wa2.gif (4241 bytes)

abut9.gif (3095 bytes)

abut12.gif (3207 bytes)
abut10.gif (3636 bytes)

abut11.gif (4039 bytes)


Regulating wine: why AOCEs are a bad idea for France's wine industry

Regulations. Europeans love them and the classic wine producing countries – France, Italy, Spain, Germany, Austria and Portugal – all regulate their industries tightly, with rules galore. Now we have proposals by the French to introduce yet another tier of regulations on top of the existing AOCs, with the goal of creating exceptional AOCs, AOCEs, a grand set of new rules for the very best wine regions, in the expectation that this will raise the standing of French wine and solve the many problems it currently faces. Of course, this is a wrong-headed fantasy, and in this piece I’ll explain why, offering my own humble thoughts about a better way of solving the malaise in the French wine industry.

The French wine industry is an old one – most French regions can trace their history back a thousand years or more. But the Appellation d’Origine Controlée (AOC) rules governing production are a relatively recent idea, dating back less than a century.

The AOC rules legislate factors such as maximum yield, permitted grape varieties, vine age, vineyard site and can even extend to factors such as pruning and trellising. There is also a tasting test of AOC wines. These rules guarantee that what you buy comes from where it says it does, and meets these production standards.

The underlying philosophy of the AOC is the importance of terroir. This is a subject worthy of a book in itself, but in short it is the notion that certain sites have specific characters that transmit themselves to a wine. While it’s clear that geography and geology do affect wine flavour (for a discussion of this see this article), it is widely acknowledged that the French overstate the influence of the vineyard site and downplay the role of the winemaker (they don’t even have a word for winemaker). There is an assumption that great wine is a consequence of a great vineyard site and that all the winemaker has to do is allow this greatness to show by not interfering too much. This leads to the belief that a set of production standards, as stipulated by AOC regulations, will result in wine of character and quality that is typical of the AOC in question.

This is the source of the problem with AOC-type regulations. While they have been successful in preserving the diversity of wine styles – and this is a hugely valuable achievement – they have not acted as a guarantee of quality. I would strongly advise against using the fact that a wine has an AOC as an indication that what is in the bottle is worthwhile, because standards vary hugely. The only guarantee of quality is the producer’s reputation.

If anything, the wine rules have shielded poorer producers from market forces and acted to hinder quality. Someone making ropey or mediocre wine can still get the AOC and thus find a market for their wines by using the AOC as a brand. Go to any French supermarket and pick up a random selection of Chablis, or Meursault, or Châteauneuf du Pape and you’ll likely be disappointed by most of the wines. It seems clear: the valuable function of AOCs is to ensure product authenticity and preserve diversity – they emphatically don’t guarantee quality. For this to be the case, the tasting test would have to be far more stringent (this will never happen for political reasons: likely a majority would fail, if the test were strict enough to ensure quality for the consumer), and the French would have to recognize that winemaking has more influence over wine flavour than terroir does, and build this into the rules.

The proposal to create a new tier of AOCs at the top end will do nothing to help the struggling French wine industry. Why? For two reasons. First, as discussed above, rules don’t ensure quality – at least not the way they are currently applied. Secondly, they aren’t addressing the sick end of the French wine industry. To explore this further, it’s important that we distinguish between the perspective of the producer and that of the consumer. From the producer’s perspective, the problem is that at the cheaper, more commercial end of the market, French wine is doing badly. In contrast, the wines from the best producers from across France are doing very well indeed. But in the face of global over-supply, there’s a lot of French wine going unsold, and they are losing out in export markets to the new world. From the consumer’s perspective, it’s difficult to find good, inexpensive French wine. This is partly because of the consolidation of the retail market in the UK with the split between specialist independents and supermarkets growing into a gulf, and the middle ground of the multiple specialists shrinking. As a result, access to market for small producers – of the kind making interesting affordable wines – is diminishing. There may be different solutions to these problems, and solving the problem faced by producers may not solve the problem of consumers looking for affordable interesting wine.

The problem faced by French producers is threefold. First, they have failed to understand the markets they are selling to, and have been production-led rather than market-led. They make their wines and then think about how to sell them. The new world has done it the other way round, looking at the market and then making wine that will succeed there.

Second, the French have not been quality focused across the board. Look at Bordeaux: enormous quantities of largely dismal, joyless, green wines have struggled to find buyers. Where’s the ambition there?

Third, the AOC system has shielded poorer producers from market forces. Market forces are a powerful incentive to achieve quality: do it or you go bust. Bailing out uncompetitive elements of an industry is a big mistake long-term. There’s a lot of denial in the French wine industry, and a lot of people making wine who shouldn’t be simply because they aren’t good enough and don’t care enough. The sense of entitlement to practice in a certain area by people who don’t deserve that right is a dangerous one, but here we are touching on social issues as well as business ones.

So the way forward is for wine producers to understand their markets and make wines that will succeed in them. The way the UK wine market is at the moment, with the power of the supermarkets, if you want to sell commercial wines in large quantities then you’ll need them listed there. This inevitably means that there is no room for the family-owned domaine with perhaps a dozen hectares of vines. The volumes don’t work. These producers need to concentrate on higher-end wines, for which the thriving specialist independent sector provides a route to market. In the middle ground you are going to have a hard time exporting your wine, simply because there’s no where to sell them. Of course, this could change with the rise of internet-only retailers, but only if people can change their buying habits.

What is my prescription for French wine producers currently struggling against new world competition? Should AOCs be scrapped altogether, or made much looser? No. As discussed earlier, they have helped preserve regional diversity, and in the light of the growing ‘internationalization’ of wine this role is a vital one. And the regionality of French wines could be a big selling point: the alternative option, to make varietal wines of no geographic distinction, pits the French producers directly against the new world, without a USP.

I have to add that my potential answers here are from the perspective of producers looking to succeed in the UK marketplace as it stands now. Ideally, from the consumer’s perspective, I’d like to see the marketplace change and for there to be a route to market for the small family-owned producers who make so much interesting wine. But that’s not the way it is. Taking the marketplace as it stands at present, commercial French wine production needs to consolidate, with fewer, more-professional, market-oriented producers.

This could be achieved by several means. One is for co-ops to be ruthless in raising their standards, beginning in the vineyards and extending through the winemaking process. Another is for producer associations such as Val d’Orbieu to assume more of a role: they could reward the best producers with separate bottlings for their wines, and then combine the rest, raising the standard across the board. More thought needs to be given to selling the image of each region and its wines, along with creating proper, reliable brands. One option that may prove fruitful is for a closer working relationship between agents, retailers and producers. Bibendum have taken the step of forming a joint company with Boisset, whereby the resources of both are shared. At the moment the quality of commercial wines from most of France’s appellations is pretty dodgy. Burgundy is flying at the top end, but look at supermarket Burgundies. They’re invariably dire, and they aren’t cheap. The same applies to Bordeaux and the Rhône, and likely many other regions also.

The drive for increased quality must come from producer ambition. Sadly, the rules shelter poor producers and prevent good ones from reaping the full benefit they deserve from their hard work – to a degree, this benefit is shared across appellations. Someone drinks a great Châteauneuf du Pape, and some of that glory rubs off on poor wines made in the same appellation. Unless the consumer is aware that it is the producer that is critical for quality, they will assume that it is the greatness of the Châteauneuf du Pape terroir that was responsible for their good experience.

Ultimately, the best option for sorting out the French wine industry and guaranteeing its health might be to expose it to market forces. Cruel as they can be, they will likely have the effect of ensuring reward to those who do the best work. This will do far more than a new set of rules to raise quality. Say no to AOCE!

Back to top