languedoc, the proposals are eminently sensible.

The big question is whether the French government has the stomach to enforce politically sensitive measures that will force growers, as one eurocrat put it, to work "without a safety net" and (it is hoped) cause the unprofitable to hang up their secateurs.

"The basic problems will never be sorted out by the state - whether French or European - but by the market," says Jean-Francois Mau, former head of Bordeaux negociant Yvon Mau. "Everyone knows the strength of market forces, but [in France] that logic isn't acceptable politically, especially in the socialist Languedoc."

That the problems are political as much as structural is evidenced by the fact that, while the government has been queasy about tackling overproduction, it's taken a hard line on marketing, promotion and consumption.

The Loi Evin has made alcohol advertising in the mainstream media intensely difficult, and the drink-driving laws are draconian. The leaked document proposing wine and alcohol sites on the internet be limited to certain hours would see wine operating under the same strictures as XXX-rated pornography.

"Wine consumption has become demonised in France," says one producer who doubtless echoes the sentiments of many. "Wine has a place in our culture, but our government seems to have forgotten that."

The paradox - where politicians defend a growers' inalienable right to produce wine, whether anybody wants it or not, yet clamp down hard on those attempting to sell or promote it - is the worst form of political expediency.

It's probably fair to say that France could afford to lose (as CREDOC predicts) around 20% of its production. And rather than throwing money at keeping economically dead vineyards on life support, the Government would be better advised to relax its 'play to the galleries' Puritanism at home and work out how to help the growers who do deserve to survive make the most of what they have. Otherwise, they run the risk of losing those too.

"It's hard in the premium category," says Mau. "I think the response will come from abroad. Global leaders will come to France to develop strong brands."

Forget producing less wine than Spain, the idea of a foreign-owned multi-million case Colline de Nottage in ten years' time really would be a humiliation…