In 2023, France expanded funding for a programme to distil nearly 80 million gallons of surplus wine into industrial alcohol; the measure aimed to ease pressure on the market

In 2023, France took an unusual initiative to tackle a growing wine surplus challenge. They paid the producers to remove eligible wine from the drinking market and send it to distilleries. This measure was initially designed to cover up to 3 million hectolitres of wine, which is equivalent to about 79 million US gallons. And after a surge in demand, the government ultimately made available as much as €200 million for the crisis-distillation programme. The wine was not simply poured away; instead, it was distilled into alcohol intended for non-food uses, including industrial and energy applications.Following a combination of falling consumption, weaker sales and accumulated stocks faced by producers, particularly in parts of southern France and Bordeaux, the intervention came. The European Commission noted that this crisis reflected reduced consumption, inflation and a good 2022 harvest, contributing to increased wine availability. For producers already holding unsold wine, storage became an issue as the harvest approached, as wineries needed space for incoming production.This pressure was not evenly distributed across the French wine industry. The French crisis-distillation initiative was particularly aimed at certain red and rosé wines, instead of treating every variety and appellation in the country alike.Why France found itself with surplus wineA single bad harvest was not the root of this challenge. French wine consumption had been undergoing a long-term transformation, with red wine losing ground over time. The International Organisation of Vine and Wine reported that French red-wine consumption fell from around 17.8 million hectolitres in 2000 to 9 million hectolitres in 2021. This showed a decline of roughly 49%. Red wine’s share of French wine consumption also declined substantially during this period.Inflation reduced consumers’ purchasing power, and changing post-pandemic consumption patterns also affected wine sales. Concurrently, the European wine market was dealing with substantial supplies, with reports suggesting that the good harvest in 2022 contributed to the accumulation of stocks, while weaker demand left producers with more wine than the market could readily absorb.According to FranceAgriMer, French wine exports in 2023 fell 9% in volume as compared to the exports in 2022, while the export value declined by 3%. The organisation attributed the deterioration in part to economic conditions affecting major markets and noted that stocks accumulated after the pandemic continued to influence trade. This did not mean that France suddenly lost its overseas market. Instead, this indicated that weaker export volumes reduced one of the outlets that could have otherwise helped absorb domestic production.On the other hand, production itself was far from collapsing. French agricultural statistics put the country’s 2023 wine production at roughly 48 million hectolitres, which was above the 2022 level. The growers in affected regions were put in a difficult position with these results. Wine that remained in tanks and cellars represented tied-up capital and occupied storage capacity, while selling large quantities at reduced prices risked putting further downward pressure on the struggling market. Removing some wine from the beverage supply was therefore aimed at addressing the immediate inventory problem rather than simply compensating producers for unsold bottles.The €200 million interventionIn 2023, FranceAgriMer established an initial programme with an €80 million budget. Eligible producers could send qualifying red and rosé wine for distillation, with the resulting alcohol required to be directed toward non-food uses. The rising demand for the programme highlighted that the initial envelope would not be enough. The country’s agriculture ministry reported that applications submitted during the first phase represented more than 4.4 million hectolitres (roughly 116 million US gallons), substantially above the roughly 3 million hectolitres that the programme was initially designed to accommodate. Subsequently, the government increased the resources available for the operation, bringing the maximum budget to €200 million, which successfully expanded the program's capacity to absorb and destroy the 4.4-million-hectolitre (116 million gallons) surge.European Union rules required the resulting alcohol from the process to be kept out of the food-and-drink industry. Depending on the destination, such alcohol could be used for manufacturing or commercial fuel purposes, meaning the programme recovered some material value while ensuring that the excess wine no longer competed with wine producers selling for consumption.The crisis-distillation programme could address an immediate stock problem, but it could not reverse years of changing consumer preferences. Removing millions of litres from the market could reduce the pressure on prices in the short term. However, it would not automatically restore demand for the wine varieties that consumers were buying less frequently.This was why the French government pursued measures aimed at reducing long-term production pressure. They supported vineyard grubbing-up and restructuring measures intended to help growers adapt where existing production was no longer economically viable.Catch the latest World News and Live updates. Download the TOI app.