News Analysis: Sopexa sell-off

Following the French government’s decision to sell its stake in Sopexa, the generic body has lost its most important shareholder. Fionnuala Synnott asks how this decision will affect Sopexa and an industry in decline

Just When it looked like things couldn’t get much worse for the French wine industry, the French government has decided to sell its 33.3% stake in Sopexa, the body responsible for promoting French wine and food. This decision wasn’t taken overnight. In fact, the French government has been thinking about withdrawing from Sopexa since 2001, when the European Union decided that all public budgets over e200,000 earmarked for promotional activities should be allocated via a formal tendering process and not be granted automatically to government organizations.

This “beauty pageant” approach to distributing public budgets was intended to create a more level playing field. Charles Collard, managing director for Sopexa GB/Ireland/Benelux, says, “These changes have provided Sopexa and the French government with a good opportunity to check the efficiencies of the organisation against the market. Of the business that we have pitched for so far, we have re-won about 95%.”

New opportunities
According to Collard, the government’s decision does not mean the end of French generic food and wine promotion. The authorities are studying the future of generic marketing and currently putting together a brief detailing what they require from a generic body. Sopexa will be given the opportunity to pitch against other agencies once a new brief has been supplied. Collard explains: “Over the last two years, the French government has carried out extensive market research internationally and it has identified the top-12 countries where it wants to be well positioned and the top-10 priorities in terms of product groups. Among these priority markets are the countries you would expect to find, such as Germany, the US and the UK, but there are also less obvious ones, such as South Korea, for example. The results of this research will provide the framework for the brief, which we expect to receive from the French government in September.”

Despite the loss of such a significant shareholder, it’s business as usual for Sopexa, at least for the moment. According to Collard, “In the meantime, while this consultation period is in progress, Sopexa will be running a full press bureau from our London office.”

Sopexa hopes this latest development will help to clarify its position in the market. Collard says, “This is an opportunity for us to strengthen the position of our agency as the best representative for French food and wine promotion. We will no longer be accused of winning mandates because the French government is a shareholder. Instead, it will be apparent that we have been chosen because we are the best in the market for the job.”

Traditionally, Sopexa has dealt exclusively with French bodies and companies in France. However, following the sale of governmental shares, the body may have more room for manoeuvre, including the possibility of working with private companies. “This is an exciting opportunity for Sopexa that could open up new horizons,” says Collard.

The shares previously owned by the French government will first be offered to existing shareholders and then to new interested parties. The remaining shares will be controlled by existing shareholders, including the Association Nationale Interprofessionnelle des Vins de Table et Vins de Pays (ANIVIT) and the Comité National des Interprofessions des Vins d’Appellation d’Origine (CNIV) as well as the Confédération Nationale de la Mutualité de la Cooperation et du Crédit Agricole (CNMCCA), which includes a Crédit Agricole subsidiary. The sale of the Sopexa shares is expected to  be completed by the end of ‘06.

INSIDER OPINION

Eric Deren, director, France Domaines Ltd
“The restructuring of wine promotion is now limiting the perception by the consumer that French wines are still available on the shelf; at the same time, media coverage for New World wines is becoming ever stronger. France has suffered for the last 10 years at an unprecedented level. Promotional campaigns such as the Rhône one have been successful, thanks to the big budget invested, but is it going to continue?

France is fighting different regional wine battles in this market with small budgets, leading to poor results. It would have been more coherent to put these budgets into one bag and use Sopexa to revamp French wines in the UK. Their expertise up to the late 80s proved to be a success, but without a big budget, it is really difficult for them to make French wines progress.

“If Sopexa had the financial opportunity, it could organise a long campaign in the UK for French wines using the money from the generic bodies and would at the same time be able to include the smaller regions. The power and the strength of this long campaign would bring not only the trade, but also the consumer, back to French wines.”

Laura Jewell MW, agency director, HwCg
“The most important feature of any generic body should be its impartiality, ensuring that the small producers or regions are featured as much as the big brands, and that often depends on the funding. The generic body should guide the producers in their promotion strategies, and this is where the issue arises with the structure of Sopexa changing. If it can only act

as any other promotional agency would, pitching for campaigns, it cannot influence the overall strategy for France. The team there has a great deal of experience in the UK market but will have its hands tied if it cannot advise its clients of the suitability or otherwise of their chosen strategy. Other generic bodies are funded by export levies, which gives them more flexibility. France needs a cohesive campaign structure for all of its wines in order not to be further fragmented.”

Santiago Mendioroz, commercial counsellor, Spanish Economic and Commercial Office, London
“What the EU law implies is that any government body spending more than £140,000 on any single activity, promotional or otherwise, done through third parties (ie, other, or private, companies) must go through a tender procedure. Such a body cannot freely decide which company is going to be awarded the contract. This rule does not apply to privately owned entities. We understand that the French move tries to respond to this situation by going private, and thus avoiding the need to comply with the regulation. In Spain, the situation is rather different. The Consejos Reguladores de la DO, which are the governing bodies of the geographical indications of Spain, are private and privately funded. No change is necessary, as the EU rule does not apply. Wines from Spain is a trade name of ICEX and, as such, is 100% government-owned, and financed by the state budget. We do comply with the EU ruling tendering every single activity worth more than £140,000, and we intend to stay that way.”

© db September 2006