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Professor Shares Lessons From Missteps by France and Australia

March 2017
by Paul Franson

Sacramento, Calif.—A Sonoma State University professor revealed what North American wine producers can learn from their counterparts overseas during a session held Jan. 25 at the Unified Wine and Grape Symposium in Sacramento.

An Australia native who also worked in France, Damien Wilson, Hamel family chair of wine business education with Sonoma State University’s Wine Business Institute, said he learned from those countries’ wine debacles, and the stories can be applied to U.S. producers.

n France, oddly enough, it was an emphasis on premiumization that sent consumption spiraling through the erosion of entry-level wines.

The French introduced the AOC system as a means to verify production (though consumers see this as a symbol of quality), and vineyards started declining as drinkers focused on fewer appellations. By 1970, slightly more than 3 million acres of vines existed; by 2000 the number had fallen to just over 2 million, and now only 1.9 million vineyard acres remain in France.

As French wines became more premium, wine drinking declined: In 1980, 51% of the French population drank wine almost daily. By 2015, only 16% drank almost daily. In 2015, almost 60% of French consumers under 25 years of age didn’t drink wine at all, double the figure from 1980. Wilson emphasizes, “Domestically, they’ve failed to refresh their consumer base. One aim in creating AOCs was to convey an image of prestige. The number of AOCs in France has doubled since the 1950s. So as the prestige image of French wine has increased, consumers have been alienated from the increasing challenge to learn and know them.”

Wilson’s comments about AOCs suggests that American growers’ rush to create more and more AVAs might also confuse consumers.

Australia, by contrast, chose the path Wilson calls economization: attracting value-seeking consumers. He said that in the 1960s, six out of seven bottles consumed in Australia were fortified wines with an annual per-capita consumption rate of around 3 gallons per person. By the end of the 1980s it was 10 bottles of table or sparkling wine per bottle of fortified wine, and now the ratio is closer to 100:1. Annual wine consumption today is around 9 gallons per person.

“How did these changes occur so quickly?” Wilson pondered. “The Australian tendency has been to act first and ask questions later.”

The Australian wine industry initiated a massive planting strategy in the early 1990s. The country initially had 75,000 acres of vines and grew to 427,000 around 2007, with peak wine production in 2004 delivering 1.4 billion liters (370 million gallons) to the global market. Prices peaked in 2003, but by then the market had dramatically changed, with Yellow Tail and other cheap wines dominating the market. An oversupply killed the goose that laid the golden eggs.”

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