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FRANCE: L’assurance de qualité

With rising costs and cash-strapped consumers, times look tough for French wine exporters. But, finds Patrick Schmitt, with its reputation for quality and value, France should weather this storm well

Weathering the times must be an understatement for French wine exporters, who are struggling to shelter from a torrential downpour of negative influences – be it a rising currency, increasing raw material costs, a slowdown in the world economy and a small harvest in 2007, as well as little hope for a greater crop this year. The impact of this convergence of factors is already being seen statistically – for the first six months of 2008, France has suffered a fall of almost 13% in still wine exports, a result of a 4.5% drop in shipments of AOC/VDQS wines and near 19% decline in vin de table and vin de pays. And in sparkling, even Champagne has shown a dip.

A key concern is that rising costs in France (and elsewhere in the Eurozone) are coinciding with a consumer increasingly strapped for cash. But, is France better placed than most to manage the so called credit crunch?

Certainly, with some 800,000 hectares of vineyards covering a vast array of varietals, regions and price points, France’s diversity is proving the country’s strength when times are tough. “France is in a good position at the moment,” says Richard Nunn, director of Louis Latour. “It should never be complacent but it is well set to weather the storms because it has been making wine so long and its fragmented set up, while less advantageous when the market is on the rise, is beneficial when there is a fall – a big deal with a supermarket can be fantastic but it can also be catastrophic.”

There is also a feeling that when consumers are closely counting their costs, they tend to return to wine-producing regions they know – the so-called classics such as Sancerre or Chablis. And France’s regional brands offer reassurance, as well as an expectation of quality. “The classics are making a comeback,” says PLB’s buyer for France, Nick Tatham MW. “Chablis, Sancerre, Châteauneuf have all been in high demand and it has been much harder to find decent sized parcels. But part of the reason for this is that new customers from Asia, Russia and China are starting to buy the classics.”

Value for money
But what about cost? Does France offer value for money? “Yes,” says Patrick McGrath MW, managing director of Hatch Mansfield. “The only aspect playing against it is currency – France is 15% less good value for money than a year ago.” The country’s current decline in the UK off-trade (down 1%) is a reflection that France, due to a stronger euro, has not been able to afford promotional slots in Britain’s major retailers. “The bottom end has been squeezed out by the likes of three for 10 on California,” says McGrath – and France’s average price in the UK off-trade is £4 (Nielsen MAT July).

Interestingly, according to Bottle Green’s operations and marketing director Richard Hitchcock, “In the current climate there are those that want the security of what they know, and those that look for promotions.” France it seems, is finding it hard to provide both.

However, there are “large pockets where France offers incredibly good value”, believes Hitchcock. “The difficulty is getting people to reappraise the country, something is stopping the consumer, most probably other promotional noise.”

But where are these areas of value? In general terms, above £4, there are places the UK trade repeatedly cite as sources of well-priced and exciting wine. These include, in particular, the Languedoc and south of France, the Rhône, Bergerac, the Loire and Beaujolais. Of course, in some cases, the potential is still untapped, however, in general terms, “France’s branded offering has really got its act together now”, according to Hitchcock.

He and others wonder whether it’s time for a Beaujolais revival in the UK. “As the lighter wine style debate comes to the fore maybe demand for Beaujolais will increase?” asks Hitchcock.

For Dominique Vrigneau, export director at Thierry’s, Beaujolais is “completely undervalued despite increasing consistency”, although he thinks “it could be an interesting story for next year. However, Louis Jadot is already enjoying increasing sales in the UK with its Beaujolais Villages and McGrath, at Hatch Mansfield, describes the wine’s performance as “remarkable, considering duty pushed the wine over the £8 barrier”.

Certainly Louis Latour has been enticed by the potential charms of Beaujolais, having bought Maison Henry Fessy in the region in January this year. “Maison Latour has always had an eye for an opportunity,” says Nunn, citing the producer’s Ardeche project in the late ‘70s , then the acquisition of Simmonet Febvre in Chablis four years ago, and now expansion into Beaujolais. “But,” adds Nunn of the latter project, “Louis Fabrice [Maison Louis Latour CEO] is looking a long way down the line. Beaujolais has had a tough time but maybe one day you can plant Pinot Noir or Chardonnay in the right places in the region?”

Côtes du Rhône

French regional success story, Côtes du Rhône, is looking to build on sales growth in the UK with a new marketing campaign.

As reported in last month’s drinks business, (page 100-101) the region’s striking and amusing print advertising featuring cartoon animals has come to an end after 10 years.

Replacing it is a photographic approach continuing the “Think Red, Think Côtes du Rhône” theme. From this month, expect to see posters on the London Underground which suggest a glass of red wine in a series of unexpected situations.

Inter Rhône has doubled its UK marketing spend to £500,000 for this year in the hope it will further raise awareness for the wine region.

Classic regions
When it comes to freedom from varietal strictures, however, it is the Languedoc that provides the potential for experimention, and on a commercial scale. “The Languedoc is a breath of fresh air in France and the potential is huge,” says Catherine Monahan,  owner of Clink! Wines. “The producers there are really interested in what the UK market needs. We are launching Le Beast from the Languedoc, and we hope to add some interesting marketing to the amazing wines from the region, as well as make French wine a bit more fun.”

Similarly, Vrigneau, of Thierry’s, notes that “the Languedoc contains superb wines and can deliver at all price points”.

However, PLB’s Tatham remains less convinced. “The Languedoc does seem to be going slightly backwards, along with vins de pays, most of which are from the region. The wines are suffering because of price positioning – there is so much pressure from the major retailers to supply wine for below £4 and with the strength of the euro, despite the fact the Languedoc specialises in cheaper wines, it is virtually impossible to supply offers such as three for 10 – except using vin de table, but that’s not very exciting.”

However, for Gérard Bertrand, Languedoc brand owner, the Languedoc should be aiming higher, both in terms of price positioning – above £5 rrp in the UK – and in terms of image. “The Languedoc has a good potential for growth in the UK – there is a lot of dynamism with varietal wines and we are starting to see the development of the appellation wines. And it is our aim to help consumers understand the difference between wines with an expression stronger than a varietal, but one of terroir. We can produce Corbières, Minervois, Fitou, only in those areas. And we need to promote appellation wines because the consumer gets tired of Merlot or Shiraz.”

Also looking to develop the region, but taking a different approach, is Bibendum, which has begun a new collaboration with Foncalieu. The result will be a new label “designed to bring to mind classic regions such as Chablis or Sancerre, but at credit-crunch-friendly prices, as Vin de Pays d’Oc,” explains Tim Marson, French wine buyer at Bibendum. Wine names include the likes of Chablisse, Bord de l’Eau and Neuf Papillon.

Another project concerns Boisset and Bibendum in the South of France. A just-unveiled brand, Les Petits Detours is “a range of vin de pays wines from ‘unknown terroirs’ categorised by the French AOC system as VDP Zones. Many of these areas, hitherto little known in the UK for their wine, are well known by consumers as a holiday destination and the range focuses on popular destinations such as Carcassonne, Toulouse and Beziers,” explains Marson.

He also justifies the decision to embark on this and further French projects. “There is a renewed interest in French wines because they provide a style of wine that is on-trend in terms of taste – they are fresh and food-friendly. Also, there is a security with French wines, they are always considered the benchmark, and people want security in times like these.” As for the regional focus, for Marson, Languedoc, Roussillon and the southern Rhône provide the potential because they are a source of good quality wines at reasonable prices.

And notable among the French wine regions is the Rhône, which simply appears to be on a roll in the UK market. Southern Rhône in particular seems to be highly popular, including the appellation contrôlées Gigondas and Vacqueyras. Why? “The wines suit the UK palate,” says PLB’s Tatham, while Bottle Green’s Hitchcock simply describes the wines as “cracking”. For Vrigneau, at Thierry’s, the Rhône may already be doing well in the UK, but still offers potential for growth. The region is helped, he says, by the presence of “a very clear hierarchy from £3 to £15 plus and the fact the Rhône is easily identifiable as a brand [see boxout on p41 for more on Rhône marketing]. Also, there’s Châteauneuf du Pape, which despite a £10 entry price, is seeing demand outstripping supply.”

Loire revivial
Despite the repeated emphasis of southern French wine regions for commercial opportunities, the Loire also seems to be on the brand builder’s radar. For instance, Tatham thinks the region “has the potential to make a comeback. There is a huge interest in Sauvignon Blanc as the new Chardonnay and good wine is being made in the Loire.” Similarly, Hitchcock is looking to the region for the French connection brand, “because of the breadth of choice across the various subsections and the UK trend towards lighter wines”.

However, Muscadet, also from the Loire, fills Tatham with less optimism: “There is some cracking wine, especially when sur lie and prices haven’t risen for six or seven years, but it is just not made from a very sexy variety.”

Where else offers value in France? Between £4-6 Bergerac appears able to supply interesting wines at commercial volumes, while this feature has yet to touch on Bordeaux, where branded offerings, such as Mouton Cadet, have proved capable of adapting to the demand for more fruit-forward wine styles at mid-market price points. Also, at £9.99, Bordeaux négociant Barrière Frères and New Generation Wines have developed two new wines for the UK market – Grand Bateau Blanc and Rouge.  Ben Llewelyn, sales and marketing director, believes: “The sub-£10 Bordeaux category needs to be shaken up, and there are so many own-label offerings. We think this [Grand Bateau] is something really interesting – it is fruit forward and well packaged.”

Overall, in the UK market, “France is growing at every single price point abouve £5,” according to Vrigneau, quoting summertime Nielsen statistics. “And that means that consumers who buy at this level clearly believe the wine is good.” Similarly, Matthew Dickinson, commercial director at Thierry’s, adds, “There is no doubt that France does £5+ better than anyone else (NZ is too niche and too white-biased to compete effectively). Offering value is not just about providing low prices but also about offering cracking value for money at any level. Wines like Châteauneuf are the envy of other countries. Where else can you sell such huge volumes and run out, despite the entry point being £9.99? This suggests that consumers are not just looking at cheap wines but are also prepared to pay for a perceived great value at higher prices.”

While France is increasingly incapable of operating at the entry-level – Spain is the source of Europe’s cheapest consumer-friendly wines – France crucially offers wines of quality, and not at the expense of character. 

db © October 2008

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