Introduction
Specificities and Challenges

I.1. Characteristics of the French wine sector: framework data and challenges

I.1.1. Why this book?

Wine is a particular product in many respects; the particularities attached to it - some of which are more intrinsic, others more constructed - shed light on the basis of certain constraints or opportunities that have emerged in the management of wines on the markets, which are themselves rapidly developing. This sectoral specificity deserves to be considered in all its dimensions and questioned in its historical roots.

A cultural product, of pleasure and even more leisure than food, a product whose traditional character has long masked the capacity for innovation, a product that is highly regulated and frequently supported by public policies, a product that has often attached its value to an image, sometimes a mythology, an anchor in often specific regions, and a product which has experienced an original form of globalization that is both overdue and rapidly growing. We could continue to list equally original characteristics of wine within the world of beverages and agri-food, to the point that it has remained an "agricultural" product from the point of view of European regulations.

Such original characteristics undoubtedly stem from a particular market dynamic, the behavior of actors and organizational patterns that must be understood if we want to consider favorable prospects, and support them in a context of rapid change and new challenges1.

I.1.2. Wine in France: key figures and global trends2

In France, wine is an integral part of the country's agricultural, food and cultural history and identity. The accumulated know-how and image of French products have made France one of the most emblematic "wine countries". In 2018, France had about 786,000 hectares of vines, with a production of approximately 46.4 million hectoliters (Mhl)3. Thus, France is the second largest producer in the world by volume, behind Italy. French production represents 16.5% of world production. In terms of surface area, one out of every 10 hectares of vines in the world is located in France.

France mainly produces still wines (3/4), in red (55%), white (26%) and rosé (19%) varieties. The wine sector is the top agricultural sector in terms of the value created. It employs nearly 558,000 people, including 142,000 winegrowers - of whom approximately 84,000 are members of one of the 690 French cooperative cellars - 300,000 direct jobs, 38,000 merchants, 3,000 sommeliers, 10,000 wine merchants and 15,000 employees in the wine departments of the supermarket distribution sector (France Agrimer 2018). Nearly 18 Mhl are produced on 330,000 hectares in France, as part of the cooperative system (cooperatives, SICA4 and Unions) (Coop de France 2018).

In terms of consumption, two-thirds of national production is consumed in France. 85% of French households (23 million households) consume wine at home (Kantar World Panel 2017). However, this is a downward trend, with a current average of 43 liters/person/year, compared to 120 liters in the 1960s. 16% of French people are regular consumers (once or twice a week) whilst 55% are occasional consumers (France Agrimer 2015). In terms of distribution channels, 5 out of 10 bottles are bought in supermarkets, 3 in cafés, hotels and restaurants, and the remaining two are either sold directly or through a wine merchant. Almost all coffee shops and restaurants in France (96%) offer wines by the glass (nine items on average for an average price of 4 euros per glass).

Wine in France is also a patchwork of terroirs (grape varieties, soils, microclimates, cultural practices), appellations and winegrowing landscapes. Nearly 10 million wine tourists (42% of whom are from abroad) visit the 10,000 French wine tourism cellars or the 31 museums dedicated to wine in France. 67 wine tourism destinations have been awarded the "Vignobles et Découvertes" label (Atout France 2016).

I.1.3. France, a major player in the international wine trade

Internationally, France is a large winegrowing country, which is part of a small group of countries, characterized by both high production volumes/values and international trade; some countries are characterized more by high levels of consumption and low production (e.g. England or Germany); others are in the opposite situation: high production and low domestic consumption (e.g. Chile). The group of countries with high production and consumption includes the other major traditional players (Italy, Spain) as opposed to two other groups (the new winegrowing countries: Australia, Argentina, Chile, South Africa, etc.), and the emerging winegrowing countries such as China, Japan and Turkey.

The French model, characteristic of traditional winegrowing countries, differs from that of the new countries in several respects: strong territorial anchoring and connection to the terroir5, numerous appellations and wide ranges of products and prices, low share of "marketed" wines or major brands. In short, this model is traditionally based on a form of marketing, sometimes (incorrectly) referred to as "product marketing", while the more aggressive model at work in the "new" countries would focus on anticipating demand and continuously adapting products.

In value terms, France is the world's largest exporter of wine, ahead of Italy and Spain, with 29% of the total value. Wine is thus a strategic product for French exports. Wines and spirits represent the second largest surplus in France's trade balance (behind aeronautics and ahead of cosmetics) and the largest in the French agri-food industry. In 2018, France exported nearly 14.9 Mhl for nearly 8.9 billion euros (the equivalent of more than 100 Airbus aircraft). However, this observation masks major disparities between champagne, grand cru and other cognacs that are highly valued on the export market, and less well-known wines whose prices remain modest on the international market (approximately ?3 per liter on average).

French exports are mainly (almost 60%) destined for European countries, led by Germany and the United Kingdom. Nevertheless, the main destination for French wines remains the USA (16% of the total value exported, mainly in bottles). China is the fourth most common destination (7% of the value) with a recovery in export volumes since 2013. Even in decline, the French domestic market represents the main outlet for French production (60% of the volume). In 2018, 3.5 billion French bottles (out of the 4.8 billion produced) were consumed in France. With nearly 27 Mhl, France has long dominated the ranking of countries, in terms of wine consumption (domestic market). Since 2011, with a downward trend in the volume of wine consumed in France, the USA has been in first place, with 31 Mhl. Finally, France also imports wine, particularly in bulk from Europe (Spain). In 2018, French imports reached nearly 7.5 Mhl. Most of them are Spanish wines (73%), in bulk, intended for blends, resold and often re-exported as wines without GIs6, branded wines, base wines for sparkling wines or the production of brandies.

I.1.4. French specificities: organization of the sector and regulatory framework

More than an agricultural product, wine is an ancestral tradition, a mythological product and an ambassador for France's gastronomic excellence abroad. Viticulture takes place in 66 of France's 96 departments (excluding the French overseas departments and territories). While vines represent only 3% of agricultural land, wines and spirits represent 15% of the value of French agricultural production (12.5 billion euros in 2018). Big name appellations/products or grape varieties are associated with French wines (Bordeaux, Burgundy, Champagne, Cognac). The French wine sector involves many institutions and organizations (Smith et al. 2007). 15,000 jobs are recorded in research, inter-professional organizations, trade unions, chambers of agriculture, etc.

Two specificities of the sector in France can be mentioned:

- First, the classification of French wines follows the system of appellations. There are 368 registered designations of origin (protected under the European Union, AOC/AOP) and 74 protected geographical indications (PGIs) (INAO, 2016). Almost half (47%) the volume of production is composed of AOC, 28% of PGI and only 8% are without geographical indications (GIs). These appellations refer to distinct terroirs that make up the specific characteristics of French winegrowing regions. These appellations also refer to strict specifications in terms of quality, grape variety and cultivation practices, controlled by the Institut National de l'Origine et de la Qualité (INAO).

- The second specificity is related to regulatory aspects. Since 1991, wine communication, promotion and distribution have been controlled under the loi Évin, which aims to prevent alcohol consumption among young people. Thus, the media, content of messages and promotional strategies follow strict rules (no television advertising, no direct encouragement to consume, etc.). Amended several times, this law remains a rather restrictive legal framework, according to wine companies of other countries who wish to market their products in France.

I.1.5. What are the prospects for French wines in the world?

In terms of volume,...