Are Wine Imports Bad for Old World Wines? How Inexpensive Wine Is Changing the European Market

inexpensive wine changing the European market

A group of French winemakers dumped gallons of Spanish wine out of a wine tanker to protest cheap foreign wine imports. Photo Credit: Wikipedia CC user Greatesttrowerever

Last spring, a group of French winemakers hijacked five tankers carrying gallons of cheap Spanish wine. They forced the tankers to the side of the road, turned on the their taps one by one, and dumped tens of thousands of liters of generic red wine into the streets. The hijackers destroyed the wine because they believe that there is unfair competition between France’s popular old world wines and Spain’s inexpensive alternatives. Essentially, more supermarkets in France are choosing Spanish imports over local winemakers because the Spanish wines are cheaper, and this is putting an economic strain on French vintners. Unless the system changes, experts are worried that protests like these will continue to escalate, and could negatively impact the wine industry as a whole.

Inexpensive Wines Take Over the Market

What caused this problem in the first place? It starts with European Union farming subsidies. Countries that are part of the EU (including France and Spain) receive a Single Payment Scheme farming subsidy. In Spain, vintners can use this subsidy to grow wine grapes, which keeps their winemaking costs extremely low. However, France doesn’t allow its winemakers to use the subsidy to grow grapes–the country reserves these funds for food crops instead.

This difference in upfront costs means that French wines almost always cost more than Spanish wines, even when they are of similar quality. Lately, French supermarkets have invested more heavily in Spain’s cheap table wine because it’s easier to sell to customers. Those who buy these types of wines are usually French shoppers looking for a simple wine to keep at home, or restaurant owners in need of a complimentary wine to serve guests at the beginning of a meal. In both cases, the wine needs to be as inexpensive as possible while still being of reasonably high quality. Since it costs more for French winemakers to craft a quality product, these types of customers often go with the Spanish equivalent.

Not Just Cheap Wine

This issue doesn’t just impact cheap table wine sales; protesters claim that this is a problem for fine wine consumers as well. When French winemakers are outpriced by Spanish competitors, prices often climb across France, even for high-end producers. This means that you’ll likely pay more for French wine in the future. Producers specializing in grower Champagne, or niche, collectible blends made on small terroirs will likely experience the most market pressure over the next few years unless France changes its farming subsidy requirements. These small-scale vintners can’t afford much more than one year of low sales figures, and they’re not yet popular enough to charge their customers significantly more for the same product.

In addition, there’s conflict over wine quality as a whole. French winemakers pride themselves on strict AOC regulations for high-end wines, and even cheap table wine has to follow certain standards. Spain’s wine regulations differ slightly from France, and critics say that some cheap Spanish wines don’t meet basic French standards at all. Experts also worry that some French winemakers will attempt to cut corners in an effort to make a cheaper wine that competes more easily with Spain. This will result in more bulk, low-quality wine on the market, while high-quality, reasonably-priced French wines could become a rarity.

How This Impacts Your Collection  

Although cheap wines will be impacted the most by the drama in France and Spain, we could see changes in some popular old world wines that are worth collecting as well. Larger, mainstream wineries can often power through a short slump in sales, and they have the benefit of a loyal customer base who are willing to pay more for top quality wine. In other words, DRC likely won’t be impacted, but lesser-known estates like Champagne’s Guy Charlemagne could face more challenges. One of my favorite things to do when I visit France is to walk through the wine shops and find cult wine producers for much less than the price of a more pedigreed bottle made in the same terroir. It may become more difficult to discover these kinds of wines if small-scale French winemakers are driven out of the market by less expensive foreign imports.

Until the subsidy and EU trade regulations change, conflict between France and Spain over wine will likely continue to grow. However, there are a few things that you can do to lessen the impact of this problem on winemakers. To start, you can invest in more small-scale French producers, especially grower Champagne. These wines might not be legendary in name, yet, but they are growing in popularity among serious collectors looking for the next great cult producer. Often, these wines are just as delicious and age-worthy as their larger-scale peers. Additionally, these wines are naturally rare because not much is produced every year. When you commit to buying more small-scale French wine, and decide that you’re willing to pay a bit more to support these winemakers, you can help mitigate the effects of under-regulated imports (and add some wonderful new wines to your collection).

Whether you are starting your high-end wine collection or adding to an established portfolio, Vinfolio is your partner in buying, selling, and professional storage. Contact us today to get access to the world’s best wine.

Image by Greatestrowerever at English Wikipedia [CC BY-SA 2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons

Ryan has worked in every restaurant capacity from bartender to management, and in wine distribution as a consultant and advisor to Chicago’s most elite restaurants and retailers. As a new member of Vinfolio’s Executive Fine Wine Specialists, he is thrilled to share his expertise and passion for wine. Outside of the office, he can be found learning to cultivate vines in the garden, with a glass of White Burgundy in hand, or hiking with his wife and dogs.