If France didn’t exist, the wine world would have to invent it. Where else would it get so many benchmark wine styles? From Chablis to Champagne, French regions remain the most widely recognised wine ‘brands’ in the world. Moreover, France continues to be the engine of the fine wine trade – despite the much publicised ‘Bordeaux bashing’ of recent times, many consumers, particularly in Asia, display a loyalty to French brands that borders on the fanatic. The figures speak for themselves: data released from the Rabobank Wine Quarterly survey in July showed healthy growth for global French wine exports, which increased by 5.9% in volume and 14.7% in value, giving an average price-per-litre rise of 8%.
Champagne did well in global terms with 7.3% volume and 12.1% value increases, while Bordeaux continued its strong growth with a 10.7% rise in volume and a considerable 26.4% jump in value. Meanwhile, the Languedoc continues to offer a mosaic of different grapes and great value wines that often outclass their New World equivalents.
However, France does have its problems, not least in the UK market where a toxic combination of post-Brexit market volatility and the meteoric rise of Prosecco have conspired to rob Champagne of considerable market share. IWSR data indicates that in the UK and Germany – two key markets for French wine – still and sparkling wine volumes have been steadily falling since 2012, while China remains largely disinterested in Champagne; between 2015 and 2016, sparking volumes (9-L cases) exported to China fell by more than 24%. In addition, competition from the New World is increasing in the mainstream on-trade; France’s wines cannot be as cheap as those of, say, Chile, because land and labour are far more expensive, and economies of scale more difficult.
Overall, though, there’s a tangible sense of optimism emanating from American and Chinese distributors, albeit German and British professionals remain more cautious about France’s prospects, as the following analysis shows.
China
‘Back on track’ is the predominant phrase being used by wine professionals engaged in the Chinese wine market of late. French brands that export to China report that wine sales seem to have recovered from previous tepid growth, caused by the government’s well-publicised anti-corruption drive and the subsequent fall in gifting revenues.
According to data released by Chinese customs, from January to June this year, China imported 254m L of bottled wines worth about $1.146bn, representing a 13.9% increase in volume and a 3.34% increase in value over the same period last year. Moreover, France still ranks as the biggest wine-exporting country to China in terms of volume and value, taking up more than 40% of total market share. “From Sichel’s perspective, China will soon challenge our top European markets for number one position in volume and value,” says Charles Sichel, export director of Maison Sichel. “The positive side of the government’s ban on ostentatious gifting is the heightened awareness it created of Bordeaux wine outside the 150 or so top names.” He says that while the entry level is still king, the mid-level is catching up, and has been the main driver of improved figures over the last 12 months.
Chuan Zhou from Wine Intelligence also believes that the market continues to show signs of maturity and consumer diversification, much to the benefit of French brands without the marketing allure of Cru Classe Bordeaux. “What we’ve seen in recent times is a growing awareness of different French regions, driven by middle-class consumers who are developing their own tastes and preferences,beyond simply buying wine because of the brand association,” he says.
Indeed, Bordeaux’s monopoly on Chinese wine sales appears to be over, at least according to Languedoc-based brand Foncalieu. “Foncalieu opened an office here almost 10 years ago – despite some fluctuation in demand, we have seen consistent sales growth for the past two years now,” says Alexandra Ladeuil, the export and marketing director. “Today, China is our most dynamic market in value after the US. It’s encouraging to see consumers’ desire to learn and expand their knowledge – this is no longer simply a prestige- and image-driven market.”
Leading brands also claim that white wine is making inroads into a traditionally red-obsessed market. Leeuwin Estate’s joint CEO Simone Furlong is confident of further growth in the white wine category if investment into education continues at the current rate: “We are currently seeing an increase, year-on-year, in demand for our white wine. We believe this will continue to grow over the next few years.”
Ladeuil agrees: “In China, we’re seeing increased demand for aromatic whites or pale rosé in first-tier cities, as both pair very well with Chinese food.”
However, sparkling wine is not doing so well. Export volumes continue to fall, despite a significant investment in education from bodies like the CIVC.
Germany
According to IWSR data, French wine exports into Germany – both still and sparkling – have fallen consistently in volume and value since 2012. In that same year, Germany was France’s leading export market, a position the country lost to China in 2016. “Following the general trend, mature markets like Germany have lagged behind the US and China in growth, but this was to be expected,” says Alexandra Ladeuil. “However, in these price-competitive markets, I do believe we’ll see growth areas thanks to our price-to-quality ratio and the unique story behind each wine, which matches with the consumer demand for more authenticity.”
Nonetheless, German wine professionals are circumspect when asked about France’s longer-term prospects in the market, particularly in the off-trade. Sommelier/buyer Stephanie Döring works at retailer Weinladen, and has observed a shift among German Millennials toward domestic wines. She attributes this as one of the key reasons behind France’s loss in market share. “Italy has long been number one in Germany,” she says. However, domestic wines are once again fashionable, and increasingly I see our customers requesting more and more German wine. In retail, France traditionally held a strong position in the middle and lower price segment.” She then outlines the Loire, Languedoc, and Chablis as the most popular French wine ‘brands’, while Jura, Alsace, and Bordeaux continue to struggle, she says. “I worked in London for some years as a sommelier. I found it much easier to sell high-end Bordeaux and Burgundy there compared to Hamburg.”
Yet Rienne Bilz, head sommelier & beverage director for the MASH restaurant chain, claims that top-end Bordeaux is a key player in the German on-trade. “Of the big French regions, Bordeaux is most highly regarded in Germany along with Champagne. Lesser-known regions like the Languedoc have no sizeable presence in the market,” says Bilz. “Bordeaux is big in the prestige on-trade, yet with the domestic production of Spätburgunder increasing in quality, many people would rather drink domestic Pinot. I sell more red Burgundy to non-German Europeans.”
However, Bilz also reports that sales of white Burgundy, and white wine in general, have risen considerably in her restaurants over the past 12 months. She argues that the real opportunity for growth in Germany lies with newer white wine appellations from established/famous regions, rather than from the emerging regions themselves. She cites the Loire Valley as a perfect example. “Recently, we had success with newly created AOCs such as Oisly in Touraine. Despite a higher price point compared to regular Touraine Sauvignon Blanc, this AOC seems to have filled a gap just below the star AOCs from the Loire such as Sancerre and Pouilly-Fumé.”
Great Britain
French wine sales in the UK have been in uneven decline for over a decade now. Bordeaux and Champagne have been the regions hardest hit by this fall in demand; Bordeaux volume exports were 253,000 hL in 2005 compared to 184,000 hL in 2015 – volumes dipped 10% in 2016 to 165,000 hL. “Today, some on-trade outlets in the UK do not list even one French wine, let alone a wine from Bordeaux,” observes Leigh Claridge, sales manager for Maison Sichel UK. “Bordeaux bashing has been going on for many years now – ‘prices too high, does not represent value for money, complicated labelling, not enough information on the back label, if there is one, etc.’ In addition, the New World continues to eat into Bordeaux/French sales.”
Nonetheless, CGA analyst Mark Newton reports that France still accounts for one in four bottles of wine sold in the UK on-trade, with a robust presence in the premium sector.
“At Ormer, it’s a case of the usual suspects at the top of our list,” agrees Ormer Mayfair’s head sommelier, Andreas Rosendal. “Grand Cru Classe Bordeaux and higher-end wines from Côte-d’Or probably account for 90% of the sales. Consumers in the market for fine wine can’t get enough of them.”
However, the picture becomes far more complex when shining the spotlight onto the mainstream on-trade – particularly leading chains – and the lower/mid-price points of a list. A combination of Brexit-induced inflation, a small harvest in 2016, and the growing popularity of the easy-to-decipher labels of Chile and Argentina has hit some mid-priced French styles quite hard. Even celebrated appellations such as Chablis and Sancerre are struggling more and more to capture consumer attention, they claim. “The price increases seen in the Burgundy region in recent years following a succession of very small harvests is starting to become apparent with a noticeable impact on sales,” says wine buyer Bérenger Piras.
Morgenrot, a leading UK importer, agrees: “Today, our French wines make up around 10% of our total wine turnover, and they are the third-largest proportion of our sales after Spain and Italy. However, five to ten years ago France would have accounted for a lot more,” says commercial director John Critchley.
Vin de Pays and varietal-led wines from regions like the Languedoc are in growth (albeit at price points that generally offer less-attractive margins) as consumers look to grape first rather than country. However, increased competition from the New World combined with pricing and supply issues on the back of a bad 2016 harvest is going to put further strain on French wine sales in Britain in the coming years.
USA
French rosé appears to be the current darling of the US on-trade – sommeliers and producers tell tales of rocketing demand, even in states not blessed with eternal sunshine. “The appetite for Languedoc premium wines (above $10.00) is still there and we’re also seeing a strong demand for our pale rosé; Americans now tend to consume rosé all year long, which is an exciting development,” says Foncalieu’s Alexandra Ladeuil.
Trends in the US wine market include premiumisation and the growth of sparkling wine and rosé, all factors which benefit French brands with an eye on export. According to Nielsen data, French exports grew by 14.2% in value in the first half of 2017; France currently accounts for more than 75% of all American rosé imports, with demand expected to grow as Millennials continue to embrace the category.
IWSR data also indicates consistent growth in French wine sales in the US market, with Provence, Burgundy, and Champagne doing particularly well. The dynamic east and west coast on-trade have been a major catalyst for this growth, as Americans perceive premium French brands at the top of the wine hierarchy. “France continues to be a strong performer for us – luxury French brands are held in high esteem,” agrees Cedric Nicaise, wine director at Eleven Madison Park in New York.
The LVMH luxury Champagne portfolio also continues to thrive in the US, particularly Krug and Dom Pérignon. “The biggest growth in Krug sales has been in the US and Japan,” says Krug CEO Margareth Henriquez. “The American market has been a key focus for Krug over the past five years – previously the brand was not well positioned and distributed in the US. However, sales in the prestige on-trade have dramatically grown of late.”
French producers emphasise that brands should not limit their focus to the US east and west coasts. “For 25 years the US has been a key market for Sichel. The reason of our yearly increased performance is that we consider the US as 50 different markets,” says Charles Sichel. “Our goal is to travel to every single state, work the market, and build long-term relationships with our partners in each city.
Remember that the more popular the city, the more competition you’ll face, so success for French brands can often come in the less famous urban areas.”
According to Sascha Speicher, editor-in-chief of Germany’s Sommelier magazine, Bordeaux and Champagne are by far the biggest value segments of French exports to Germany. “In volume it’s Bordeaux in the AOP-Categorie and Pays d’Oc in IGP-Wines.” He says the fastest-growing segment is Vin de France.
