More bad news for the French champagne sector as pre sales were cancelled
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French alcohol producers are being hit hard by the pandemic–the champagne industry suspended early sales (when it usually sells around 10-15 million bottles) because of a slump and Burgundy winemakers are unhappy about a government plan that was supposed to offer them respite against the recent spike in U.S. tariffs on French wine.
Champagne sales suspended
The pandemic has curbed the role of champagne in large social gatherings and celebrations and sales have bottomed out–reducing by as much as 70% in France (which accounts for 50% of all champagne sales).
A glass of champagne–much less in demand at present
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In total, producers have so far sold 100 million bottles fewer this year than normal, according to The Local, which amounts to roughly one third of sales in 2019. Lost revenue is estimated at around €1.7 billion ($1.83 billion).
To protect the price, when not much is selling, the Comité Champagne (the organisation representing champagne producers) has halted pre sales, which usually take place in June for sparkling wine which is still in the fermentation process.
Burgundy wine producers are upset
Over the past few years, French wine producers have suffered poor harvests, ruined by frost, drought and excessive heat. Many were expecting a good year in 2020 before the pandemic hit–and now consumers have mostly turned to mid-range and entry-level wines to drink at home.
Burgundy wine sales are down
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But the biggest problem is the recent huge increase in U.S. tariffs placed on French wine exports. Since the tariff increase, French wine is significantly more expensive in the U.S. making it difficult for French exporters, but notably in Burgundy, as it’s one of the biggest–Burgundy wine producers send 56% of its bottles abroad, 20% to the U.S.
The French wine industry asked the French government for help, citing how they are currently supporting the beleaguered aviation industry by subsidising companies such as Air France and Airbus. (The latter is particularly testy for wine producers because the the reason the U.S. has spiked tariffs is because of a 15-year-spat between France and the U.S. involving Boeing and Airbus).
A vineyard in Burgundy, where producers are suffering from U.S. import tariffs.
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Finance Minister Bruno Le Maire told wine producers that payroll taxes and other business charges would be waived. He is also allowing winemakers to distill up to 2 million litres of excess stock into ethanol, which can be used to make hand sanitizer, which the government has agreed to buy at a guaranteed price.
Burgundy wine producers are up in arms, because they don’t usually have excess stock. Instead they want help with exports. They have asked for €500 million ($540 million) in aid and for an E.U. wide compensation package deal to be reached, which is expected to amount to €250 million ($270 million) to offset the tariffs.