French Wine Output Seen at 40-Year Low as Grapes Damaged

By Rudy Ruitenberg October 4, 2012
Wine production in France, the biggest producer, may slump 20 percent this year to the lowest in at least 40 years after unfavorable weather and disease damaged vines and grapes. Output in the Champagne region is predicted to show the biggest drop.

Production is forecast to slide to 40.6 million hectoliters (1.07 billion gallons) from 50.9 million hectoliters in 2011, the Agriculture Ministry wrote in a report on its website today. The outlook was cut from 42.9 million hectoliters a month ago.

France's vineyards suffered from cold and wet conditions during flowering, damage from mildew and other funguses, hail storms that destroyed grapes in Burgundy and Beaujolais, an August heat wave and a dry September that caused drought stress and resulted in smaller grapes, the ministry wrote.

"All the categories of wine will see their production decline compared to 2011," the ministry wrote. "Production estimates are particularly tricky this year due to the variation in grape weight in most of the vineyards."

France exported 7.17 billion euros ($9.31 billion) of wine and champagne in 2011, accounting for 13 percent of the country's farm and food exports. In the first half of this year, wine shipments rose 14 percent to 3.57 billion euros, government data show. Production in the Champagne region is expected to slump 40 percent after damage from frost and "particularly virulent" attacks by mildew and oidium, the ministry said. Harvesting in the region started at the end of September, it said.

LVMH Moet Hennessy Louis Vuitton SA (MC) is the world's largest maker of champagne with brands including Moet & Chandon and Dom Perignon. Vranken-Pommery Monopole SA (VRAP) is the second-largest, followed by Pernod-Ricard SA (RI) and Laurent-Perrier. (LPE) Protected Designation

France cut its outlook for 2012 wine production for the third time in as many months, from an initial prediction for output of 46.7 million hectoliters in July.

Production of wines with a protected designation of origin, known by their French abbreviation AOP, may drop 15 percent to 19.4 million hectoliters, the ministry said. Output of wine for making spirits including cognac and armagnac may slump 22 percent to 6.81 million hectoliters, it said.

The volume of Champagne region AOP wines will slump 36 percent to 1.82 million hectoliters, according to the report, compared with a previous forecast for a drop of 26 percent. Burgundy and Beaujolais appellation wines are forecast to plunge 28 percent to 1.78 million hectoliters.

"In Burgundy and Beaujolais, vineyards suffered from numerous weather events since the spring," the ministry wrote, citing poor fruit set, repeated hail, disease and heat stress. Biggest Producer

Bordeaux-region AOP wine volumes will slip 4.5 percent to 5.24 million hectoliters, according to the report. The region is France's biggest producer of designated-origin wines.

France is the biggest wine producer, followed by Italy, Spain, the U.S. and Argentina, according to the International Organisation of Vine and Wine, or OIV. Italy was the biggest exporter in 2011, followed by Spain, France, Australia and Chile, the OIV estimates.
Italy's wine production may slide 8 percent this year to 39.3 million hectoliters after drought and heat damaged grapes, researcher Istituto di Servizi per il Mercato Agricolo e Alimentare reported last month.