Sopexa Global report: why France is at an international crossroads
The French wine industry is facing more challenges than ever before, with many wine professionals claiming it has lost its way, according to Sopexa’s annual survey of the world’s leading wine markets.
The survey, which quizzed nearly 1,000 retailers, importers and wholesalers in the world’s leading wine markets including the UK, the US, Germany, Belgium, China, Hong Kong and Japan, was released at Wine Paris this week, and makes for sobering reading for anyone in the French wine sector.
Top of the industry’s concerns is the impact that US tariffs are having on French wine which have nose dived by almost half since 25% tariffs were introduced last October by the Trump administration on an array of European goods.
It means the outlook is going to be tough, for the majority of respondents to Sopexa’s survey, compared to countries such as Chile, Argentina and Australia, which are unimpeded by US trade tariffs.
France was also considered a turn-off for younger drinkers, a key demographic for the wine industry aware that it cannot depend for ever on its traditional core market, the ageing baby boomers.
France is also losing ground in key markets such as Belgium, China, Hong Kong and the US, with Australia, and to a lesser extent Chile and Italy predicted to be the biggest winners in the huge and highly lucrative Chinese market.
Despite its woes, France still retains the top spot when it comes to the country of origin on wine lists, and also for reputation, with 59% of respondents saying French wine enjoys the most positive image.
Tipped for growth
Four French red wine regions were identified as being the key areas for growth: Bordeaux; Langudedoc; Bourgogne and the Rhone. All of which are being driven by strong sales in Asia and Europe.
In the UK, however, Beaujolais is the only French region to make it into the top four regions for red wine, with Argentina and Mendoza being tipped by the Brits as a region to watch.
While Bordeaux reds are still highly prized in mainland China and Hong Kong, Languedoc wines are predicted to perform better in Germany, Belgium and Japan.
Rosé’s potential remains strong
Provence rosé was also considered another strong area of continued growth, with over two thirds (67%) of industry professionals putting the region at the top of the rankings for rosé, with the sole exception of Belgium.
In China and Hong Kong, almost all respondents (90%) said they believed that Provence still held potential for growth in the rosé category.
Languedoc rosé also had a strong following, and is also expected to see further growth. It takes the top spot in Belgium, while in the UK it gets the backing of nearly three quarters (70%) of respondents.
Demand for white wine
Marlborough in New Zealand and the Loire dominate when it comes to which regions the trade seeing as being the most important for white wine, with nearly a quarter (24%) of respondents citing the French region as being particularly well placed to perform well in the UK, mainland China and Hong Kong.
The US is also very strong for the Loire and it is has maintained its lead as the top region for white wines, even if its growth potential has dipped slightly compared to past years.
The Languedoc is also set to perform well in Belgium and Japan.
Key varietals
There are four clear stand out winners when it comes to the varietals that wine professionals see as having the most growth potential: Cabernet Sauvignon; Pinot Noir; Chardonnay and Merlot. Of the four, Cabernet Sauvignon is predicted to peform particularly well outside Europe, most notably in China.
Wine List appeal
With eight countries represented on the average list, competition remains as fierce as ever. There are, though, some significant regional disparities around the world. While China typically only offers 4.5 countries of origin on the average wine list, the UK, by contrast, offers the most diverse range, with an average of 11.3 countries.
France, Spain and Italy are the most popular countries to feature in wine lists across all markets. A full 89% of respondents named these three countries, compared to 75% citing Italian wines and 67% Spanish wines.
Of the seven markets surveyed by Sopexa, three stood out for the level of optimism expressed by respondents, with those from Germany, Japan and the US expressing the most bullish outlook, and predicting growth in the coming two years.
In marked contrast, the UK, which has endured a politically and economically bruising three years before the country finally left the EU at the end of last month, the view is far more gloomy, with nearly half - 44% - saying they expected the market to contract.
Australia –cleaning up in China
Australia is seen as the country with the brightest future in China, amongst 60% of respondents, while Chilean wines are favoured by 46% and Italian wines by 42%.
Rob Bevis, senior business development director, Greater China, of export and distribution company East Meets West Fine Wines explained why he believes Australia has such a bright future in China.
“Trade agreements between China and Australia resulting in reducing duties for Australian wine to zero, compared to 14% for wines from France,” he said.
Australia is also known as a red wine producer, which also fits well with Chinese buyers and consumers.
”In China, which lacks a strong retail infrastructure, consumers seek reassurance or recognition to guide their choice. Australia, which has some of the world’s largest wine companies, acutely focused on marketing, has prominent, recognisable wine brands that fulfil this role,” added Bevis.
Brexit impact
As the UK starts to come to terms with the fact that it has left the EU (it is currently in a transition phase, and finally leaves on December 31 2020), the majority of UK wine professionals surveyed believe that Brexit will primarily benefit countries outside the EU.
Over half – 53% predict growth for Chilean wine, while 45% are backing Australian wines with 40% putting their money on Argentina.
Despite this, a quarter of UK respondents also believe that Brexit will give their own country’s small but burgeoning local English wine market a boost.
Most attractive countries or origin for young drinkers ?
For those chasing the youth dollar, Italy and Australia were regarded as the frontrunners, while Spain, Chile and the US were also mentioned. France, with its long winemaking heritage and tradition, does not make it into the top five of countries which respondents believe are appealing to a younger demographic.
“Of all the traditional wine producing countries, Italy has a dynamic approach to marketing and communications,” said Paolo Librandi, director of Librandi and president of the Calabria wine trade body.
“This is reflected in the quality of the packaging and the message this conveys.”
He added: “The Italian wine trade could promote a different variety each day. This can only serve to engage younger drinkers, who appreciate anything new or original.”
Organic and biodynamic wines take centre stage
The trend for more organic and biodynamic wines continues to gather pace, as increasingly health and environmentally aware consumers seek out these products which are more closely aligned with their lifestyles and beliefs.
Over 40% in Sopexa’s survey believed that these wines are the most trending category for the next two years, ahead of regional wines. And it is the UK and US wine markets that have highest hopes for organic and biodynamic wines, with 63% and 58% respectively predicting growth in this area. Only mainland China bucks this major trend.
“The interest in organic and natural wines is part of a larger movement involving food, wine, climate change, the environment and globalisation,” said Daivd Bowler, a New York-based importer and distributor of organic and natural wines. “It’s a generational shift, so naturally the market is trying to jump on it and be a part of it.”
Low alcohol wines were also regarded by respondents in Germany (35%) and the UK (24%) as possessing good potential for growth in the coming years.
Sparkling wine continues to fizz
Sparkling wine continues to be dominated by Prosecco, and features in the top three performers in all markets surveyed. Japan and the US both hold high hopes for Cava, while the vast majority of respondents in Germany and the UK can see a big future for the Cremant sector. English sparkling wines too are expected to record healthy growth over the next two years, with 79% of respondents putting it in the number one position.
Japan embraces domestic wines
Meanwhile, in Japan, where wine production only really began in earnest in the 1970’s, local wines are set to see the greatest sales growth, according to trade professionals surveyed in that country, with 40% flying the flag for local wines, though French wines had significant support (35%), followed by Italy (24%).
As the quality of local wines has improved, so it has started to attract the attention of the local wine trade and consumers.
“Today it is evident that Japanese wines are increasingly present on wine shelves and in restaurants in the domestic market,” said Loic Brunot, managing director of Sopexa, Japan and Australia.
“Demand is fuelled by consumers wanting to drink local wines and by the promotional efforts of producers who are focusing on the 2020 Olympics to put their wines in the spotlight.”
Production, however, remains relatively low, with yields of around 198,000 hectolitres in 2018 – a tiny fraction of that produced by the French and the Spanish.
* To find out more from the report go to sopexa.com.