A French region calculates the true cost of its wine

It's increasingly clear that selling wine at the bottom end of the market is not only unprofitable, but an expensive business. Felicity Carter hears how a French regional body convinced its growers to stop supplying that segment.

Wine
Photo by Patrick Fore on Unsplash

Getting out of the unprofitable bottom end of the market is a priority for many wine producers, whether they are major producers like Constellation—who have said this is “urgent” for their business—or small European winegrowers. A project conducted by the Conseil Interprofessionnel des Vins AOC du Languedoc & IGP Sud de France (Languedoc Wines Council) has demonstrated why winegrowers literally cannot afford to be in this segment.

“We began around 2012,” said managing director Jérôme Villaret, speaking at ProWein 2019, saying the project had come about after many growers had become increasingly unable to make a profit.

The Council set out to understand the true cost of wine production in regions such as Corbières, analysing everything from how much it cost to produce grapes through to the vinification, bottling and sales. This was done for each category of wine, from table wines through to IGP, AOC premium and AOC top-level wines. When the study was finished, the Council called a meeting with the region’s producers, from independent winegrowers to the cooperatives.

Many producers, it turned out, had not understood the true cost of production and were making and selling wines below cost—in effect, subsidising the wine market. 

“We showed everybody that it costs around €3.00 per bottle for Corbières,” said Villaret, adding that of course the cost depended on the yield. “We can’t produce a bottle for €2.00.”

“They said, ‘I usually lose money, but I don’t know why’,” said Villaret.

After it understood the real cost of production, the Council next made a pricing scale—the true price of an IGT wine is around €3.00 to €4.00, while for an AOC wine the price needs to be €5.00 and up. For a premium wine, the producer should be selling for €10.00 or more. Wine producers have since adopted the scale, and largely withdrawn from the cheapest segments of the market.

The result is better for consumers, said Villaret. “It’s easier to understand. You used to have Minervois at €2.00 a bottle but also at €20.00 a bottle. Now it’s around €6.00 to €10.00, and you don’t find it at less than €5.00.”

It’s better for the image of the region, as well. While results for individual appellations were not available, figures provided by La Region Occitanie showed that in 2018, Languedoc AOCs earned 3.4% more, despite volume falling by one percent. 

The Council is now repeating the same study across the entire region. 
Felicity Carter

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