French wine-makers, shunned by some Americans last year over France's opposition to the Iraq war, face a new problem in 2004 - the rise in the euro.
Industry leaders said on Thursday the currency's surge to new highs against the dollar could make French wine seem too expensive to US consumers also being offered keenly priced New World rivals from Australia and elsewhere.
"Buyers of fine wines are not overly sensitive to price variations," Michel Pons, head of promotion at the national Onivins agency, said of the euro's 40 percent gain since 2002 to a record $1.29 earlier this month. It is now around $1.25.
"But the impact is greater among the less prestigious wines selling for around $10 a bottle - and it is there that the competition is the hottest," he told Reuters.
As some American consumers and businesses shunned French wine, US exports fell 11 percent in the first 10 months of last year, the French Board of Foreign Trade (CFCE) said.
French wines at the cheaper end of the market - from the Cote de Provence or the Languedoc Roussillon regions - fared worst, with individual slumps of up to 37 percent.
The US market was worth some 790 million euros ($988.6 million) to French wine producers over that same period, a substantial chunk of a sector estimated each year to contribute around 8.4 billion euros to the French economy.
Italy and Australia, the two top exporters to the United States, both managed to slightly increase their sales there in the first nine months of 2003 with wine less than half the price on average of French wine.
Industry players say they will try this year to shield US consumers from some of the inevitable rise in retail prices by lowering their margins.
But with the 2003 wine harvest the lowest in a decade, after vines were battered by violent storms early in the year and then shrivelled by a summer heatwave, they say their bottom lines are already squeezed as far as they can go.
"Purely as a result of the euro's increase, the price rise (to US consumers) would be of the order of around 30 percent for some wines now," said Jean-Marie Chadronnier, head of CVBG Dourthe Kressmann, one of Bordeaux's top wine trading houses.
"Producers are making an effort to keep that price increase down - but this can only be a temporary measure," he said.
Comments
Comments are closed.