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Regional Analysis |
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The wine trade show Vinisud, held every other year in Montpellier, showcases the wines of the Mediterranean, in particular those of the Languedoc-Roussillon. This year’s edition, the eighth, finished on a positive note. Foreign visitors were up 5% on the 2006 edition to 28% of the 32,660 total and, according to exhibitors, buyers from the UK, Holland, Belgium and France were clearly in evidence, while interest from Asia was keen.
There was a further note of optimism from leading producers in the region. Skalli posted results which showed a consolidated turnover of €87m ($137m) for its south of France and USA concerns in 2007, up 10% on 2006, the group aiming for a further 10% growth in 2008. At the same time Jeanjean declared a progression in sales of 9.8% in 2007, the advancement attributed to an increase in activity on the export front.
Results from the Fédération des Exportateurs de Vins et Spiriteux de France (FEVS), however, told another story. With French exports as a whole showing a positive balance in 2007, the Languedoc-Roussillon (along with the Beaujolais) ended up the party pooper with exports for AOC wines down 2.5% in value and 11.2% in volume on 2006. This was the second year in succession exports had fallen with a resounding bump, the results for 2006 down 2.6% and 9.6% respectively on 2005.
Market share in the principal export markets has been declining in recent years (results for 2002 were of the same order as 2006 and 2007) and for certain producers in the Languedoc-Roussillon ‘crisis’ is not an ill-defined word. Prices at the ‘generic’ end have dropped to an unsustainable level and where progress has been made the news hasn’t been readily communicated. But is it all doom and gloom or did Vinisud 2008 signal a ray of sunshine?
The region’s structure
The Languedoc-Roussillon is France’s principal wine producer with 290,000ha and 16m hectolitres (2006). Thanks to a programme of uprooting and conversion this figure has declined from a high of 29m hectolitres in the late 1980s.
Within the region, production can be broken down into four parts: AOC wines account for 19% (Corbières, Minervois, Coteaux du Languedoc and Côtes du Roussillon the principal appellations by volume), Vins de Table 14%, Vin de Pays d’Oc 40% and other Vins de Pays 26%. Around 40% of AOC wines are exported.
For AOC wines trading at premier prix or entry level it’s clearly an uphill struggle today. At under €1.5 a bottle or even €1.5-2.5 a bottle in French supermarkets (approximately 50% of the volume in this retail sector) there’s little reason to exist. “France is potentially an important market, but the mass of wines are sold too cheaply with tiny margins, hence the need to export to procure added value,” explains Christophe Palmowski, marketing manager for Vignerons Catalans.
Nor is premier prix in |
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Regional Analysis |
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export markets the solution. Production costs for New World wines are lower, quality often better and prices more competitive, particularly in the hard discount sector.
Breaking down the export figures, volume (en vrac) sales of red Languedoc-Roussillon were down 22.9% by value in 2007 and 24.1% in 2006 compared to 1.2% for bottled wines, while bottled whites actually progressed 7.7% and 9.8% respectively. Add the fact that exports to Germany and Holland (two important markets where hard discount accounts for 38% and 63% of distribution) were down 15% and 17% in 2006 and the picture becomes clearer.
So where do the Languedoc-Roussillon’s AOC wines sell? Clearly, there’s a market where price is not the driving factor and the expression of Carignan, Cinsault, Grenache, Mourvèdre and Syrah the main incentive. In France wines retailing at €5-12 in traditional merchants or cavistes do reasonably well. While in the UK, on-trade specialist Les Caves de Pyrène has seen permanent growth and now sources from 50-odd producers. “Quality and typicity are the two important factors with price less of a problem,” says managing director and chief buyer Eric Narioo.
Among producers there are also individual stories of success. Pierre Bories of the 140ha, family-owned Château Ollieux Romanis in Corbières has seen turnover more than quadruple in the last five years. Part is due to the increase in size of the vineyard (production now averages 600,000 bottles) but the rest is down to quality, marketing and the ability to offer a range of wines that retail at €4-€20. “Value-for-money is the key to success and this we can do with our volume, vineyards and pricing,” explains Bories.
Japan, the UK and Switzerland are the biggest export markets for Ollieux Romanis, the ‘new discovery’ dimension making it easier to sell quality wines. Sales in the USA where the Languedoc-Roussillon has a mixed reception are stable and, says Bories, there’s room for progression once the exchange rate becomes more favourable. This mirrors to a certain extent the list of the region’s top export markets with Germany still ahead in terms of volume and value followed by the UK, Canada, Belgium, Holland, Switzerland, the USA, Denmark and Japan.
Not withstanding these and other positive examples, the sheer volume of AOC wine maladapted to today’s markets, much from cooperatives that have yet to evolve, continues to mar the image of the region. “There’s need for a more coherent offer and assistance for those who want to progress,” says Michel Laroche, producer of the eponymous Chablis and Mas La Chevalière in the Languedoc.
This is not the case for Vins de Pays which account for 66% of the region’s production, in particular Vin de Pays d’Oc which provides the lion’s share at 40%. Exports of French Vins de Pays as a whole were positive in 2006 and |
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Regional Analysis |
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2007 improving 0.4% and 1.4% by value. Vin de Pays d’Oc alone showed an increase of 3% in volume and 2% in value in 2006 with an increase of 6% in volume in 2007.
Vin de Pays d’Oc basically equates to vins de cépage or varietal wines (91% of the production) and it’s this sector that has seen more than a gleam of success. The offer is clearer and more in tune with modern consumption. In terms of production there are less restrictions than in AOC zones allowing vineyards and winemaking to be tailored to the needs of the market. Of major consequence, as well, the leading players in the region have fully embraced the cause, their commercial structures driving sales.
Exports now represent 62% of production with 347m bottles sold in 149 countries, making Vin de Pays d’Oc the leading French export denomination. Styles and colours vary from market to market with, for instance, demand for red varieties (Merlot, Cabernet Sauvignon, Syrah) strong in northern Europe and white (Chardonnay, Sauvignon Blanc) in Asia, while the UK has latched on to growing trends like bi-varietal blends and the increase in demand for rosé. The home market is now progressing even faster, the ease and facility of these wines attracting a new generation of French wine drinkers.
Looking at other advances in the region there are two projects of note. First, 2006 saw the launch of the new AOC Languedoc which geographically encompasses the entire Languedoc-Roussillon zone. The idea is to galvanize the sale of AOC wines by the creation of a generic appellation of reference with which the consumer can identify clearly. The knock-on effect, it is hoped, will be to give added value to the sub-regional and communal appellations like Corbières and Montpeyroux. It’s early days yet, but wines from the 2007 vintage were well received at Vinisud and groups like Val d’Orbieu (via La Cuvée Mythique) are set to support the initiative.
The other important development has been the federation of the region’s four major producers’ associations (CIVL, CIVR, ANIVIT, InterOc) under the marketing umbrella Sud de France (South of France). A yearly budget of €15m euros for the first three years has been allocated with a view to improving market share in France and overseas and enhancing the image of the region. Again, only time will tell if this is a success.
What’s clear is that the Languedoc-Roussillon is in a state of mutation. There’s dynamism in certain sectors and a ready supply of new investors, but equally wines that are unwanted in the market today. The drive for quality and improved margins must continue accompanied by a greater number of companies with the ability and structure to sell the wines.
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