2013 was a good year for French wine and spirit exporters but they are predicting a tough year ahead with smaller volumes and rising prices dampening sales.
The gloomy forecast for 2014 follows a relatively stable performance for the sector in 2013. While still wines and Cognac may not have had the greatest year in 2013, a strong performance by Champagne and other sparkling wines helped French wine and spirit producers to ship 200 million cases overseas, worth 11 billion euros ($15bn), the Federation of Wine and Spirit Exporters reported Wednesday. Wine shipments alone were worth 7.59bn euros ($10.4bn).
“2013 recorded a good performance after a great year in 2012,” said the president of the Federation, Louis Fabrice Latour.
But he expressed concern for the year ahead: “We are rather worried about 2014 because we aren’t able to sell the same volume of wine as in 2013 or 2012 and it will be more expensive,” he added, noting that supply issues were a particular concern for Bordeaux, Beaujolais and Burgundy.
"We are going to have a lack of still wines after two small harvests. Will our price increases be accepted by our international customers, especially when our competitors have had a bountiful crop," he asked.
Consumers should expect price increases of up to 30 percent, said Philippe Casteja, the CEO of Bordeaux négociant Borie Manoux, and head of the Federation’s Bordeaux arm.
The United States now accounts for 8.6 percent of French exports in volume, and more in value, worth just over one billion euros ($1.37bn) compared with just 455 million euros ($622m) in China, yet it was the People's Republic that dominated discussion.
Chinese Market Sours
The Chinese government's austerity measures hit some French producers hard in 2013 with exports to China falling 12.5 percent in volume and 15 percent in value in the past year, equivalent to 825 million euros. Cognac sales were badly affected by the government’s increasing frugality: Rémy Martin, one of the Charente region’s biggest names was particularly hard hit with sales falling 32 percent in the third quarter.
At the same time, European wines suffered a trade dispute between Beijing and Brussels – China launching an anti-dumping investigation into European wine imports after the European Commission imposed anti-dumping duties on solar panels imported from the People's Republic.
The most prestigious wines were affected by this fall out, particularly Bordeaux grands crus. But those lower down the ladder also suffered. Antoine Leccia, CEO of the Advini group, based in the Languedoc said: “There’s less gift-giving and also fewer banquets,” which has affected sales.
Latour doesn’t believe it’s time to panic and that there is still plenty of growth to come. “Don’t forget that this market didn’t exist and has grown 1200 percent in 12 years,” he noted.
Moreover, it was recently reported that China has become the world's largest consumer of red wine.
Casteja claimed the Chinese market is “taking a breath.” He explained that many had entered the wine trade in China to make a quick buck but were now leaving. He cited a large fishing company that tried to diversify into wine, which was now dropping out of the market.
“The Chinese market is not yet a mature market but it is no longer an emerging market. This is a sophisticated market that is in the process of being built.”
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