Category: French Wine

The European Union Announces “Exceptional Support Measures” for Wine Sector

The Commission adopted yesterday an additional package of exceptional measures to support the wine sector, following the coronavirus crisis and its consequences on the sector. The wine sector is among the hardest hit agri-food sectors, due to rapid changes in demand and the closure of restaurants and bars across the EU, which was not compensated by home consumption.

These new measures include the temporary authorization for operators to self-organize market measures, the increase of the European Union’s contribution for wine national support programs, and the introduction of advance payments for crisis distillation and storage.

Janusz Wojciechowski, Agriculture and Rural Development Commissioner states:“The wine sector has been among the sectors hit hardest by the coronavirus crisis and the related lockdown measures taken across the EU. The first package of market-specific measures adopted by the Commission has already provided significant support. Nonetheless, the uncertainties surrounding the scale of the crisis at EU and global level, and a close monitoring of the market has led us to propose a new package of measures for the wine sector. I am confident that these measures will provide rapidly concrete results for the EU wine sector and soon provide stability.”

The Exceptional Measures include:

  • Temporary derogation from the European Union’s competition rules: Article 222 of the Common Markets Organisation Regulation (CMO) allows the Commission to adopt temporary derogations from certain EU competition rules in situations of severe market imbalances. The Commission has now adopted such a derogation for the wine sector, allowing operators to self-organize and implement market measures at their level to stabilize their sector and in the respect of the functioning of the internal market for a maximum period of 6 months. For example, they will be allowed to plan joint promotion activities, to organize storage by private operators and to commonly plan production;
  • Increase of the European Union’s contribution: the European Union’s contribution for all measures of the national support programs will increase by 10% and reach 70%. A previous exceptional measure had already increased it from 50% to 60%. This will provide financial relief to beneficiaries;
  • Advanced payments for crisis distillation and storage: the Commission will allow Member States to provide advanced payments to operators for on-going distillation and crisis storage operations. These advances can cover up to 100% of costs and will allow Member States to fully utilize their national support program funds for this year.These measures complement the recently adopted package, which benefited the wine sector through the flexibility provided under market support programs. This included for instance an increased flexibility of tools to control production potential, the so-called green harvesting tool, and the possibility to include temporary new measures such as the opening of distillation of wine in case of crisis or an aid to crisis storage of wine.

In addition, the Commission also launched two calls for proposals for promotion that aim to support the sectors most affected by the crisis, including the wine sector. The two calls will be opened until 27 August 2020.
The commission said it is the first time that it has issued such calls. One call relates to ‘simple programs’, which can be submitted by one or more companies from the same EU country. The other relates to ‘multi programs’, which can be submitted by at least two companies from at least two EU member states, or by one or more European organizations. Janusz Wojciechowski, states that the first package of support measures had “already provided significant support”.

BARON PHILIPPE DE ROTHSCHILD APPOINTS ARIANE KHAIDA TO MANAGE ITS CHÂTEAUX WINES DIVISION

The Board of Directors of Baron Philippe de Rothschild SA has recently appointed Ariane Khaida to the position of Executive Director, Châteaux Wines – this includes: Château Mouton Rothschild, Château Clerc Milon, Château d’Armailhac, and Domaine de Baronarques. Effective July 1, 2020. Ms Khaida will also sit on the Board of Directors of Opus One, Chile’s Almaviva and Domaine de Baronarques in the Languedoc.

Born into a non-winemaking family in the Champagne village of Rilly la Montagne, Khaida spent five years working for luxury goods giant LVMH, two of them as the buyer of Louis Vuitton leathers, a role that saw her select skins all over the world.

In 2014 she was the first woman to be made the head of a major Bordeaux négociant house, running Duclot, owned by the Moueix family.

As the manager of leading Bordeaux merchant houses, Ms Khaida demonstrated her energy, her decision-making ability, her capacity for forward-thinking and her excellent knowledge of the world of fine wines.

She will succeed Philippe Dhalluin, who has decided to retire after more than 15 years as manager of the company’s estates and will relinquish his position as Executive

Director, Châteaux Wines on 1 July 2020.  In order to ensure the smooth handover of responsibilities within the Châteaux Wines division, he will continue to serve as Adviser to the Chairman until 1 December 2020, at which date he will leave the company.

“My family and I express our deepest thanks to Philippe Dhalluin for all his wonderful work. Over the last 15 years, he has taken Mouton Rothschild and our other family châteaux to an unprecedented level of excellence and reputation. He has also been successful in attracting and training the necessary talents to continue our unceasing quest for excellence”, said Philippe Sereys de Rothschild, Chairman and CEO of Baron Philippe de Rothschild SA.

Women in Wine Talks: Leadership in Challenging Times with Maggie Henriquez, President and CEO of Krug Champagne – June 23, 2020 1:00 pm EST

I’m extremely proud to host our upcoming “Women in Wine Talks” with Margareth Henríquez, President, and CEO of Krug Champagne on June 23.  Maggie is someone truly whom I respect and admire as a woman, mother, (now grandmother), and business leader whom I’ve met on many occasions in Paris and Reims.

Here are the details on her upcoming leadership talk:

Join us June 23rd 2020 1:00 PM Eastern Time (US and Canada) for an exclusive in-depth conversation with Maggie Henriquez, President & CEO of Krug Champagne. Ms Henriques will share her personal strategies for success in challenging times!

Les Dames d’Escoffier Ontario (Canada) is proud to host “Women in Wine TalksTM” as an online platform to raise awareness of women in the wine industry to impact positive change. We shine the spotlight on global women business leaders, winemakers, authors and industry experts.

CONCEPT

Women in Wine TalksTM are inspiring conversations, virtual wine- tastings and panel discussions with wine industry experts. “Memorable and Elevated Virtual Experiences.”

Next up:

Women in Wine Talks with Margareth (Maggie) Henriquez Ph.D., President & CEO, Krug Maison de Champagne, and President, LVMH Estates and Wine Division

“The Turnaround CEO”

Maggie Henriquez needs little introduction. She is an extraordinary speaker and inspirational leader, is incredibly dynamic and a visionary. Maggie is the President and CEO of Krug Maison de Champagne and President of LVMH Estates & Wine Division.  She will not only capture your heart; she will fully engage your mind with her talk on Leadership in Challenging Times.

Registration details:

June 23, 2020 1:00 PM Eastern Time (US and Canada) 

To register in advance for this Women in Wine Talk:

https://www.eventbrite.ca/e/leadership-in-challenging-times-with-maggie-henriquez-ceo-of-krug-champagne-tickets-109305076426

Southern French Wine Regions Announce €34M Recovery Plan

At a press conference May 29, members of the southern French wine industry agreed on a comprehensive plan which will aid the sector following the coronavirus disruption.

The “unprecedented” scheme aims to safeguard jobs, boost sales and help the region and its wine producers regain market share over the next 18 months.

Furthermore, it intends to help companies develop multi-year trading partnerships, increase the rate of premiumization in the wines, and safeguard the production of the region’s distinctive dessert wines (vins doux naturels).

The scheme has the backing of the regional council, regional business and marketing boards, wine industry trade unions, the regional Chamber of Agriculture and wine trade bodies including Inter Oc (Interprofessional Council of wines from the Pays d’Oc), IVSO (Interprofessional Council of Wines from the South West of France), CIVL (Interprofessional Council of  Languedoc Wines), CIVR (Interprofessional Council of Roussillon Wines) and the Gardoise, part of Inter Rhône.

A total of €14 (€7m each) will be coming from the Regional Council of Occitanie and business and marketing boards.

Support will be given to companies to assist them with their marketing expenses, including participating in trade fairs, while €0.5m will also be allocated towards a campaign promoting the region’s wines. 80% of the budget (the €14m) will take the form of direct aid for businesses.

A further €20m will come from wine trade bodies. Inter Oc is contributing €14m, while the CIVL, CIVR and IVSO are each giving €2m to the cause.

The recovery plan will be presented to the vote of regional elected representatives in July.

Languedoc winemaker, Gérard Bertrand, said: “The region and all the players in the Occitanie wine sector have come together and mobilized to collectively build a stimulus plan of unprecedented scale in France with regards to the resources that have been contributed.

“With direct aid for wine companies, in particular for marketing, collective actions and promotion, we are ready to act on all fronts: to secure jobs, promote local development of activities and stimulate the reconquest of markets in France and internationally.”

In addition to national government schemes, the region has been supported by a number of measures during the Covid-19 crisis. Wine firms have been able to take advantage of the Fonds de Solidarité Régional (Regional Solidary Funds) which gives aid to businesses who have not had access to a state-guaranteed loan (PGE). Companies have also been given extensions, postponements or exemptions from loan repayments. In addition, the Solidarité Alimentation Occitanie, launched in March, has helped promote local deliveries in order to for the economic activity in the region to be maintained.

Occitanie is the administrative region formed in 2016 from the merger of the Languedoc-Roussillon and Midi-Pyrénées regions

It comprises over 270,000ha, producing 14m hectolitres of wine, and boasts 93 appellations including 59 PDOs. It is viticulturally diverse, with some 150 native and international grape varieties grown. Around 22,600 wine-related companies operate in the region – employing 100,000 people – with a turnover of €1.3 billion. Wine grapes represent 20% of agricultural production in the region (in 2017) and wine worth €925m was exported in 2018.

Sources:  Drinks Business and the Regional Council of Occitanie

 

Pau Roca, Director General of OIV gives his overview of the 2019 global wine sector and the impact of Covid-19

Speaking from the OIV’s [International Organisation of Vine and Wine] headquarters in Paris, by web conference to over 3,000 international wine journalists, and trade, Director-General Pau Roca presented today [April 23, 2020] details of the 2019 wine production, consumption, and international trade. The impact of Covid-19 in the sector was also highlighted.

Here are the important facts and highlights of today’s Conference:

  • The surface area of the world vineyard is estimated at 7.4 mha, which has been stable since 2016;
  • World wine production is estimated at 260 mhl, a marked decrease, compared to 2018 historically high;
  • World wine consumption is estimated at 244 mhl, marking a +0.1% with respect to the previous year;
  • The world wine export market has expanded both in volume, estimated at 105.8 mhl (+1.7%), and in value with 31.8 bn EUR (+0.9%);
  • 2020 Harvest – first estimates of wine production in the Southern Hemisphere indicate low expected volumes for 2020 (with the exception of South Africa and Uruguay).

Vineyard area stabilization

In 2019 the world area under vines, corresponding to the total surface area planted with vines for all purposes, including young vines not yet in production, is estimated 7.4 mha.

Starting with the Northern Hemisphere, overall stability can be observed in the European Union (EU) vineyards, which stands for the fifth consecutive year at 3.2 mha.

Within the EU, the latest available data for 2019 indicates an increase in the area under vines in France (794 kha), Italy (708 kha), Portugal (195 kha), and Bulgaria (67 kha). The vineyard surface area in Spain (966 kha), Hungary (69 kha) and Austria (48 kha), on the other hand, slightly decreased from 2018.

In East Asia, after over 10 years of significant expansion, the growth of Chinese vineyard (855 kha), second in the world by surface area just behind Spain, seems to be slowing down.

In the United States, the vineyard has been consistently decreasing since 2014, and its estimated surface area in 2019 is 408 kha.

In South America, developments in vineyard surface area between 2018 and 2019 showed a downward trend for the fourth year in a row.

The only exception in the continent is represented by Peru that increased by 7.1 kha (+17% / 2018) its vineyard surface area reaching 48 kha.

South Africa’s vineyard surface area remained stable with respect to 2018, at 128 kha.

Australia the area under vines remained stable at 146 kha in 2019; while New Zealand the surface area grew by 1.6 % reaching a record-high of 39 kha.

Production back to the average

World wine production, excluding juices and musts, in 2019 is estimated at 260 (259,0) mhl, marking a sharp decrease of 35 mhl (-11.5%) with respect to the exceptionally high volume recorded in 2018. Overall, after two consecutive years that can be defined as extremely volatile, 2019 brings global wine production back to average levels.

Italy  (47.5  mhl), France (42.1 mhl), and Spain (33.5  mhl), which together account for 48% of world wine production in 2019, saw a sharp decrease in their wine production with respect to 2018.

Other EU countries that registered a decrease in production with respect to 2018 are Germany (9.0 mhl, -12%), Romania (5.0 mhl, -4%), Austria (2.5 mhl, -10%), Hungary (2.4 mhl, -34%) and Greece (1.9 mhl, -8%). The only EU country that, in 2019, saw an increase in its wine production is Portugal with 6.7 mhl (+10% / 2018).

In Eastern Europe, weather conditions were favourable in Russia (4.6 mhl, +7% / 2018) and Ukraine (2.1 mhl, +6% / 2018), while in Moldova the harvest was less abundant in 2019 and the vinified production was equal to 1.5 mhl (-23% / 2018).

In Asia, the new data available for China indicate an estimated vinified production of 8.3 mhl in 2019, marking a decrease of -10% with respect to the already relatively low production level of 2018.

In North America, wine production in the USA is estimated at 24.3 mhl, a decrease of 2% compared to 2018. This slight decline in 2019 does not depend on bad weather conditions or the raging fires that occurred in California (harvest was just before), but it is a response to overcome an oversupply of grapes and wine.

In South America, the overall trend for wine production in 2019 is negative with respect to 2018. However, while in Argentina (13.0 mhl) and in Chile (12.0 mhl) 2019 vinified productions are lower with respect to 2018 but overall in line or even higher than their five-year averages, Brazil (2.0 mhl) registered a sharp decrease in its wine production in 2019 of more than 1 mhl (-34% / 2018).

In South Africa, 2019 production reached 9.7 mhl. This represents an increase of +3% with respect to the low volume registered in 2018, but it is still far from the average production levels recorded before the beginning of the drought that heavily impacted the country for three years in a row (2016, 2017 and 2018).

With regard to Oceania, Australian wine production registers a decline for the second consecutive year reaching 12.0 mhl in 2019 (-6% / 2018). In New Zealand wine production was 3.0 mhl in 2019, a slight decrease of -1% with respect to 2018.

Expansion of the international trade of wine

In 2019 the world wine export market – considered here as the sum of the exports of all countries – has expanded with respect to 2018 both in volume, estimated at 105.8 mhl (+1.7%), and in value, with 31.8 bn EUR2 (+0.9%).

Strong increases can be observed in exports from Italy (+2.0 mhl), Spain (+1.3 mhl), Canada (+0.4 mhl) and Chile (+0.3 mhl). However, significant reductions in exports are recorded for Australia (-1.1 mhl), South Africa (-1.0 mhl), Ukraine (-0.4 mhl) and Hungary (-0.3 mhl).

In 2019 the global value of wine exports is on the sustained growth path started in 2010 reaching a new record high. France was still the most important world exporter in terms of value, with 9.8 bn EUR exported in 2019. There were rises in the value of exports in many large exporting countries like France (+425 m EUR), Italy (+211 m EUR), and New Zealand (+84 m EUR). The largest declines include Spain (-234 m EUR) and South Africa (-73 m EUR).

In 2019 the international trade of wine in terms of volume was mainly dominated by three European countries – Italy, Spain, and France – that together exported 57.1 mhl, accounting for 54% of the world market.

In 2019 the top three importers in terms of volumes were Germany, the UK, and the USA, which together imported 40.4 mhl, reaching 38% of world total. These three countries represent 39% of the total value of world wine imports, reaching 11.9 bn EUR.

The first importer in 2019 is still Germany with 14.6 mhl, even if its wine import volume decreases by 0.6% compared to 2018.

China for the second consecutive year saw a significant decline in its imported volumes (-11% / 2018), reaching 6.1 mhl in 2019. In terms of value, the trend is similar, with an overall downfall of -9.7% compared to 2018, reaching 2.1 bn EUR. The only category that increased both its volume (+8%) and its value (+8%) is sparkling wine, although it represents only 2% of the total imported volume.

Early estimates of the 2020 harvest in the Southern Hemisphere

First estimates of wine production in the Southern Hemisphere indicate low expected volumes for 2020 for the majority of countries, with the exception of South Africa and Uruguay.

In 2020 a decline in production volumes in all South American countries, with the exception of Uruguay, are expected. In Argentina estimated production is 11.6 mhl (-11%), in Chile 10.5 mhl (-12%) and in Brazil 2.0 mhl (-1%), while in Uruguay 0.65 mhl (+11%).

South Africa seems to continue its recovery path from the drought and expects +5% with respect to last year, reaching 10.2 mhl.

In Oceania, Australia expects a lower production level in 2020 estimated at 11.5 mhl (-4%) due to drought and bushfires while in New Zealand (2.9 mhl, -2%) expectations on wine production are by and large in line with 2019, or just below.

These are preliminary estimates and should be interpreted with caution,  given the current exceptional circumstances.

Impact of Covid-19 in the wine sector

At this early stage the information and statistical data available are insufficient to provide an accurate forecast and anticipate the scenario of the vitivinicultural sector in the future. However, due to communication with OIV members (“Member States”), the OIV has certain qualitative information at its disposal.

The feedback given by the Member States reflects a radical change or transfer between distribution channels. The expected overall balance is a decrease in consumption, a reduction in average prices, and therefore an overall decrease in total sales value, turnover, margins and finally profits of the wineries.

As far as exports are concerned, economies in recession are not a promising market to develop, and during this pandemic, the largest consuming countries have been the most affected. Trade flows may recover along with the economy, but some permanent changes could occur.

Alcohol consumption is also being debated. Messages on the positive effects of wine consumption are totally unacceptable and irresponsible.

The same applies to the issuing, under these circumstances, of general statements or biased messages that are the result of ideological concerns about wine consumption, such as abstention.

The OIV’s work follows the Strategic Plan approved by the General Assembly in October 2019 and covers a 5-year period until 2024. In the current context, the objectives and goals of the OIV go hand in hand with the needs that this crisis has highlighted.

The OIV is the intergovernmental organization of scientific and technical nature of recognized competence for its work concerning vines, wine, wine-based beverages, and other vine-based products. It is composed of 47 Member States. In the framework of its competence, the objectives of the OIV are as follows:

  • to inform its members of measures whereby the concerns of producers, consumers and other players in the vine and wine products sector may be taken into consideration;
  • to assist other international organizations, both intergovernmental and non-governmental, especially those that carry out standardization activities; and
  • to contribute to international harmonization of existing practices and standards and, as necessary, to the preparation of new international standards in order to improve the conditions for producing and marketing vine and wine products, and to help ensure that the interests of consumers are taken into account.