Knowledge - French wines are best!

Sadly, for thse who believe this, it is no longer the case and in recent years things have gotten worse for French producers, as those upstart newcomers, the Australians have consistently sold more wine in the UK!

France is losing market share in many export markets because in the past it has failed to recognise and respond to growing competition. In 2003 and 2004 French share of sales to the USA fell behind those of Australia and Italy, while in the UK and other markets, they lag behind Australian shares for the first time. In these markets, many perceive French wines as being poorer quality, less fruity and more difficult to drink than those of their rivals. In addition, they are regarded as being generally more expensive, less reliable and more difficult to understand.

This phenomenon, while recent, is not a sudden one. The 1990’s saw the rise of ‘New World” wine sales. This was characterised by a more consumer rather than producer focused approach in the wine producing regions that comprise the ‘New World’. France’s main rivals have applied a very basic marketing maxim in their approach to gaining market share: “listen to your customer, make your product easy to understand, easy to buy and continue to deliver what you promise.” In essence, build a brand.

One of the key strands of achieving this brand success has come from making wine easier to understand for the consumer. Ironically, France and the other ‘Old World’ regions inadvertently provided the ‘New World’ with part of the impetus to take this approach. In the late 1980’s France was the benchmark against which many producers around the world sought to measure their wines. Bordeaux, Burgundy and Champagne were among appellations which were revered. Global markets were growing, fuelled by rising personal prosperity, creating many consumers new to wine. With this growth many ‘me-too’ branded products such as “Californian Chablis”, “Barossa Burgundy” and “Champagne from just about everywhere”, came to the market. France and the EC moved to ban the sale of these branded wines in the EC and in doing so forced their rivals to consider new ways of labelling and branding their wines. As a result, the ‘New World’ has adopted the approach of identifying grape varieties on their labels. Most ‘new’ consumers appear to find this much easier to understand and use, more so than the concept of ‘place of origin’ preferred by France and the ‘Old World.’

The wines of the ‘New World’ are regarded by many consumers to be fruity, easier to drink, consistent from year to year and relatively inexpensive. During the 1990’s growth in ‘New World’ sales was aided by very proactive action by the producing countries and further facilitated by the failure of French producers and the industry collectively, to recognise competition and respond to it. Several of these rival countries developed very collaborative business strategies for increasing their shares of world markets. These would typically include considerable investment in new wineries and winemaking equipment, to complement the encouragement of
innovation, creativity and the development of systematic approaches to winemaking. This was often coupled to the formation of jointly funded, by industry and government, Generic Promotion or Marketing Agencies with the purpose of promoting the country’s wines, encouraging feed back from the markets and supporting producers in their own promotion efforts.

The prime example of this has been ‘Wines of Australia’, which has successfully positioned Australian wines as easy to drink, inexpensive, reliable; in effect, creating ‘Brand Australia’. This model has been copied to various degrees by many ‘New World’ countries and regions, so for example, as well as ‘Strategy 2025’ from Australia, South Africa has produced its ‘Vision 2020’ and the Californians have their ‘Wine Vision’ setting out their ambitions for future success in global markets.

By contrast, the French wine industry has long been regarded as being producer focused and extremely fragmented. There are too many small producers making the type of wine that consumers do not seem to want. In addition, producer competes with producer, region competes with region. In the last twenty years, France has developed no recognisable producer brands to compete with Penfolds, Hardy’s, Lindemans of Australia or Gallo of the USA.

Until very recently, there were very few, if any collaborative efforts to promote “The Wines of France”. Indeed, there has been relatively little promotion of French wines to consumer markets at all. It is little surprise then that France has been ill equipped to deal with the consumer focused onslaught from Australia and other rivals. Whilst the ‘New World’ was investing in modern equipment and practices for modern markets, French producers did not, preferring to emphasise tradition over innovation. Many, even in France, consider this to have been due to arrogance and complacency.

Yet today, despite now recognising its competitive deficiencies and rivals strengths, France continues to inflict pain upon itself. There are still too many wineries producing poor quality or market unfriendly wine. Having finally realised that they have been outflanked, French winemakers find themselves restricted by the country’s regulations and therefore unable to fight fire with fire. For example, while continuing to protect the integrity of place, Appellation regulations prohibit the use of grape descriptors on front labels, exacerbating the understanding and image problem. These same regulations prevent winemakers from experimenting with some newer winemaking practices, such as use of oak chips or from using different or non- approved grape varieties unless the producer is prepared to declassify the wine below the Appellation Controlee level and thus to drop the wine out of the only internationally perceived quality badge available to French producers.

Recent political problems and currency fluctuations have merely compounded, not created, the difficulties facing France. Evidence for this comes from the fact that in some specific niches France still leads the world. The finest wines of Bordeaux and Burgundy are matchless, having created brands based on quality, luxury and attainability. Whilst in Champagne, perhaps the most widely known wine brand of all, France has a region which is still growing its market share.

France’s loss of its lead position in many markets represents a classic study of marketing failure. Marketing in its truest sense; listening to the customer and delivering what the customer needs. However, with 914 million bottles of wine exported in 2004, France remains a very strong and key player. To regain its position at the top of these markets will require considerable and significant changes on the part of French producers and its industry collectively. However the French should be
encouraged by the thought that many of the remedies lie in their own hands, the big
question that remains is “Will they take them?”      


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