Analysis: How France is holding its own in global wine production despite difficult 2013 vintage

By Erin Smith

Published: 04 November, 2013

In response to last week's report from Morgan Stanley Research, which revealed a possible global wine shortage on the horizon, Harpers.co.uk is taking a closer look at key wine producing countries to assess whether they may or may not be contributing to the the global wine shortage hype. Today we look at France.

France

For decades, France was the largest country producing wine in world. But in recent years France and Italy have been battling it out for the top spot as the largest wine producer globally, with Spain hot on their heels. Italy is expected to come out top for the 2013 vintage with France in second place.

France, though, remains a critical player in both production and consumption levels of wine, and thus has a large impact on global wine supplies. But are wine production and consumption levels in France pushing us towards a global wine shortage?

Consumption

"The French remain the largest consumers of wine, with consumption maintaining a positive trend since 2010, following decades of decline," according to the Morgan Stanley Research report.

France AgriMer, a branch of the French Ministry of Agirculture, reported that in 2010, the average amount of wine consumed per person in France was 46.6 litres per year, down from 104 litres in 1975. In the past quarter of a century France has reduced its wine consumption by more than half.

The drastic decline in consumption is due to the fact the average Frenchman and woman does not now drink wine every day. Recent media reports have claimed just 17% of French people now consumed wine almost every day in 2010, compared to 51% in 1980.

According to the Morgan Stanley figures, France's consumption as part of the global wine market dropped from 15% in 2000, to consuming an estimated 12% of the wine produced globally in 2013.

Although consumption levels have now appeared to have stabilised, the decline of wine consumption in France has not been a contributing factor to any potential global wine shortage. Quite the contrary it has freed up more wine to be sold on the global wine market.

The graph below shows the excess of supply compared to the demand within the French wine market.

Production

There is no doubt that production levels in France have been hit in recent years due to bad weather having an adverse on yields and harvests in many of its key wine producing regions, most noticeably in Bordeaux and Burgundy.

France was cited in the Morgan Stanley research when it said: "Overall global production fell 5%-6% in 2012 to the lowest level in 40+ years. This was primarily the result of large declines in European production as a result of poor weather conditions. France in particular saw a sharp fall of 20%."

This has clearly resulted in ripple effects being felt in the global wine supply. The 2013 vintage is also estimated to be a very challenging year, which will further strain inventories and the global wine supply.

But, in a report released last week by the Organisation Internationale de la Vigne et du Vin (OIV) it is not all doom and gloom for the 2013 French wine harvest. It reported: "In France, even though 2013 vinified production remains modest at slightly over 44 Mhl, an increase of 7% has nevertheless been recorded compared with the very low 2012 production (41.2 Mhl)."

The OIV expects France to be the second largest wine producer in 2013, behind Italy, despite having a challenging harvest, with the estimated production levels provided by the OIV putting production in line with the 2010 harvest.

Global consumption levels may be on the increase, but so is global wine production, according to the latest OIV figures. It states: "The 2013/2012 relative change is therefore very marked, between +7.1 and +10.5%, and so, on average, is up sharply by nearly 23 Mhl compared with vinified production in 2012."

So despite the doom and gloom of yet another challenging harvest in France, things on the whole are on the up when it comes to overall production levels.

Click here for an analysis of Australia's wine production levels for 2013 and how it is contributing to the global picture.

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