Earlier this year, as it abandoned zero-Covid policies, the Chinese government hoped to unleash a stampede of consumer spending, saying consumption would be – or rather needed to be – the main driving force of the economy.
International onlookers waited with bated breath, not least European wine makers. Sales to China have been dwindling for years and last year alone China slashed its wine imports by a quarter.
This week, French producers will start destroying gallons of some of our favourite tipples after more than £170 million was set aside by the government to manage the glut, specifically in the Bordeaux and Languedoc regions.
The intervention comes as consumer behaviour in China and beyond continues to shift in the wake of the pandemic and as an increasingly environmentally-aware population considers their consumption – not only of wine but other goods.
Recent rises in the prices of food and fuel, linked to rocketing global energy prices and the Russian invasion of Ukraine, have seen buyers reduce their spending on non-essential goods. For producers in the world’s biggest wine making area, the figures are stark. As their production increased by four per cent in the year to June, consumption tanked, even in domestic markets; down 34% in Portugal, 22% in Germany, 15% in France, 10% in Spain and seven per cent in Italy.
The French government’s action may soon be mirrored elsewhere to support struggling producers and shore up prices. But is it sustainable?
Wine producers across Europe and beyond are under pressure to adapt to changing consumer behaviour, driven by China, but also by the long-term trend towards wine alternatives, including beer and other drinks.
In the words of French agriculture minister Marc Fesneau, the industry must adapt – and fast.
But wine makers themselves are urgently calling for intervention from the EU, akin to those from Europe’s last so-called ‘wine lake’ in the mid-2000s, which forced the 27 member bloc to reluctantly reform its agriculture policy and introduce heavy subsidies.
With EU support spending already exceeding £1 billion a year, a repeat seems unlikely. All of which leaves many producers with nothing else for it than to drown their sorrows and wonder: “what next?”.
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