France’s ministry responsible for agriculture has introduced a proposal to provide financial incentives to vineyard owners for the removal of their vines.
The International Organisation of Vine and Wine (OIV) reported that in 2023, wine production exceeded global demand by 10%.
This surplus in wine production has led to decreased prices and jeopardized the financial stability of French winemakers.
With around 800,000 hectares of vineyards in France, the nation’s government aims to mitigate the oversupply by diminishing the area dedicated to vine cultivation.
Under recent proposals, vineyard owners might receive up to €4,000 per hectare to allow the government to remove the vines. However, they will not be allowed to replant vines on the same land before 2029.
The French government has informed the European Commission about this state aid initiative, which is expected to cost around €120 million. This amount would enable the removal of 30,000 hectares of vineyard area.
This initiative follows a previous measure to reduce the vineyard area in Bordeaux by almost 9% due to excess production.
The overproduction crisis is attributed to a shift in consumer preferences, with the Observatory for Drugs and Drug Addiction reporting a significant drop in wine consumption from 120 liters per adult per year in the 1960s to just 40 liters today.
That trend has started to accelerate in recent years, as young adults either reject alcohol entirely or choose beer and cocktails over wine.
Wine sales in French supermarkets diminished by 5% year-on-year in the timeframe from January 1 to August 11 this year, according to the government agency FranceAgriMer. While white wine sales remained stable, red wine experienced an 8.5% decrease and rosé sales dropped nearly 6%.
Historically, producers have depended on export markets to compensate for domestic losses, but these markets have encountered difficulties as well.
French wine exports declined by 9.4% last year, marking the lowest level since at least 2007. Export volumes to the US fell by 13%, while shipments to the UK saw a 5.2% decline.
The French Ministry of Agriculture cited a “market crisis faced by the agricultural sector, notably due to the war in Ukraine,” in its announcement of a €120 million initiative to grub up 30,000 hectares.