France is battling a wine crisis, with the government announcing it will provide $336 million in funding to the industry to destroy surplus supplies and support producers.

An initial European Union fund of 160 million euros announced earlier this year for wine destruction has been increased by the French government.

The funding is in response to falling consumption of wine in Europe, over-production and the cost of living crisis. Younger drinkers are also turning increasingly to alcohol-free drinks.

The French Minister of Agriculture and Food Marc Fesneau announced on Friday that most of the money will be used buy excess stock, with the alcohol converted into items such as hand sanitiser, cleaning products and perfume.

The agriculture ministry also announced 57 million euros in funding in June to fund the pulling up of around 9,500 hectares of vines in the Bordeaux region, while other public funds are available to encourage grape-growers to switch into other products, such as olives.

The money was “aimed at stopping prices collapsing and so that wine-makers can find sources of revenue again,” but Fesneau stressed that the industry needed to “look to the future, think about consumer changes … and adapt.”

European Commission data for the year to June shows that wine consumption has fallen 7% in Italy, 10% in Spain, 15% in France, 22% in Germany and 34% in Portugal, while wine production across the bloc – the world’s biggest wine-making area – rose 4%.

Susie Goldspink of IWSR Drinks Market Analysis told The Guardian in 2022 that France has one of the fastest-growing non-alcoholic drinks markets.

“Last year 14% of consumers said they were abstainers, whereas this year it was up to 20%,” she said. “Abstainers in France are more likely than in other markets to be from the youngest age group, Generation Z.”

Australia’s wine glut

Australia has the equivalent of 859 Olympic swimming pools worth of wine in storage due to the current wine glut.

RaboResearch associate analyst Pia Piggott, the author of the Wine Quarterly Q3 2023 report, said the oversupply equalled two billion litres of wine or over 2.8 billion bottles of wine.

Her report predicts two tough years ahead for Australian wine producers as they struggle with the huge surplus of wine. Even early removal of Chinese anti-dumping tariffs would not be enough to prevent Australia’s wine industry facing several years of oversupply.

Improving trade relations between the two countries and the recent removal of Chinese tariffs on Australian barley has led to optimism that five-year tariffs placed on Australian wine in March 2021 may be removed early.

However, the report says that even if tariffs were removed this year and Chinese consumption of Australian wine recovered quickly, this would “not be a panacea” with Australia’s wine industry still facing at least two years to work through its current wine surplus.

Australia drowning in huge wine glut