Vintage Advantage

How can you be expected to govern a country that has 246 kinds of cheese?" asked Charles de Gaulle back in 1962. It's a good thing no one got the General onto the subject of wine. France has no fewer than 466 different Appellations d'Origine Contrôlée, plus some 150 Vins de Pays. This hardly mattered when the French drank most of their wine themselves; complexity, after all, is part of being French. But with adults consuming half the wine they did in the '60s, producers are having to look elsewhere. And they're discovering that foreign drinkers often have simpler tastes. If the French wine industry is to fight off growing competition from the New World, clearly it's going to have to change.

Global production is increasing steadily. In Australia alone, output has doubled since 1995, with vine acreage up more than 50% in the past four years. Over the same period, the number of wine-drinkers worldwide has stagnated. "There are more and more of us fighting for the same-sized pie," says Charles Maurisset-Latour of the venerable Burgundian firm Maison Latour. The traditional major producers — France, Spain and Italy — have found themselves squeezed by state-of-the-art competitors from Australia, New Zealand, South America and South Africa. When French exports started to fall after a bumper year in 1998, growers wondered if they'd got something wrong. "We used to make wine that we knew was good and assumed it would sell itself," says Jean-Luc Dairien, general manager of the French Wines Council, "but that just doesn't work any more."

Europe is the main battleground. The Continent consumes 70% of the world's wine and three-quarters of French exports. While wine-drinking has been steadily declining among its traditional aficionados in southern Europe, it is winning new converts among their beer-drinking northern neighbors. Last year, Britain accounted for nearly a quarter of France's exports. But although the British wine market has been expanding regularly for the past decade, France's share of it shrank from 33% in 1995 to 26% last year. Meanwhile, the New World's share rose from 15% to 37%, more than half of it from Australia. The prospect of being marginalized in one of the world's few growth markets has convinced the French that they need a shake-up.

"Until now, all our regulations have been designed to protect the upper half of the quality spectrum," says Dairien. The French have been blind-sided by New World competitors' reasonable prices, strong brand identities and consistent quality. "The Australians have concentrated all their marketing on the middle and lower market segments that account for the biggest volumes," says Dairien. "We're going to have to completely rethink the way we regulate our production." A report to the French Senate this month proposes radical solutions, like mixing the produce of different regions and vintages in single-grape-variety wines and adding oak chips to vats as a flavoring agent. The aim: encourage strong brands with consistent tastes that can take on the Jacob's Creeks of this world.

France's problems aren't just at the bottom of the market. In a report to the Agriculture Ministry last year, beverage expert Jacques Berthomeau singled out the more refined AOC sector. "Beneath the shelter of our Appellations d'Origine Contrôlée hide a number of wines which are mediocre, if not unworthy of the appellation," wrote Berthomeau. Widely assumed to be a badge of quality, the aoc label guarantees little more than the place where a wine was produced. Quality controls introduced in 1974 are administered by growers themselves: 98% of wines submitted pass the test. "We've lost €152 million in AOC exports," says Elodie Pasty of the Institut National des Appellations d'Origine: "We're going to have to tighten up our quality criteria."

Like other industries, France's wine trade is belatedly discovering that globalized markets call for new ways of doing business. "Our producers and distributors are going to learn fast, because they've got no choice," says Dairien. Once they've sorted out the wine, maybe they'll get started on the cheese.