Worldwide Wine Surplus
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| Will French cars run on Bordeaux? | |
As bad news seems to be never ending for its wine industry lately, France is definitely in the worst shape. French Agriculture Minister, Dominique Bussereau in fact, will ask the European government to open a crisis distillation center, in order to distill his country's huge wine surplus.
Though the proposal regards all of Europe, French wine accounts for one quarter of all European wine earmarked for distillation, or a whopping 2.5 million hectoliters, 20 percent of which AC (Appelation Controlèe) wines, and 1.6 million hectoliters from the Bordeaux region alone. Only one fifth of the total French wine deemed to be distilled for industrial purposes, mainly for fuel and the pharmaceutical industry, is less expensive Vin du Pays.
On the opposite side of the globe though, the New World champions in wine production, namely Australia, seems to be headed in the same direction, though the problem there is on a substantially smaller scale.
A report by market analyst Citigroup Smith Barney in fact, predicts that by June, Australia will have a surplus of 190,000 liters that it is struggling to sell. This could be more bad news for the Old World producing countries, as the Australian producers may sell their surplus wines at discount prices.
A series of overlapping events, such as the huge harvest of 2002 and 2004, high prices, and the slowing down of export growth, that fell from the 21 percent of 2003 to 'only' 14 percent in 2004, are fingered as culprits for the expected Australian wine surplus.
In a wine production world that has adopted a decidedly corporate philosophy, which needs constant market growth to be sustainable, the worldwide growing wine consumption is not keeping the pace with the rise in production.
All this bad news could actually turn out to be positive for the Italian wine industry, that is mostly based on small, often family-run small operations. In fact, Italy grows the largest number of grape varieties compared to all other wine producing countries. Many of such vines are cultivated only in Italy and produce a great variety of unique, high quality wines which are not found anywhere else in the world.
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