FRENCH REGIONS – Taking the terror out of terroir

With its greatest competitor facing lower yields and higher prices, France is in a good position to gain market share in the UK, if only it can learn to communicate the breadth and quality of its offering. Fionnuala Synnott reports

Much has been made of France’s fall from grace among UK consumers but, when you look at the figures, it becomes clear that France is far from beyond redemption. With just under 17% of the UK off-trade market, the category is second only to Australia, which leads the market with 22.5% (Nielsen MAT 21.04.07). Volume sales of French wine in the UK off-trade may only be up 1% since last year but value sales are up 5% – an encouraging trend in a virtually static wine market. 

In the past, France has been accused of resting on its laurels but it seems that nowadays, far from being complacent, French wine producers are aware that they have to work hard to regain the international market share lost to the New World. Falling wine consumption, a global wine surplus and increased competition have led France to reassess its approach to the export markets. The surge in popularity of New World wines has driven certain producers to take a consumer-based approach to the market rather than the terroir approach traditionally associated with France. According to Pierre-Henry Gagey, the incumbent president of the Bureau Interprofessionnel des Vins de Bourgogne (BIVB), France has been overtaken by the New World at the mid-range price point “because we didn’t listen to the consumer and were too sure of ourselves”. Having learned from this mistake, the more modern producers are consulting the marketplace to find out what consumers want instead of going to market with the finished product.

For certain producers, employing this consumer-based approach has led to a new interpretation of the French wine style. Some have sought to imitate the full-bodied wines of the New World in a bid to capture the so-called “international palate” while others have taken a more measured approach, preferring to make less tannic, more approachable wines that appeal to the new generation of wine drinkers created by New World wine brands. The challenge for France now is to convert these consumers, more used to wines with residual sugar than wines with mineral characteristics, into French wine drinkers.

Changing tastes
As well as creating new consumers, New World wines have imposed an international taste profile. Anne Burchett, managing director at Castel UK, explains: “The success of the bigger New World wines has certainly faded since they first appeared on the market. Having said that, the fruit forward element that was central to the success of New World wines has not only stayed but has defined a new benchmark for all wines from Old and New World alike.”

Yet a number of producers, including some from Australia, are convinced that consumer taste is changing, leading to a gradual move away from full-bodied varietals such as Shiraz to more delicate varietals such as Pinot Noir. “Mainstream mouth feel is moving from big, rich wines to less jammy medium-bodied wines,” says Nick Butler, wine director at Bottle Green. According to Laurent Miquel, owner and winemaker of the eponymous winery, UK consumers are looking for wines with more elegance and better balance. He explains: “Today’s consumers are interested in trying new propositions, including wines from different grape varieties and less well-known regions of production.”

Jérôme Bonaccorsi, export manager for Château La Rivalerie, says: “The New World educated young people about Syrah and Chardonnay – now they want to discover something new. These consumers are growing up. Whereas before they might have drunk wine in nightclubs, now they are looking for something more elegant to serve with food.”

But some feel that this trend has been overstated. According to Tim North, UK director, Grands Chais de France, only a small number of wine drinkers are interested in drinking complex wines. “Consumers want something that is easy and enjoyable to drink. They want refreshing, fruity wines.” Fiona Barlow, sales director at Bottle Green, agrees and thinks that the percentage of consumers who recognise varietals is small compared to the volume of wine sold. “Of course Sauvignon Blanc is growing but so is Pinot Grigio. The press talk about Sauvignon Blanc and Riesling but look at what people are buying – they are buying Chardonnay.”

European wines – particularly French – have enjoyed a revival lately but rather than crediting this fashion to a change in consumer taste, Burchett thinks it is more to do with French wines’ ability to offer quality and diversity at a wide range of price points.

When it comes to wine style, many producers are using modern vinification techniques to make contemporary wines that are unmistakeably French and not just a poor imitation of Brand Australia. According to Jean-Marie Chadronnier, president and CEO of CVBG Dourthe-Kressmann, the objective is not to imitate others but to correct the errors made in the past. Meanwhile, Jean-Claude Mas, owner and winemaker at Les Domaines Paul Mas, is wary of adapting flavour profile to consumer taste. “We should never underestimate the consumer’s palate. After all, Rioja and Yellow Tail are successful but are not at all similar. We have to make wine with personality,” he says.

Richard Kannemacher, marketing director at the Comité Interprofessionnel des Vins d’Alsace (CIVA), adds: “We can’t turn our back on our traditions otherwise we risk losing the subtlety and finesse of our wines. If we look to make wines that are less structured, with notes that everyone can perceive it will lead to less complexity. But it is this very complexity that makes French wine different.”

Better Bordeaux
In the past, Bordeaux has come under fire for producing wine that was not perceived to be of AOC quality. The Bordelais have taken this criticism on board and thanks to innovation on the technical side have made some significant qualitative advancements. But these improvements have been slow to filter through to the UK market, where Bordeaux wines, at grand cru level, are seen as unattainable and AOC wines are not considered to be good quality. Jérôme Bonaccorsi, export manager for Château la Rivalerie says: “Wines from Bordeaux and France have never been so good. No one contests our savoir faire when it comes to winemaking but Bordeaux wines are not known for offering value. People are under the impression that they are expensive and associate them with luxury. Grand crus fly the flag for the Bordeaux appellation, reinforcing this image. People think Bordeaux wines are inaccessible, like sports cars.”

Marie Chadronnier, president and CEO of CVBG Dourthe-Kressman, agrees: “Even though fine wine only accounts for a small volume of total Bordeaux exports – wines priced at over £10 represent just 1% of the volume sold – we still have an elitist image.”

Bonaccorsi advises small Bordelais producers that don’t have large marketing budgets, to run targeted tastings, especially focusing on the press. “Media support is one of the best weapons in our armoury and can be a good way of finding an agent that can build the brand in the export market. The second stage is to raise consumer awareness. People buy New World wines without knowing them, we need to convince these people to try Bordeaux wines.” Chadronnier has noticed a change in the media’s perception of AOC Bordeaux: “In the past, the UK press claimed that the only good Bordeaux was expensive Bordeaux. But this is no longer the case. People are starting to understand that Bordeaux is capable of being competitive at all levels except entry level. From £5-£6, Bordeaux has some very interesting offerings; there are now more opportunities to reconquer the British market than ever before.”

As in many other regions of France, Bordelais winemaking and marketing have been influenced by an influx of new winemakers. Bonaccorsi explains: “We are in the middle of a transition between the old and the new generation of winemakers. Our generation was influenced by marketing and advertising while growing up. Because we know that these methods work, we try to bring these elements to our sales offering and have added another dimension to the traditional terroir message: what does the consumer want?”

Appellation restrictions

Obviously, it is impossible to generalise about a country that produces such a broad range of wines and it is clear that the degree of innovation varies greatly from region to region as well as from appellation to appellation. According to Lynn Murray, marketing director at Hatch Mansfield, southern French wine producers are more known for being innovative than producers in the “more traditional regions” such as Alsace, Bordeaux and Burgundy. She explains: “Stylistically, Burgundy won’t change as producers want the wine to reflect the terroir. They want the vine to speak for itself rather than impose a style on it. They also don’t have the same flexibility as other regions because of the appellation system.” According to André Barlier, assistant director at Vinhiflor, the appellation system is not made to facilitate the creation of innovative wines. He says: “Real innovation can therefore only be carried out at Vin de Pays level. Vin de Pays wines (which account for around half of all French wines imported into the UK) have adapted well to US and Australian competition by focusing on a varietal message.”

In the past, the rigours of the appellation system have often been cited as a stumbling block to innovation but it seems that today’s producers, even those based in Bordeaux – notorious for its strict appellation rules – have little patience with this excuse.

According to Burchett, appellation rules are not an excuse for producing bad wine. She says: “The appellation rules are restrictive but they do not stop any forward-thinking winery from improving the quality and from innovating up to a point.” Chadronnier adds: “The appellation system is far too complex, particularly in relation to consumer expectation. But it is not the appellation system that forces producers to make mediocre wine.” In fact, according to Florence Boubée-Legrand, export brand manager at Inter Rhône, it is possible to innovate on many technical levels while respecting the AOC rules. “By researching grape varieties or how to control alcoholic levels you can better control the winemaking process and make it easier to adapt the wine to consumer demand. You can also innovate on a commercial level. Joint ventures between different cooperatives can be used to create a brand under the AOC rules, while promotional activities can also be innovative.”

Poor communication

There have been many qualitative improvements in French winemaking in the past few years. However, getting this message through to the consumer (and, in some cases, the trade) is not always easy. Historically, communication has never been a particular strength of the French wine industry. This is partly because, for a long time, there was no need for France to market its wines as domestic consumption was high and there was far less competition in the international marketplace. But the lack of a cohesive message is also due to the fragmented nature of the French wine industry. Unlike Australia and California, where large brands thrive, France is made up of thousands of wine producers, most of whom do not have sufficient margins to justify a significant marketing budget. However, according to Pierre Menez, president of Entreprises des Grands Vins de France, the lack of marketing budget is not always a disadvantage. He believes that it makes France more competitive as it means the consumer is paying for the wine rather than the marketing campaign behind it.

France has a lot going for it, in particular a wide range of diverse terroirs – the difficulty lies in communicating this message. It is apparent that French wine producers need to adopt a collective strategy if they are to grow their share of the export markets. Chadronnier says: “The whole of the industry should work towards offering a clear and comprehensive message about French wine.” Producers that are not yet using modern marketing techniques need to update their approach and cannot expect the terroir to speak for itself. “Unless you use the right presentation and marketing approach the best efforts on the wines will be wasted,” says Grands Chais de France’s North.

Modern marketing
Taking inspiration from the New World, many producers have sought to simplify their labels by placing more emphasis on the varietal than the appellation. Alain Raynaud, director of the Cercle de Rive Droite, says: “An appellation is a quality guarantee but it’s not always easy to read. Labels focused on the varietal were a necessary evolution.” Blason de Bourgogne, for instance, moved away from the plain, white, square labels favoured by many other Burgundian brands. Marc Vachet, export director, Blason de Bourgogne, explains: “It was important that rather than containing a lot of unnecessary French wine jargon, the labels contained cues that UK consumers could relate to, including stating the grape varieties and using the word Burgundy, rather than Bourgogne.” Burgundy has rolled out this varietal-led approach to its consumer advertising campaign, letting Pinot Noir and Chardonnay fly the flag for the region.

Brands are also vital to the development of the French wine industry, according to North. “Wine styles are important but France needs brands. People don’t have the patience to get to know new appellations.”

Kannemacher thinks that France should marry tradition with modern communication methods. He says, “We must respect tradition, while explaining it to the consumer. Identity is something you inherit, we have to bring it to life and make it contemporary.”

Many producers have already taken this on board. North says: “This is quite an exciting time in France. A number of people have realised that there are new ways [to market their wines]. There is a generation of young, go-ahead producers that have realised the need to respond to the market.”

Marketing the Rhône
It is no secret that consumers like history and provenance. France has both but has not communicated it very well until now. However, some French regions are very good at promoting themselves. The Rhône, for instance, has invested considerably in advertising and marketing in order to make itself known to consumers. This investment has paid off: the region now has the largest UK market share of all the French regions (albeit only a fraction ahead of Bordeaux) and recorded double-digit growth in both volume and value last year (Nielsen MAT 21.04.07). Florence Boubée-Legrand, export brand manager at Inter Rhône, attributes the success of Côtes du Rhône wines to a “personalised” marketing strategy that includes good development of the “four Ps”: price, promotion, packaging and product.

Increasingly, Rhône producers are considering the importance of consumer demand. According to Boubée-Legrand, this modern approach is due to the maturity of the French wine business. She says: “For a long time, wine was just an agricultural, familiar product but nowadays it is a real industry. In order for France to maintain its position, it is necessary to adapt to this new context. This is probably the main reason why most Rhône companies offer a wine range with specific ‘cuvées’ depending on the wine style.”

As in most French regions, the Rhône offer is a combined one and the region does not make wines exclusively in a modern style. Boubée-Legrand adds: “The Rhône offer is mixed: some companies want to compete in a standard wine category, where wines are easy to drink, fruity, low-priced and sold on promotion; while some choose to compete in a specialised wine category for wines with a characteristic personality, an AOC or a higher price.”

Time of opportunity
Following the latest vintage, Australia is unlikely to be in a position to provide UK retailers with the same volume of low-priced wine as it has in recent years, leaving the door open for other wine producing countries, including France. But, according to Fiona Barlow, sales director at Bottle Green, French producers shouldn’t assume that the UK market is theirs for the taking: “The situation in Australia could be a massive opportunity but it is still unclear. There is no room for complacency.” According to Boubée-Legrand, price will not be the only criteria for success. She adds: “The consumer will ask for quality and value and will still be very reactive to promotions. The country that is most likely to succeed is the one that is best at the marketing mix.”

In fact, France’s position in the UK market is threatened by the growth of the US category. Stewart Blunt, wine analyst at The Nielsen Company, comments: “Throughout 2006, it seemed likely that the US would finally overtake on volume or value sales, having been a solid third-place performer for a number of years.” But France has managed to hold its position thanks to Christmas sales, particularly in the premium and traditional Bordeaux, Bourgogne, Rhône and Loire categories. “The net result is that France is still ahead by 600,000 cases. However the gap was twice that a year ago, so [there is] no room at all for complacency if the status quo is to be maintained,” says Blunt.

With the exception of Vins de Pays, France has not been able to compete with the New World when it comes to entry-level wine. Although there is still considerable interest in the sub £3 sector (which accounts for 23% of the market), the category has suffered disproportionate losses due to much weaker performance of own label wines, in which France has a traditionally large stake, exacerbated by the general move away from the lower end of the market. “A number of successful half price promotion brands have slowed the decline, and this coupled with JPChenet’s continued successful approach to the market adding to the long-established Calvet, La Chasse du Pape, Louis Jadot and others, it all begins to turn it back into growth. New entrants such as Renaissance, La Terre Chammarré, to name a few, are also adding to the momentum,” adds Blunt.

But France comes into its own above the £5 mark. At a time when other countries are struggling to get consumers to trade up, France seems to have no difficulty persuading consumers to part with their cash and is often the first category that consumers look to when celebrating a special occasion. Guy Young, managing director at HwCg, says: “Sales are in greatest decline in the sub £3 category, but France is seeing growth in the over £5 category and is steady at £4-£5. The average price per bottle is now £4.21, which represents a 3% increase on 2006.” The fact that slowly, but steadily, wine consumers are starting to trade up to more premium wines presents a real opportunity for French producers.

And if, as some producers think, consumers want to move to a more complex offering, then this trend will play to France’s strengths. Miquel says: “This is a great opportunity for France to regain ground but we must give consumers good, clear information on which to base their choices. That means attractive packaging, clear information on front and back labels, as well as consistent wine quality.”

It appears that, when it comes to innovating, France is no better or worse than any other country. Barlow says: “It is almost arrogant to presume that we can teach the French how to make wine.”

With a tee-total president at its head, France may have a challenge on its hands in the domestic market but if dynamic producers manage to maintain their current momentum, we may yet see some French panache injected into the UK off-trade.

Burgundy

With high demand and little supply, Burgundy can almost charge what it wants for its wines but, curiously, its wines are not perceived as expensive, unlike wines from Bordeaux. The region continues to be a favourite in the UK market and currently has a 9.4% share of the off-trade sector, just behind the Rhône and Bordeaux. Guy Young, managing director at HwCg, says: “Burgundy has seen considerable growth in value and volume in the past year – it is up 15% and 17% respectively.” (Nielsen MAT 21.04.07)

The quality of Burgundian wines has also improved of late, thanks to greater consistency. Marc Vachet, export director for Blason de Bourgogne, explains: “Consistency is relatively new to Burgundy. But in the last seven years there have been less catastrophes and less bad vintages. Because of changing climatic conditions the producers who were below standard have disappeared.”

In Burgundy, the appellation counts more than the winegrower or the négociant, with producers preferring to talk about the appellation rather than any brands. But few consumers have a proper understanding of the different villages, vineyards, producers, négociants and cooperatives in the region. This explains the emergence of certain brands in the category. “Blason de Bourgogne and Louis Jadot give people something they can trust in an area that is particularly difficult to understand,” says Vachet.

© db June 2007